You could be declined by finance lenders of a number of reasons such as bad credit low income or benefit income. If you have been refused car finance, you may be offered a car loan without a guarantor. For many people a guarantor loan is not an option but is it the end of the road? There re a few ways in which you can get no guarantor car finance with affordable monthly repayments though!
What is a guarantor loan?
A guarantor car finance deal is type of unsecured loan where a third party agrees to meet the repayments if you fail to do so. A guarantor can be a friend or family member who will agree to pay your car finance for you if you can’t. Both parties are liable if the repayments are not made and both credit score can be affected. Guarantor loans can be a good option if you have bad credit or have had trouble in the past meeting your repayment deadlines. For the lender, it increases the likelihood of the finance being paid back so can increase your chances of getting approved. However, if you can’t get someone to support your application, there are still a number of things you can do.
Work on your credit score
If you can’t get someone to guarantee your loan but have bad credit, its recommend that you work on your credit score before you start applying for finance. Having a better credit score can give you access to better rates and save you money! You could consider clearing your existing debt first and make any current payments on time and in full. This is one of the easiest ways to instil trust in your lender that you can pay back your loan. If you do have bad credit and need a car quickly, you can provide evidence of your affordability too and get car finance bad credit instant decision.
Prove your affordability
As well as a credit check, lenders may ask you to undergo an affordability check. This isn’t as scary as it sounds though! Lenders just want to check that you could afford to pay back your car finance. You can usually do this by providing bank statements to prove your income. Lenders will look at your income and expenditure to decide whether they should accept you or not. If you are self-employed or have irregular income, any money you do get should be paid into a UK bank account to prove the wages you get.
Save up for a deposit
Another way you can help to get approved for car finance is to have a deposit to put down. Provided that you have the cash to hand, a deposit can help to reduce your monthly repayments. This is because you don’t have to borrow as much from the lender, and it can also make you more favourable to lenders. In some car finance agreements such as Hire Purchase, they can require you to put down a deposit at the start of the agreement.
What are the criteria for no guarantor car finance?
Unfortunately, guaranteed car finance isn’t a thing and there are a few requirements you need to meet before you can get accepted for car finance.
- You are over 18 years old
- You have lived in the UK for a minimum of 3 years
- You are not currently bankrupt
- You are able to prove your affordability
If you can meet the above requirements, you could be offered car finance with no guarantor!