The finance first approach for buying a car is increasingly becoming more popular. By choosing your loan first, you can then shop for cars within your financial budget, and it makes it easier to stick to your monthly affordability. A car finance broker can assist you with your finance journey and help to match you with the most suitable lender from a large panel. There are more and more brokers popping up across the UK car finance market and they work to find the cheapest finance deals for customers. If you’re unsure about how finance through brokers work and if its right for you, the guide below has been designed with you in mind.
What is a car finance broker?
Gone are the days of comparing car finance deals through commission hungry comparisons sites! Car finance brokers can help you to compare finance in an instant by comparing the lenders on their panel and selecting the best deal for your circumstances. Brokers work on behalf of customers but act as a credit broker and not a lender. The repayments will not go to the broker and instead to the lender the customer chooses. Brokers can also offer their advice, but the final decision lies with the customer. Customers also have the right to walk away from the process at any point before signing the finance contract.
- They are efficient and saves time.
It’s a common misconception that using a car finance broker instead of sorting your finance on your own is a long and lengthy process. However it can be exactly the opposite. You only need to make one application with the broker and then they get to work comparing your finance options from a wide range of lenders. The whole process can be completed in a matter of hours, and you could be driving your new car in just a few days!
- They can help you save money.
Most finance deals will come with interest to pay, unless you choose an interest free car loan but they are usually only offered on brand-new cars. A higher interest rate makes car finance more expensive, and a broker can help to select the cheapest and lowest rate finance deal from any of the approvals you are offered by their lenders. Your personal circumstances will affect the interest rate you are offered, and a low credit score can make your interest rate higher. Brokers can help to secure the lowest rate from the finance offered but they can only do so much. If your credit is low, you should consider increasing your score before securing car finance.
- Protect your credit score.
When you make multiple applications with different finance lenders, it can take its toll on your credit score. Multiple credit checks in a short space of time can have a negative impact on your credit score and by comparing car finance through a broker, you can protect your credit report. You only need to apply the once and let the broker do the rest. Once you’ve secured a finance deal, only then may you have to undergo a hard search credit check at the stage of the finance being paid out.
- You get a higher level of protection.
You should first check the broker you are using is verified and authorised by the Financial Conduct Authority. If they are, you are protected should anything go wrong with your car purchase. Reputable brokers only work with trusted lenders and FCA approved car dealers which helps to give you an added layer of protection when securing car finance.
- Find the right type of finance.
In the UK, there isn’t just one type of finance to choose from. Finance can come in many forms but the most popular tends to be a personal loan option, Hire Purchase finance and Personal Contract Purchase. Each have their own lending structure and you may be better suited to one form of finance over the others. Brokers can help to give guidance and advice on which finance agreement would be suitable for your circumstances For example, hire purchase can be more suitable for bad credit car financing. It can be worth which finance type the broker has access to as they may not work with lenders who can offer all three.