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What is a Good APR for Car Finance?

Whether you’re in the market for a budget-friendly Kia Sportage or an all-electric Tesla Model Y, Annual Percentage Rate (APR) is one of the most important metrics to consider when buying a car in the UK. So, what’s a good APR for car finance and why does it matter for British motorists?

In this guide, we’ll answer all your questions about APR, including factors that can influence it and benchmark rates to keep in mind.

The basics of APR

Before we take a closer look at a good APR for car loans, let’s take a moment to define exactly what the acronym means. Expressed as an annual percentage, APR measures the total cost of the loan. It includes the interest rate charged on the borrowed amount plus additional fees charged by the lender. The lower the APR, the less you’ll pay over the lifetime of the loan.

What is a good APR for car finance?

APR can vary enormously between lenders. As a general benchmark, 10.9% is considered a good APR for a borrower with an excellent credit score. With a good broker, applicants with excellent credit scores shouldn’t need to settle for anything lower than 10.9%.

Why does APR matter for British motorists?

Why take the time to secure a good APR for car finance? Here are a few reasons why APR matters for British motorists:

Affects the total cost of ownership

It’s important to understand that the advertised price of a car doesn’t necessarily reflect the total cost of your loan. A high APR can inflate the overall cost of the vehicle and significantly increase the total cost of ownership. Similarly, a good APR will keep costs as low as possible and help you enjoy the benefits of auto finance.

For example, the best-selling Nissan Qashqai is currently priced at around £26,000 in the UK. A high APR will push up the price significantly over the lifetime of the loan while a low APR keeps the family-friendly vehicle affordable and accessible to many British motorists.

Determines monthly payments

The option to split the cost of car ownership into bite-sized monthly payments is one of the biggest advantages of auto finance. A good APR for car finance can significantly influence the cost of your monthly payments, so it’s important to shop around for the best deals.

Establishes your budget

APR doesn’t just affect the total cost of your loan. It can also influence your budget and determine the type of cars you can afford. For example, a lower APR may allow you to upgrade from a petrol-powered Vauxhall Corsa to an all-electric version. On the other hand, a higher APR may force you to look at other more affordable models, like a second-hand Ford Fiesta.

Factors that can influence car finance APR

Credit score

Most lenders will consider your personal credit score when calculating APR. A high score means you’re considered low risk by lenders, and vice versa.

Loan term

Lenders will also consider the length of your loan when calculating APR. Shorter loans generally have lower APR while longer terms result in higher rates. Use a car finance calculator to play around with loan term options and compare rates. This is a quick and easy way to secure a good APR for car finance.

Amount borrowed

The total amount borrowed can impact APR. Large loans generally come with lower rates, though this can vary depending on the lender. Consider making a larger down payment to bring down your APR.

Type of finance

The type of loan agreement you choose can affect what APR you’re eligible for. Personal Contract Purchase (PCP) loans generally have the lowest rates while Hire Purchase (HP) can be slightly higher.

Unlock the best APR with My Car Credit

All of the above factors can influence car finance APR and have a big impact on the total cost of your loan. At My Car Credit, we specialise in helping Brits achieve the coveted 10.9% APR and keep the total cost of car finance as low as possible. Even if you have lackluster credit, we can still help you secure a good APR for car finance. Get in touch with a friendly advisor today to discuss your options and get behind the wheel of your next car.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

Car Loan APR Explained

Annual Percentage Rate (APR) is one of the most important factors to consider when calculating the total cost of your car loan. Whether you’re shopping for a peppy Volkswagen Golf, an eco-friendly Mini Electric or a luxurious Audi A1, understanding the intricacies of car loan APR is critical when it comes to making smart and informed financial decisions.

In this comprehensive guide, we’ll take a deep dive into APR, explain how it affects your car loan repayments, and provide handy tips on how to unlock the best deals.

Understanding car loan APR

APR stands for Annual Percentage Rate and reflects the total borrowing costs associated with the loan. It includes the interest rate you’ll pay on cash borrowed, as well as additional fees and charges imposed by the lender. The goal is to provide borrowers with a clear idea of the total cost of the loan, including fees. This transparency makes car loan APR one of the most important metrics to consider when crunching your numbers and calculating how much to borrow.

Is APR the same as interest rate?

While car loan APR does factor in interest charged on the cash amount borrowed, it also includes other fees and charges associated with the loan. This makes it a different and more comprehensive metric than a traditional cash interest rate.

Why is APR important?

