Buying a car is a big financial decision, and finding a suitable car finance option is an even bigger struggle. With plenty of options in the market, it is now confusing to understand which lender and loan offer is the best.
However, the new-age Fintech market has many flexible solutions these days, even for bad credit borrowers. Searching for car finance with bad credit from a direct lender is among the highest searches these days.
Are you also looking forward to financing your car? If yes, then the guide below can offer you a deeper insight.
What is car finance from a direct lender?
The financing for a car from a direct lender is a borrowing option offered by a loan company directly, without any broker. It is considered a better and affordable option as compared to the indirect financing.
When you hire a broker, you lose a lot of money on brokerage fees. You may get the right deal, but the deals suggested by a mediator can be biased. Just like you pay a mediator for finding the car finance deals, some lenders pay the brokers.
As a result, the broker companies suggest to you only those loan companies that pay them well. Hence, a mediator earns from you as well as from the lender. This is why choosing a direct lender is a good suggestion.
Types of car finance offered by a direct lender
Varied types of car finance options are available, which you can explore and choose as per your financial comfort.
- Car loans– The loans facilitate car purchase if you have a good credit score. As a result, the loan deals are quite affordable. However, you will have to prove your repayment capacity.
- Car loans for bad credit– This loan product is specifically offered to borrowers with a poor credit score. Due to a poor credit score, your credit profile is risky for the direct lender. Hence, the rate of interest will be higher than the loans for good credit people.
- Personal loans – If you want to buy the car faster, getting a personal loan can be a relevant decision. If you have a strong creditworthiness, getting a bigger amount hassle-free is possible.
What are the advantages of taking car finance from a direct lender?
For many reasons, it is advisable to take car loans from a lender directly. It has multiple benefits which you should know before buying a car.
- Speedy funds online
Direct lenders have a fully digitized loan process. Easy apply, get approval and receive funds online. This makes the borrowing a speedy and smooth process. While sitting in the comfort of your home or during your daily commute, you can apply anywhere. A 24/7 available application process is mobile-friendly as well.
- Transparency
As you can deal and bargain directly with the lender, nothing remains hidden. In fact, many direct lenders upfront tell you the APR and have no hidden fees to shock you later. Also, due to digitized processes and online verification of your details, you too get better deals. The loan providers can know about your financial records.
- Affordable bespoke deals
Every borrower gets a personalized deal as per their individual credit purchase power. Hence, when you apply for the loans, you get a repayment plan and an interest rate that you can afford to repay. It gives a chance to borrow money at better rates. If you choose an online lender, flexibility and affordability are higher than those of a traditional loan company or a bank.
- Immediate troubleshooting
With improved customer service, a direct lender can solve your issues faster than a conventional fund provider. The customer support executives guide you on every aspect of the loan process. From application procedure to resolving other issues, such as setting a new date for repayments, etc., is solved instantly.
- Custom loan agreement
The loan agreements are prepared as per your individual circumstances. It is because the loan offer is also decided considering your financial conditions. Because it will be a customized agreement, you will never find any unpredictable conditions. There is no clause or rule that you were not informed about.
Tips to search for the best car finance direct lender deal
The most difficult part is to find a dependable direct lender and the best car finance deal. But you know what, with some easy tips below, you can do it in a short time.
- Know your financial situation
The answers you find outside usually exist inside you. This sounds philosophical, but it is applicable in the case of car finance as well. To find a good deal, you need to first understand your financial circumstances.
Find the answer to the following questions to make the right decision.
- What is the monthly repayment capacity for car finance?
- What’s your credit score, and how perfect is your payment history?
- How much can you afford to pay for a deposit?
- Do you have a sufficient deposit amount? If not, what’s the solution?
- Do you want to own the car for a long time?
- Do you want to return it after a few years?
- Do you need the car as fulfilment of a desire, or is it a basic need?
After scrutinizing yourself on all these aspects, you can understand the requirement better. Then it will be easier to start the search for a relevant car loan provider and car loan deal.
- Check your credit report
Your credit report contains everything about your current and past financial record. Take it from all credit reference agencies and read it carefully for the following reasons.
- Check your current credit score
- Read the report fully and carefully to make sure there is no error in it.
- If you find errors, dispute those errors and get them rectified before applying for car finance.
- In case of a poor credit rating, improve your score by paying bills and debts on time.
Don’t forget that the latest six-month payment behaviour is always important for the finance providers. Hence, make sure your recent six-month bank statement is spotless and has no pending or skipped instalments.
- Compare lenders
Never choose the first lender you find. In the rush to borrow money, many fund seekers finalize the loan provider right away.
Do a detailed comparison of the following points.
- Annual Percentage Rate
- Deposit requirements
- Loan term length
- Repayment flexibility
- Fees and penalties
- Customer ratings and reviews
If you want to get exclusive deals, visit the website of the lenders. Ask questions or call for detailed information.
Get a pre-approved offer
Once you shortlist the lenders, apply to them using the soft search eligibility check. Getting a pre-approval presents a clearer picture.
- You get to know your budget range, hence, planning for repayments becomes easier.
- Knowing the interest rate and loan amount puts you in a stronger position to bargain on the loan terms and conditions.
- If you feel the deal is still a bit expensive, you can try two things. Wait for a few days and gather a bigger deposit. The second is to try to bargain more, but this time with the car dealer on the car price.
Conclusion
The above information reveals that finding a good car finance deal is not a cakewalk. But using a rational approach and your research skills, it is possible to find a reliable loan offer. Yes, all this takes time, but your time and hard work are a worthy investment. These days, the direct lending market has become versatile and flexible. Few lenders even offer extremely bad credit loans in the UK, but the interest rate is high. Hence, try to improve your payment record before applying for the loans.
