Not many of us can afford to buy a new car outright. In the past few years, more than £2.2 billion was lent to buyers in order to fund the purchase of more than 155,000 new cars, with a further 200,000 used cars also being purchased on credit. A reputable car finance company can help you spread the cost of a new or used car over a period of time, allowing you to afford a better car than if you were paying outright.
There are numerous finance companies that are eager to finance your new or used car. H0wever, to get that loan, you’re required to submit certain documentation like ID proof, personal and employment details, and others. Your application to get financial assistance may be rejected in case you fail to submit the demanded documents.
The documents required to buy a new car typically include …
Most car finance schemes will require some sort of deposit, although deposit-free plans may sometimes be available. The amount required for a deposit can vary depending on the lender, the scheme and the price of the car you are buying. The higher deposit you pay, the less your monthly repayments will be. If you already own a car you may be able to use it in part exchange to cover some or all of the deposit.
You will need a UK bank account in order to buy a car through car finance. You will typically be asked to set up a Direct Debit to make your monthly repayments. The account details which you’ve planned to give should be in your name. They may also ask you to give them your credit card score statement. If it’s a joint account, you should be the first account holder. Again, you need to have an account in that bank for minimum 3 years. Otherwise, you may require to submit the previous bank account details.
Most car finance providers require you to hold a full UK driving license. Some will, however, accept a provisional driving license (typically charging a higher APR) or international driving licenses in conjunction with relevant identification. Many a time, the driving license of the candidate go back to DVLA where penalties are added to it. If such is your case, then the finance company may contact DVLA to find out whether you actually hold a driving license or not.
But, if you don’t have your driving license yet, you may need to submit other ID proofs to get your car finance approved.
Personal and financial information:
When you apply for car finance you will be asked to provide various pieces of information and documentary evidence and identification. These will typically include your name, your address and previous addresses if you have recently moved, bank details and income. You may be asked to provide bank statements, wage slips, utility bills and photo ID.
Proof of Income:
Depending on the history of your employment, the bank may ask you to submit proof of your income like payslip. Or, you can give bank statements to show them how much you’re earning now. If your company is paying you in cash, you can support your income claims by showing the finance institution other information like tax return information.
Do I need to know which car I want to buy?
You do not generally need to know which car you want to buy. Some people choose a car and then attempt to get finance for it but it can make more sense to apply for finance first and then go shopping for your perfect car. Most car finance companies will offer deals that can be used across different dealers nationwide. Knowing that you have the finances in place when you find a car can save on disappointment later. Knowing what you can afford to repay or the maximum amount you can borrow can also save you from wasting time looking at cars that are outside your price range.
The Bottom Line
Once all the documents required to buy a new car have been submitted by you, it will be sent to the head office of the financial organization. Make sure that the information you’re giving can be verified with paper documentation if required. The finance company has the right to reject your application outright. It will do so only when they find either the information you’ve given is untrue or you haven’t submitted all the necessary papers. Getting your application rejected for once means that you won’t be able to get finance from that specific company for a long time. So, check the documents properly before submitting them.