Car loan APR is one of the best ways to compare loan offers quickly, easily and accurately from different lenders. As mentioned above, APR not only factors in the cash interest rate but includes additional fees and charges. It offers borrowers a glance at the total cost of the loan, expressed using an easy-to-interpret percentage rate. A low APR means you’ll pay less in interest and additional fees over the lifetime of the loan. A high APR means you’ll pay more.

What is a typical APR rate?

In the UK, a typical car loan APR rate offered by a reputable lender should sit at around 10.9% for an applicant with excellent credit. It’s important to understand that most reputable brokers and lenders use representative APR as an example. The actual percentage will vary depending on the applicant. We’ll cover representative APR in more detail below.

Fixed vs variable APR

Most auto loans in the UK come with fixed APR. This means the APR remains constant for the lifetime of the loan and monthly payments stay the same. For borrowers, this provides stability and makes it easy to budget and plan ahead. Car loans with variable APR are less common and can be difficult to manage.

Factors that can influence car loan APR

APR can vary significantly depending on the applicant. Here are a few factors that can influence what APR you’re eligible for:

Personal credit score

Your personal credit score can have a big impact on what car loan APR you are offered. Lenders use your score to assess your credibility as a borrower and calculate risk. Borrowers with high credit scores are generally rewarded with lower APR, and vice versa.

Preferred loan term

The total length of your car loan can affect your APR. Lenders typically offer lower APR for shorter loan terms. Longer terms can result in higher overall APR, though monthly payments are lower which appeals to many borrowers.

Loan amount

The total amount borrowed is another factor that can influence APR. To lower your car loan APR, consider putting together as much cash as possible for your down payment.

What is representative APR?

When researching car loans, you’ll see the term representative APR used by brokers and lenders. This is the rate that at least 51% of customers will receive. Of course, some customers will enjoy lower rates while others will receive higher rates.

Representative APR takes this fluctuation into account and offers borrowers a general idea of what to expect. Ultimately, it’s a transparent way to compare rates offered by different brokers or lenders. The bottom line? Use representative APR as a guide, not a guarantee.

How do I find out the exact APR of a car loan?

You’ll need to continue with your application to get an exact car loan APR quote. Also called a ‘real’ or ‘personal’ rate, the figure is tailored to match your unique credit profile, financial history and personal circumstances.

Ideally, brokers should be able to calculate an exact car loan APR using a soft search. This type of search doesn’t leave a permanent mark on your financial history and won’t affect your credit score or future applications.

Tips for lowering your APR

APR can have a big impact on the total cost of your car loan. So, it makes sense to be proactive when it comes to lowering your APR. Here are some strategies to help you secure the best rates:

Boost your credit score

From paying off outstanding debts to registering on the electoral role, there are a few quick and easy ways to boost your credit score.

Increase your down payment

A larger down payment can reduce the amount you need to borrow, which can help bring down your car loan APR.

Choose a shorter repayment term

While it can be tempting to stretch out your loan for as long as possible to bring down your monthly payments, opting for a shorter repayment term typically reduces APR. In the long run, you’ll pay less.

Score the best APR with My Car Credit

One of the best ways to secure a good car loan APR is to work with an experienced broker. At My Car Credit, we specialise in helping Brits secure finance on all kinds of cars, from zippy Ford Fiestas to adventure-ready Range Rovers. Whatever your budget, financial history or credit score, we can help you unlock the best possible APR from trusted lenders.

Use our handy car finance calculator to get the ball rolling, or get in touch with a friendly member of the My Car Credit team today to find out more.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

What is a Good APR for Car Finance?

8 Benefits of an Auto Loan Payment Calculator

Car Finance with Fair Credit: What You Need to Know

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

apr apr calculator car finance calculator car financing credit rating credit score Jan24

8 Benefits of an Auto Loan Payment Calculator

From commuting to work to visiting friends and family on weekends, Brits across the country rely on cars to get them from A to B. Up there with buying a house, cars are a major purchase, so it makes sense to arm yourself with as much knowledge as possible when committing to a sale. This is where an auto loan payment calculator steps up. Fast, simple and easy to use, these handy tools make it easy to crunch your numbers when shopping for a new car.

In this article, we’ll take a closer look at the benefits of using an auto loan payment calculator and why every new car search should start with this simple step.

