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Car Finance: How Customers Avoid Getting Cheated

Car Finance

Photo by Pixabay, CC0 1.0

As far as things go, navigating the motor industry isn’t particularly easy.

For most of us, buying a car is the second big purchase after a house. Buying that shiny, new SUV though is unlikely to be affordable without car finance to help you out.

When looking for car finance, it is easy to get caught up in the buying frenzy. I mean, who doesn’t want an instant new ride without any hassle? Then, there’s no guarantee that you can even have finance in the first place!

It may surprise you that even the best car finance dealers, credit brokers, and finance companies out there can’t promise you car finance. Specific borrowing criteria have to be taken into account for any prospective loan deal.

So all the “Guaranteed Car Finance for Bad Credit with No Deposit” advertisements we are bombarded with daily, are potentially giving us all false hope. With this in mind, how do you avoid getting cheated when looking for car finance? Let’s take a look at some of the chinks in the car finance deal armor:

Guaranteed car finance: Debunking the myth

So, let’s get this straight. Lenders are the final decision-makers when it comes to you being approved for car finance. No dealer or broker has the power to approve your loan – so why do so many of them claim that they can guarantee your car finance? Is there such a thing as guaranteed car finance?

Lenders have to look at your credit score to determine if you can make repayments on the loan amount you are looking to borrow. So when they search your credit history and see that there is no way you can make those repayments, that once promised guarantee is shattered instantly.

So, don’t get caught in the misleading “truths” that car dealers and brokers want you to believe.

What application fee?

Dazzled by the “money-back guarantee” on offer with your “guaranteed car finance loan?” Well, the first rule of not being cheated is not to snap up all the dangling carrots that are out for the supposed taking!

Application fees can put you back £299 with the “promise” of getting it back once approved. Unless you’ve meticulously read the terms and conditions, you are unlikely to get this money back – except for the legal geniuses out there! They might stand a chance!

High rates and the need for a guarantor may now separate you from getting that once promised and “guaranteed” loan.

What does the law say?

The FCA (Financial Conduct Authority) take misleading and false consumer credit claims very seriously. Not only is it an offense according to the 2010 consumer credit act, but any dealer or broker promoting “guaranteed” car finance is also likely in breach of the act.

A loan can only be guaranteed if there are no conditions to the borrower’s creditworthiness. Have you ever seen a loan like that?

Any broker or lender found breaking the credit act will lead to a full FCA investigation and enforcements will be made. Essentially, this protects you as the customer as any credit deal has to Treat Customers Fairly (TCF) by law.

But, the law isn’t perfect. Car dealers and brokers that are offering “guaranteed” finance loans still slip through the net.

How to spot a false deal

A deal that sounds too good to be true is usually just that. If you have a poor credit history or have never borrowed at all, the idea of having something “guaranteed” is definitely appealing. I mean, who doesn’t want life to be easy?

If you are on the hunt for a car finance deal, a credit check has to happen. No credit check, no deal. It’s as simple as that.

False deals are always well crafted, but you can spot the cracks. First off, what language is being used?

  • We can “guarantee” your car finance loan in less than 5 minutes
  • Bad credit no problem – all applications are welcome here
  • No credit history – your loan will be accepted by our trusted partners

You get the gist. Reputable car finance brokers and lenders will be transparent with you from the start. Fees will not be hidden from you, and the idea of a “guaranteed” loan to someone with bad credit won’t even be put on the table. What they will do is look at the bigger picture, and see what rates they can offer you instead. This will be based on what you can actually afford to pay back.

Enter the unsecured loan

Cheating you out of your house and home is not a phrase to be used lightly.

When you are in the market for a new vehicle, getting an unsecured loan may be the only viable option to get what you want. A loan without being tied to any of your assets, like your home is undoubtedly better in the long run?

Although the term “unsecured” sounds a bit daunting, it’s not as bad as it sounds. The finance company is in the driving seat for this one, not the borrower. So, fear not.

Do your research

Familiarising yourself with the terms car finance lenders and brokers use is going to help you find the right deal for you. Not only will you avoid being cheated, but you will also feel more confident when purchasing your new car.

Some questions to think about:

  • What can this car loan offer me?
  • What are the terms and conditions?
  • How long will my repayments take?
  • Can I get out of this deal early?
  • Are there any hidden fees and charges?
  • What is “guaranteed?”
  • Will I need a guarantor?

Knowledge is power, after all.

Already got a new car in mind? Not quite sure how to get a car finance deal? As the motor industry grows and advances, knowing which vehicle to buy has become harder than ever before. Fooling for the gimmicky promise of the “guaranteed” finance deal is easy to avoid. So, don’t get cheated at the dealership or online! Be prepared!

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