6 min read

How car finance at ClearScore works

Hannah Salih
25 July 2018

First car, dream car, get-you-from-a-to-b car — whatever kind of vehicle you’re looking for, car finance could help you afford it. Here's how the process works...

Paying the full cost upfront for your new ride is always going to be the cheapest way to get behind the wheel, as there’s no added interest to pay. But if you don’t have enough saved up, using finance helps you spread the cost into monthly installments instead.

Organising your finance yourself, rather than getting it from a car dealer, means you have more choice around where you buy your car from, and more control over the deal you opt for. At ClearScore, we work to find the best offers for you to help you finance your new car. Here’s how the process of getting your own finance works, and the reasons why you might want to go down this road (pun fully intended).

Decide how much you want to borrow

If you decide to go down the financing route, the first thing to decide is how much you want to borrow. It might be that you know the kind of car you’re looking for tends to cost around £12,000 or maybe you know you can spend £300 each month. With most car finance options, if you have some money to put towards a car you can also use that to lower the amount you have to borrow. Be realistic about what you can afford, never borrow more than you can afford to pay back each month.

Once you’ve decided how much you might need to borrow, you’ll see that there are two options:

Option 1 - a personal loan

If you can’t buy a car outright then a personal loan is often the cheapest way to use finance for a vehicle. You also get to choose how long the loan lasts, so you could opt for a longer loan with lower monthly repayments (although you're likely to end up paying more interest overall).

But to get the best rates you’ll need a high credit score. To find tips on how to improve yours take a look at this article, or check out our interactive coaching plan. Simply have a chat with our chatbot to get your tailored To-do list of steps to improve your score.

With a personal loan, after you apply the lender will perform a full credit check to decide whether or not to lend to you and at what interest rate. But because you can see your eligibility before you apply in your ClearScore offers page, you can be more confident of any applications you decide to make.

If the loan gets approved, the loan provider will deposit the money into your account. Then you can go and buy your car from wherever you want. Using a personal loan, the car becomes yours straight away. But this does mean that if you can’t keep up the repayments, you can’t just hand the car back and walk away, so make sure to keep up with the payments.

Discover your car finance options in your ClearScore

Option 2 - Specialised car finance

Although there are a few different types of car finance, at ClearScore we currently show you hire purchase options. Hire purchase (HP) contracts let you hire the car while you make monthly payments to buy it outright. Payments also cover any interest you're being charged. With this option, because the car dealership owns the car while you pay for it, if you have trouble making repayments, your lender can take the car away to pay off your debt. You don’t necessarily need a deposit but if you have some money you want to put towards the car then you can.

You can also get this kind of finance directly from the car dealer, which may seem convenient but it could leave you with an unsuitable option.

At ClearScore, you’ll see that we partner with a number of different car finance brokers. Car finance brokers help to connect people looking for car finance with the finance providers themselves. Brokers work directly with a huge variety of lenders, giving them access to most of the car finance market. This means that whatever your situation, they may be able to find something suitable for you. Sometimes even if you’ve been rejected for car finance elsewhere.

Now, if the thought of arranging your own finance seems daunting at first, don't worry. In reality, it's much easier than it sounds.

There’s three steps involved:

  • After you click apply on your preferred finance deal, you’ll be asked to fill out a few extra details to help the lender assess your application. They’ll then approve your application for credit and give you a call to discuss the terms of the finance and the rate you’ll receive.
  • After this, it’s time for the fun bit - finding your car. Most car brokers have a list of thousands of verified dealerships to choose from. This means you can get a car from wherever you wish, rather than being limited to the dealer with the 'best' finance.

    If you’re not sure what car you want, the car finance broker will even be able to help you search for options suitable to your lifestyle and budget. Sometimes, they can even set up test drives for you.

  • Once you’ve chosen the car, the finance broker will sort everything out. They’ll carry out some history checks on the car to check all is a-okay. They sort the admin, the paperwork, and the negotiations with the dealer. Once everything is finalised you just have to pick up the keys and drive away.

And there we have it - that's how car finance works on ClearScore. See what you're eligible for in your offers page.

by Hannah Salih

Hannah reads all the finance info on the web so you don't have to. She knows all there is to know about your finances but still spends all her money on brunch. 

ClearScore exists to make your finances simple.
We offer a free service where you can handle everything to do with credit in one place. In your ClearScore account, you can see your credit score and the full details of your credit report. Your credit cards, mortgages, mobile phone contracts, loans, overdrafts and utilities all on the record. Our goal is to make ClearScore as simple, calm and straightforward as possible. Money is stressful enough.