The popularity of auto finance in the UK

Before we get started, let’s take a moment to spotlight the popularity of auto finance in the UK. In 2022, Finance & Leasing Association (FLA) members provided more than £50 billion to fund the purchase of cars in the UK. Why is auto finance such a popular choice for Brits? Here are some of the benefits:

Affordability

The option to make manageable monthly installments instead of a large lump sum is one of the key benefits of auto finance. Many Brits don’t have the funds to purchase a new car outright but can easily commit to monthly payments. This model allows Brits to get behind the wheel of cars that may otherwise be out of their budget.

Flexibility

From Personal Contract Purchase (PCP) to Hire Purchase (HP), there’s plenty of flexibility when it comes to auto finance. There’s no need to adopt a one-size-fits-all approach. Instead, borrowers are free to choose contract and payment terms that match their unique needs.

Regular vehicle upgrades

Unlike owning a car outright, auto finance allows motorists to upgrade to a newer vehicle more often, typically every two to three years. This makes auto finance an appealing option for motorists who love to have access to the latest makes, models and cutting-edge technology.

Zero maintenance

Most auto finance plans include comprehensive maintenance packages, which eliminates some of the biggest costs associated with car ownership. This peace of mind is a huge draw for many motorists.

Why use an auto loan payment calculator?

Crunching your numbers doesn’t have to be a headache. Here are the benefits of an online calculator:

1. Finetune your budget

Cars are one of the biggest purchases made by Brits, so it makes sense to finetune your budget before you commit. Auto loan payment calculators make it easy to punch in your numbers and generate instant data. Simply input information like the loan amount, preferred repayment term and personal credit rating to generate an instant quote estimate.

When you’re ready to proceed with your application, more information like your income, financial history, job status and personal circumstances is used to generate a more accurate quote.

2. Compare repayment terms

The total cost of your car loan can vary significantly depending on your chosen repayment terms. Auto loan calculators make it easy to compare different repayment terms and choose a timeframe that fits your budget. For example, the monthly cost of a £7,500 loan with a repayment term of three years is around £243. In comparison, the monthly cost with a repayment term of five years is around £160.

3. No impact on your credit score*

Using an auto loan payment calculator allows you to learn more about your budget and potential borrowing power, without affecting your credit score. Instead of hard searches that leave a footprint on your credit history and can raise red flags for potential lenders, an auto loan calculator gives you the freedom to explore your options with zero repercussions.

4. Transparent cost analysis

Auto loan payment calculators break down the cost of financing and make it simple and easy to understand. You’ll get an instant idea of the principal amount borrowed vs how much you will pay in interest over the lifetime of the loan. This amount is determined based on the average Annual Percentage Rate (APR) secured by borrowers. This transparency helps British borrowers make smart and well-informed decisions when it comes to auto loans. It’s a philosophy that all brokers authorised and regulated by the Financial Conduct Authority (FCA) should adhere to.

5. Avoiding overcommitting

Calculating monthly payments in advance helps borrowers take out realistic and manageable loans. This proactive approach to auto finance helps prevent overcommitting and avoid financial stress down the line.

6. Borrow from trusted lenders

The best auto loan payment calculators are designed to connect borrowers with trusted lenders. For example, at My Car Credit we work with Evolution Funding Limited to match your application with a large panel of auto finance lenders.

7. Find the best match for your needs

Auto loan payment calculators don’t just match you with lenders. The best tools use specialised technology and algorithms to select the best products for your needs. This not only improves your chances of acceptance but unlocks the best possible rates.

8. Free to use and obligation free

Auto loan payment calculators are completely free to use. There are zero obligations to commit to a loan or even finalise an application. This makes car finance payment calculators a great option for both serious buyers as well as motorists who are in the very early stages of researching loans.

Crunch your numbers today with My Car Credit

Whether you’re purchasing your first car or looking to upgrade an existing vehicle, there are no downsides to using an auto loan payment calculator. Fast, easy and transparent, the auto loan payment calculator from My Car Credit is designed to streamline the finance process. It not only helps you budget, but also gives you a clear and accurate look at the total cost of your loan. It’s this transparency that makes auto loan payment calculators such a valuable tool for motorists looking to make informed and financially responsible decisions.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

What is a Good APR for Car Finance?

Car Loan APR Explained

Car Finance with Fair Credit: What You Need to Know

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

apr calculator car finance calculator car financing credit rating credit score Jan24 repayments

Car Finance with Fair Credit: What You Need to Know

While some Brits enjoy a glowing credit score, others aren’t so fortunate. Credit scores can slip for all kinds of reasons, from missed payments on credit cards to lack of financial history. Wondering if you’re eligible for car finance with fair credit? This article is for you. Read on to find out more about car finance with fair credit and what you need to know before finalising an application.

