Requirements for a car loan

What are the requirements for a car loan? There are a number of requirements why trying to obtain a car loan.

• Firstly, you will need to be over 18 years of age.
• You will also need to be able to demonstrate your income and ability to replay the car loan
• You will also have to show your place of residence and if you have been there less than 2 years, you will have to show previous addresses too.
• You'll have to provide details of your employer, and possibly previous employers
• You will have to declare any poor credit history and the lender will also make checks with credit reference agencies. (More information below).

If you are unable to provide some of the required information, all is not lost. For example, if you are not over 18 or cannot demonstrate a decent credit rating, you may be able to use a guarantor, to guarantee your loan. This may be your parents or other relatives.

If you have a poor credit rating, there are a number of companies that specialise in loans for those with bad credit ratings. These include Accept Car Credit and Approved Car Finance. You'll probably pay a premium when obtaining a loan through these companies as they are perceived to be taking a greater risk in lending to individuals with a poor credit history.

Credit Reference Agencies

In the UK, there are three credit reference agencies, Equifax, Experian and CallCredit.   All lenders use at least one when assessing your file.  These companies compile information, allowing them to send data on any UK individual to prospective lenders.  Their main sources are:

• Electoral roll information.  This is publicly available and contains details of people’s addresses and of who lives with whom.
• Court Records.  County Court Judgements (CCJs) and Bankruptcies are used to indicate if you have a history of debt problems.
• Financial Data. Banks, building societies and others compile details of all your payments and transactions.  Around 300 million records a month are tracked.

If you are having trouble securing a loan, you can contact the credit reference agencies and request a copy of your file. 

Finally, always seek a number of quotes before committing to a lender. The industry is particularly competitive and there are many deals available. Also checkout cashback sites such as Greasypalm where you may be able to obtain cashback as well as an excellent deal!

That's it, a quick summary of the requirements for a car loan. Good luck with your new car!