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Understanding Car Finance And Your Credit History

By: William Penworthy

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Shouldn't car finance and buying a car be about choice? This might seem obvious, and you've every reason to believe that choosing your new car and choosing the car finance package that suits your pocket should all be about you, your preferences, your wishes and your needs.

But too often these days it seems that getting a car loan and buying a car is less about choice and more about taking what you can get and being grateful. Even those looking at guaranteed car finance might think that they have a great choice, but in such cases it seems that any real choice is almost immediately taken away.

Trying to find cheap car finance has never being brilliantly easy, but with finance companies and credit companies feeling the pinch after the last few months of financial turmoil, it is now harder than ever before. If you're one of the few people whose credit record is impeccable and you have a credit history that even the Bank of England would be pleased to have, then you may be in the fortunate position of still being able to exercise freedom of choice when it comes to buying your next car.

But sadly the overwhelming majority of us have a less than perfect record, although often it's through no fault of our own. With even the Government horrendously overdrawn, and hundreds of businesses switching the lights off for the last time, it's certainly not been easy for the average person to keep things going. Not having a perfect credit history, or at least having a credit history which is considered to be unsuitable when it comes to offering you car finance options will invariably restrict your choices, and you may not even realise by how much until you start trying to buy a new car.

The trouble is that many car credit finance companies use what they refer to as credit scoring, although in reality there is no such thing as a single credit score. Each company will use their own system to take your credit history and fiddle about with the statistics to result in an overall score. If this score does not rank highly enough, you'll be declined. But for some people who have never missed a single payment, never made a late payment and have never been overdrawn, a credit score can still be arrived at which is too low to qualify you for car finance deals.

Why is this? It could be that you simply haven't had much, or any, credit in the past, meaning that there's insufficient information on which to base a decision. It could be that you've moved house a few times recently, as this can lower your score believe it or not. Of course, if you've been made redundant, along with the tens of thousands of others who have suffered such a fate this year, then you may well have been forced suddenly into a situation where you have to choose between feeding your kids or paying the credit card off. You may have made the moral choice, but as far as the credit companies are concerned, it would be the wrong one!

Whatever the problem you've faced, trying to get car loans or even guaranteed car finance can be a monumental battle, and since there's no way to escape your credit history, you may well feel like giving up. There are a few companies who make the bold claim that they will be happy to offer car credit finance even if someone has a string of CCJs, defaults and in some cases has even been declared bankrupt in the past.

But the overwhelming majority of these companies won't make it quite as obvious to you that there's a catch - and a mighty big catch too. Because once they have agreed a sum of money, which might sound heart-warmingly generous to you, they'll then tell you that you're only allowed to use that money to buy a car from one particular dealer. Who is the dealer? Well, actually - it's them. The finance company will have a small selection of second hand cars, often overpriced, and will select two or three from which you will be expected to make your final choice, usually within the space of a few minutes and in many cases without even being able to take it for a test drive!

However, just because it looks as though there are fewer choices available for those with less than perfect credit histories doesn't mean that the right choice isn't available. There are a few companies that take a different approach, and consider a credit history to be exactly that - history. Instead, by focussing more on your current circumstances they can arrange guaranteed car finance which suits your current financial situation, and doesn't tie you down to a single dealer. The choice is yours - no choice, or the freedom to choose a car from any dealer, anywhere in the UK?

Article Source: http://depositarticles.com/

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