What is considered “fair” credit?

The first step is to understand exactly what “fair” credit means. UK lenders use three major organisations to source credit scores – Experian, Equifax and TransUnion. Each uses a different system to determine credit scores. Here’s a quick overview of what’s considered “fair” by each:

Experian – 721 – 880

Equifax – 380 – 419

TransUnion – 566 – 603

Fair is preceded by rankings of “good” and “excellent”. At the lower end of the scale is “poor”, which is anything below the lowest numbers listed above.

Why credit scores matter

Credit scores are one of the most useful ways for lenders to evaluate the financial history of potential borrowers and assess overall risk. Experian, Equifax and TransUnion use information like your direct debit history to assess your borrowing patterns and assign an individual credit score. They’ll also look at hiccups like missed payments and multiple credit card applications.

The higher your score, the less risky you’re considered. Applicants with strong credit scores enjoy a suite of benefits, including higher credit limits, lower interest rates and an increased chance of success. However, a lacklustre credit score doesn’t necessarily rule out car finance. You still have options, which is why it’s important to connect with experts who specialise in securing car finance with fair credit.

Can I get car finance with fair credit?

Fair credit doesn’t mean you have to rule out car finance. With the right broker and a strong application, you can still secure auto finance with a less-than-perfect credit score.

What to expect when applying for car finance with fair credit

Applying for car finance with fair credit isn’t always as straightforward as applying with an excellent score but it is possible. Here’s a quick overview of what to expect and consider throughout the process:

Stay realistic

Lenders are far more likely to approve your application if your expectations are realistic. For example, an affordable model like a Hyundai i10 is a much better choice than a luxury car like Land Rover. Similarly, considering buying used instead of new can be a great way to save money and win over lenders.

Be proactive about boosting your score

You can’t go back in time and make that missed credit card payment. But you can boost your credit score by doing things like joining the electoral role.

Apply for car finance with fair credit today

Wondering if you’re eligible for car finance fair credit? Give My Car Credit a call today to discuss how we can help you secure car finance with fair credit, or a lower score.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

What is a Good APR for Car Finance?

Car Loan APR Explained

8 Benefits of an Auto Loan Payment Calculator

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car financing credit rating credit score fair credit Jan24 repayments

Is Car Finance Good for my Credit Rating?

As with any financial loan, if your credit rating is good, lenders will consider you as a more eligible candidate for a favourable agreement. But is car finance good for your credit rating? We break it down below.

Does car finance impact your credit rating?

If you apply for car finance with My Car Credit, we’ll perform a car finance eligibility checker before advancing your application. This is a soft search of your credit score, meaning that it won’t impact your overall rating. It allows us to see your financial history without leaving any mark on your credit file.

If we decide that you’re a viable candidate for car finance, we’ll advance your application. At this point, our credit check will be hard, meaning that lenders will have access to your details and your rating will take a hit.

Is car finance good for your credit rating?

There are two main ways that car finance can improve your credit rating.

It’s also worth being aware that when you first apply for car finance and undergo a hard credit check, your overall score may dip because you’ve taken on a new loan.

Making timely repayments

The most important factor to a credit score is payment history. As such, if you make all of your monthly repayments on time and in full, this will build up your credit rating over time.

Diversifying your credit mix

A credit mix refers to the type of loans in your credit file. Having a diversified credit mix can improve your credit score, because it indicates that you can handle different types of loan.

Car finance counts as instalment credit, whereas a credit card is revolving credit. Adding car finance to your credit file diversifies it, which lenders look on favourably.

Can car finance damage your credit rating?

Car finance can negatively impact your credit rating if you don’t make your monthly repayment schedule. If you don’t make your instalment in full, or if you miss it entirely, this can negatively impact your credit score.

In these instances, you’ll be given a short period in which you can make the loan up. If you fail to make this payment, your ‘delinquent’ loan will be reported by the lender to major credit bureaus. This will negatively impact your credit rating.

If you miss several payments, lenders will declare your loan in default. The account will be passed over to debt collectors and your car may be repossessed. All of these negatively impact your credit score.

Find out more about car finance and credit ratings

To find out more about the kind of car finance we offer, as well as how it could impact your credit rating, contact My Car Credit on enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

What is a Good APR for Car Finance?

