When you are looking to lease a car, you hear a lot about car finance. Finance agreements, finance companies and finance options but what do they mean? Check out our guide below to understand what car finance is all about.
Vehicle finance is what makes car and van leasing possible. When you choose to take out a car or van lease, you are entering a financial agreement between you (or your business) and the finance company that owns the vehicle. You will pay a fixed monthly figure to effectively hire the car daily until the contract ends. As you are essentially renting the vehicle, the finance company will need to ensure that you can be trusted to pay for the car throughout the term.
When you fill in your proposal form, we will pass this on to the funder who will then check your credit history. For a credit check, they will look at your credit strength, risk status and current financial circumstances. When deciding whether to accept your leasing application, funders can take up to 72 hours to come back to us with a decision.
To start the credit check, finance companies will contact at least one of the three credit reference agencies in the UK: Equifax, Experian or TransUnion. Each credit agency will normally place your credit score on a scale that ranges from “very poor” to “excellent”. The agencies each have their own criteria for each band so we cannot tell you exactly what score you need to pass the credit check.
For vehicle finance, a “good” or “excellent” credit score is usually what funders are looking for when accepting an application. However, a credit score is not all a funder uses to determine eligibility – they will look over your application to identify any financial behaviour that is abnormal.
Once you have received an acceptance, we will give you a call to inform you to move on to the next stage of your process. We will send you a customer order document to your email or by text which you will need to confirm and sign before we can order your vehicle. When this is signed, we will send your order to the supplier and get your vehicle ordered as soon as we can.
Your order is then passed onto our sales support team who will provide you with fortnightly updates on your vehicle’s estimated delivery date. If you have questions both before and after your vehicle has been delivered, we are always there to help so you can get in contact with us at any point!
If you think you have something to worry about when it comes to your credit score, some of the red flags that finance companies can pick out are responsible lending, missing payments, any bankruptcies/insolvencies, too many credit searches and reaching your credit limit. You can check out our guide on bad credit to find out some more information.