Car Loan APR Explained

8 Benefits of an Auto Loan Payment Calculator

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car financing credit rating credit score Jan24 repayments

Why Was I Denied a Car Loan with Good Credit?

A good credit score can feel like a gold star on your financial history report. But unfortunately, a good credit score doesn’t guarantee approval when it comes to car loan applications. If you’ve been denied a car loan with good credit, this article is for you.

Below, we go into more detail about why a good credit score isn’t the be-all-and-end-all for car loan applications. We also take a look at how to overcome the hurdle, and what you can do to increase your chances of securing finance with a trusted lender.

What is a credit score?

Before we start, it’s important to define what a credit score is and why it matters. Basically, a credit score measures the overall health of your financial situation. A high score presents you as a reliable and trustworthy borrower, while a low score indicates a higher level of risk and an increased chance of defaulting on your loan. The higher your score, the more appealing you are to lenders.

Scorecards are used to calculate your credit score and create an overall picture of your borrowing behaviour. Information like your credit card repayment history and previous credit applications, as well as factors like your electoral roll status and address history, can affect your credit score. That said, your credit score isn’t the only factor considered by lenders when assessing car loan applications. This means you may be denied a car loan with good credit.

Good vs poor credit history with Equifax, Experian and TransUnion

In the UK, three major platforms are used to calculate credit scores – Equifax, Experian and TransUnion. All use a different number system, so don’t worry if your credit score varies between platforms.

Equifax: 0 – 1000
Experian: 0 – 999
TransUnion: 0 – 710

Experian classes 881-960 as good, while TransUnion’s threshold is 604-627 and Equifax goes as low as 420-465. As you can see, a good credit rating with one credit agency doesn’t mean you’re always classed as low risk. It depends which agency is used by each lender.

What doesn’t affect a credit score?

Credit scores are used to assess your financial history and give lenders an idea of your reliability when borrowing money. They’re not designed to reflect your overall wealth or purchasing power. The following criteria aren’t considered when calculating your credit score, however they may help explain why you were denied a car loan with good credit.

Student loans
Savings account balances
Employment history
Parking tickets or driving offences
Criminal record
Medical record

Reasons why you may have been denied a car loan with good credit

If you’ve been denied a car loan with good credit, here are some common reasons to consider. They don’t affect your credit score directly, but they can have an impact on the final decision of the lender.

Financial links

It’s important to understand that you’re not necessarily the only person assessed when applying for car loans. Financial connections to irresponsible borrowers, such as partners, family members or flatmates, can have an impact on your success rate and may help explain why you’ve been denied a car loan with good credit.

For example, if your legal partner has a lacklustre borrowing history and a poor credit score, this can impact your chances of a successful application. Even if you’re no longer together, they’re still considered a financial risk. Similarly, if you once shared utility bills with an irresponsible ex-flatmate, their borrowing behaviour can have an impact on your car loan application.

These types of financial links won’t affect your personal credit score, but they may be considered by lenders when assessing applications and calculating the overall risk factor. Lenders may check the credit reports of these individuals and use data to make a final decision on whether to approve or deny your application.

Check the Financial Associations section in your Credit Report to find out if you have any links. Depending on whether the connection is still active, it may be possible to submit a disassociation request and remove the person from your Financial Associations list.

Employment status and salary

The ability to repay your loan is a major factor considered by lenders. They won’t hesitate to follow up on employment and salary information stated in your application, and if the numbers don’t match up, your loan may be declined. This means that even with a stellar borrowing history, you may be denied a car loan with good credit if your employment status and income can’t be verified.

Another issue in this respect comes when you’re self-employed. While it’s great to work for yourself, this can negatively impact your ability to get car finance because it’s less secure than income from an employed position. Working for yourself, your salary can fluctuate month to month and year to year, making it harder for finance companies to assess affordability – which brings us onto…

Affordability

One of the most important factors for any finance company is affordability. Lenders want to know whether you can afford the repayments based on your current circumstances. While your credit rating reflects your history with finance companies, it’s also important to consider your incomings and outgoings.

As well as your salary, they’ll look at existing financial commitments like mortgage payments, utility bills and personal loans. If you’re already in financial difficulty, regardless of your credit history, you could be refused car finance.

Inconsistency in applications

Lenders don’t just check your current application. They may also cross-reference it with previous applications. Inconsistencies can raise instant red flags and may explain why you’ve been denied a car loan with good credit. For example, an application that states a £100,000 salary preceded by an application that states a £30,000 salary may be flagged.

Existing debt

Current debt isn’t factored into your personal credit score. However, it may be considered by lenders when assessing car loan applications. Ultimately, they want to be sure you can repay the amount you borrow. For example, if you apply for a £50,000 car loan but have credit card debt of £10,000 and a home mortgage of £300,000, your application may be flagged as high risk. It doesn’t necessarily mean you’re ineligible for a car loan, but it is something to consider when investigating why you’ve been denied a car loan with good credit.

What to do if you’ve been refused car finance

At the end of the day, no application is guaranteed, regardless of how high your credit score is. Lenders will always scrutinise applications and consider a variety of criteria. It’s important to understand exactly what goes into the decision making process to maximise your chances of success.

Review your application

If you’ve been refused car finance, the simplest thing you can do is review your car finance application. Look for any inaccuracies such as your address, salary and other financial information. Many lenders may point these out to you to help you get car finance.

Apply for a cheaper deal

Another simple trick is to apply for a cheaper deal that suits your personal circumstances. You could find a cheaper car, which would mean lower monthly payments.

You can also check the different types of car finance available.

Pay off existing debt

If you have lots of existing credit agreements, you might want to consider paying some off before applying for car finance – if you have the means to do so, of course. This could reduce the risk for lenders, as you’ll be in a better position with fewer outgoings and only one lender (or a select few) to repay.

Denied a car loan with good credit? We can help!

Being denied a car loan with good credit is frustrating. The good news is, we’re here to help. At My Car Credit, we have access to one of the largest and most diverse lending panels in the UK. This helps us to match your application with a wide range of trusted lenders, instead of the usual high street banks.

My Car Credit is fronted by a dedicated team of experts who can help you understand more about car finance eligibility and get to the bottom of why you’ve been denied a car loan with good credit. It’s this commitment to success that helps our customers get behind the wheels of their dream cars faster.

To discover how My Car Credit can help you obtain the right car finance, check out our online calculator to crunch the numbers on financing your next car.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

What is a Good APR for Car Finance?

Car Loan APR Explained

8 Benefits of an Auto Loan Payment Calculator

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

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How Long Does It Take To Get Car Finance Approved in the UK?

So, you’ve found your dream car, a suitable car finance deal, and you want to hit the road instantly. But how long does it take to get car finance approved in the UK?

How long does it take to get car finance approved?

The initial submission for car finance can take mere minutes. However, you’ll then need to wait for any initial quote to be approved.

The turnaround time for this will vary between car finance lenders. As a general guide, assume that you will wait at least 24 hours to hear if you’ve been accepted. That could even extend to 48 hours and longer, depending on the factors we detail below.

What factors impact how long it takes to get car finance?

Credit scores

Car finance providers will perform a hard credit check to assess your car finance affordability. These take a little longer to perform than any initial soft credit check, and will impact your overall credit score too.

It’s absolutely possible to secure car finance with a poor credit rating, but your application may be swifter with a higher score. Plus, you’ll be eligible for better terms.

Use free online tools like Experian to get a free credit score check and establish whether your report has any issues before applying for car finance. This will help to speed the application process along.

ID checks

Any car finance provider will need to perform an identity check. You’ll typically be asked to submit copies of your driver’s licence, which therefore needs to be valid – you’ll be instantly rejected if it isn’t.

As well as your driving licence, you’ll most likely need to provide a complete address history. Lenders will ask for the past three years of your address, and may ask for current proof of address too. You’ll also need proof of income, or evidence of profit for self-employed businesses, for many providers.

Having all the relevant documentation to hand can significantly speed up the car finance approval process. Ensure that you have the relevant ID, and that it’s all up-to-date before applying for car finance.

Time of day

If you’re after same-day approval for car finance, apply as early in the day as possible! Some lenders will only turn around same-day approval if you apply by a certain time, so it’s worth checking this.

Secure timely car finance with My Car Credit

Email us on enquiries@mycarcredit.co.uk to get the ball rolling with your car finance journey.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Car Finance vs Personal Loan, what’s best for me?

8 Advantages and Disadvantages of a Balloon Payment

How Do Balloon Payments Work?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

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How Should New Drivers Start Saving for a Car?

If you’re a new driver, you may find yourself asking ‘but can I afford to buy a car?’ After a house, a car is one of the most expensive purchases you’ll make in your lifetime. As such, it’s sensible to start saving for a car as soon as possible.

In this post, we’ll cut out the jargon and explain how to start saving for a car.

Why should you start saving for a car?

With all the car finance that’s available, you may find yourself wondering why it’s even worth saving for a car.

With car finance, you borrow a pre-determined amount of money against the purchase of a vehicle. You then pay this money back via a series of monthly instalments – plus interest.

As such, if you can start saving for a car deposit (sometimes called a down payment), you’ll be reducing the sum of your monthly car finance repayments. You’ll also be saving on the total car finance that you owe, because you won’t have as much interest to pay.

For example, if you borrow £7,000 for your car finance, you may face monthly repayments of £265. The overall amount that you might pay for your car finance could therefore reach £9,500. However, by putting down an initial deposit of £2,000, your monthly repayments would drop to £190. You’d be paying back £8,800, saving you £700 overall.

The higher your interest rate, the higher the amount you’ll save if you put down a deposit. Aiming to save between 10 and 20% of the overall amount is a good figure to go for.

How to start saving for a car

Your unique circumstances will determine what car finance is right for you. The size of deposit you can aim for will also be unique to you, and will vary according to the kind of car you’re saving up for.

Although it’s beneficial to have a higher deposit saved up, you should also be realistic. Break down your monthly budget, factoring in all expenditure, and establish a realistic figure for the amount that you can expect to save each month.

Also, remember that once you’ve secured car finance and a new vehicle, there will be other vehicle expenditures, such as maintenance and insurance fees.

Once you’ve established a realistic figure to save towards a car, you can decide where to store that money.

If you already have a savings account, you could set up a regular direct debit or standing order. This will automatically transfer a set amount each month, so that you don’t have to think about it. If you don’t have a savings account, take the time to compare different options.

If you already have a car, remember that you can trade it in or sell it. That can help to offset the cost of your next vehicle. Just remember to compare offers from different dealers or private buyers before settling on your final choice.

Find car finance today

Now that you’ve learned why and how to start saving for a car, you can start to think about your car finance. Contact My Car Credit on enquiries@mycarcredit.co.uk to learn more.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

HP, Conditional, PCP: The Lowdown on Car Finance Options

Balloon Payments Explained: What, Why & How

I want to buy a car on finance, how much can I borrow?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

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Can You Get Zero Deposit Used Car Finance?

Securing used car finance with no deposit may sound like a pipe dream. In fact, there are lenders around who can help you to find finance for a used car whilst paying no deposit. That said, there are potential barriers to doing so.

Can you find used car finance deals with no deposit?

The short answer is – yes. Many lenders will work with you to find a no-deposit car finance deal on a used vehicle. There are many benefits to this option. You don’t have to pay a hefty lump sum upfront – typically just a modest reservation fee – and can crack on with full use of the vehicle.

However, typically only candidates with high credit scores will secure zero deposit used car finance. Individuals searching for car finance with a poor credit rating are unlikely to be offered a no deposit car finance deal, whether for a used vehicle or not.

Remember, too, that there are benefits to paying an initial deposit. Car finance deals like Hire Purchase (HP) or Personal Contract Purchase (PCP) require a deposit, which in turn reduces the size of your overall monthly repayments, as well as any interest rate attached.

By not paying an initial deposit, you have more money to pay back overall, which might also translate to a longer repayment period too.

As such, although no deposit used car finance might sound appealing, candidates with less than excellent credit ratings, or those who want more affordable repayment schemes, might want to reconsider whether it’s the most suitable option.

Find the right car finance for you

Find out if zero deposit used car finance is right for you with help from the My Car Credit team. Email us on enquiries@mycarcredit.co.uk and get behind the wheel of your ideal car finance today.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Electric Car: Lease vs Buy – Which is Best?

Car Finance vs Personal Loan, what’s best for me?

How Do Car Finance Calculators Work?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car buying car finance credit score Jan24 zero deposit

What Is the Best Car Finance for Me?

Man confused at different car finance option

Finding the best car finance for you comes down to a range of factors.

Distinguishing between different car finance agreements can feel mystifying, which is why we’ve provided this handy guide to help you secure the best car finance for your needs and circumstances.

What are the different car finance options available?

Not everyone has the available cash to pay for a car upfront, which is where car finance comes in.

Car finance is essentially a flexible, accessible way of financing a car. It allows you to borrow a pre-agreed amount of money to purchase a vehicle. This money is paid back in a series of affordable monthly instalments, during which time you have full use of the vehicle.

If you have car finance eligibility, you can apply for one of two agreements – either hire purchase (HP) or personal contract purchase (PCP). These are the two main types of car finance.

There are also leasing agreements and car loans, but strictly speaking, these aren’t car finance, so we won’t be discussing them here.

Hire Purchase (HP)

With HP car finance, you’ll pay an initial deposit followed by a series of equal monthly repayments. The size of these will depend on your unique car finance deal, as well as the size of your deposit.

At the end of an HP finance deal, you will own the car outright – no final payment is required. As such, your repayments on HP are likely to be slightly higher than with PCP finance.

HP car finance is available for both new and used vehicles.

Personal contract purchase (PCP)

PCP finance is much like HP car finance. You pay a series of monthly instalments to the lender, the size of which is determined by your initial deposit and contract length.

However, unlike HP finance, you don’t automatically own the vehicle when a PCP deal terminates. This means that your repayments with PCP will be lower than an equivalent HP deal, because you’re technically only paying for the car’s depreciation value.

If you choose to own the vehicle at the end of the car finance deal, you’ll pay one final lump sum (a balloon payment). This can be equivalent to a third or half of the car’s initial price, so you can refinance the vehicle to pay for this.

Alternatively, if you have positive equity – meaning the car is worth more at your car finance contract’s end than the optional final payment – you can hand the car back, choose another, and put the extra value towards this vehicle’s deposit.

What is the best car finance for me?

The best car finance for you will depend on a number of factors…

For low monthly payments

Monthly payments are higher with HP because you automatically own the car outright at the end of the finance agreement.

If keeping your monthly repayments low is a priority, PCP is the best car finance for you. However, you may end up paying more overall than with HP finance, depending on the interest rate and length of your finance agreement.

For minimal restrictions

PCP finance often comes with restrictions. These can include everything from mileage restrictions through to paying extra fees if you return the car with excessive wear and tear. Equally, if you want to take your car abroad, you may face limitations with certain PCP agreements.

HP finance does not have these kinds of restrictions or limits, so it’s a better option if you think you’ll rack up a high mileage over your finance agreement – or if you often want to drive internationally. You’ll also own the car outright once you’ve reached the end of your finance agreement.

For flexibility

PCP finance agreements might have vehicle usage restrictions. However, PCP deals tend to be more flexible than HP finance.

Both kinds of finance have flexible repayment terms (typically somewhere from 12 to 60 months). However, with PCP, you have more opportunity to determine the length of your agreement. You can also change the size of your deposit.

Remember, the higher the deposit, and longer the contract, the lower these monthly repayments will be. That said, you may end up with higher interest rates compared to HP finance.

Find the best car finance for you with My Car Credit

If you have questions about securing the best car finance for you, contact our friendly team today on enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

PCP Finance Explained – Personal Contract Purchase Guide

How Long Does It Take to Buy a Car?

What is a Guarantor Loan?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car buying car finance credit score Jan24

Whether you’re in the market for a budget-friendly Kia Sportage or an all-electric Tesla Model Y, Annual Percentage Rate (APR) is one of the most important metrics to consider when buying a car in the UK. So, what’s a good APR for car finance and why does it matter for British motorists?

The basics of APR

What is a good APR for car finance?

Why does APR matter for British motorists?

Affects the total cost of ownership

Determines monthly payments

Establishes your budget

Factors that can influence car finance APR

Credit score

Loan term

Amount borrowed

Type of finance

Unlock the best APR with My Car Credit

Rates from 9.9% APR. Representative APR 12.4%

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Understanding car loan APR

Is APR the same as interest rate?

Why is APR important?

What is a typical APR rate?

Fixed vs variable APR

Factors that can influence car loan APR

Personal credit score

Preferred loan term

Loan amount

What is representative APR?

How do I find out the exact APR of a car loan?

Tips for lowering your APR

Boost your credit score

Increase your down payment

Choose a shorter repayment term

Score the best APR with My Car Credit

Rates from 9.9% APR. Representative APR 12.4%

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Flexibility

Regular vehicle upgrades

Zero maintenance

Why use an auto loan payment calculator?

1. Finetune your budget

2. Compare repayment terms

3. No impact on your credit score*

4. Transparent cost analysis

5. Avoiding overcommitting

6. Borrow from trusted lenders

7. Find the best match for your needs

8. Free to use and obligation free

Crunch your numbers today with My Car Credit

Rates from 9.9% APR. Representative APR 12.4%

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