If you’re new to driving then you may also be new to credit, meaning you have little to no credit history. This could be the issue for many young drivers who have recently passed their test and haven’t had the opportunity yet to build credibility.
Lenders often look at credit history when reviewing your car finance application, this can sometimes be a deciding factor in whether or not they will approve your application. Your credit history is important because it shows your reliability to make payments on time, it also shows your history of borrowing and how frequently you need to do it.
If you don’t have a credit history but are looking for car finance, there is away around this. Using a guarantor can be the answer to getting your application approved and getting you on the road with your new car in no time.
What is a guarantor?
A guarantor is typically a friend or family member who agrees to accept responsibility for your finance application should you fail to make payments on time. This is a legal responsibility they will agree to, and as such if you avoid making your payments it could damage both the credit of you and your guarantor.
How it works
The process of getting guarantor car finance is simple. To apply you:
1. Apply for car finance and nominate your guarantor
2. The lender will review both of your details, including your guarantor credit score
3. If you application is approved, you both sign the agreement
4. You make your monthly payments, and if you fail to do so your guarantor will step in.
Benefits of guarantor car finance
There are many benefits to having a guarantor when applying to car finance.
Build your own credit profile
If your application is approved and you make your payments on time to the finance company, this will build you a reliable credit profile over time which will demonstrate to future lenders that you can make repayments on time. This can help you with future terms and interest rates on future loans.
Better chance of approval
A guarantor can help your chances of approval in comparison to you applying for car finance yourself. Having a guarantor with good credit on your side can improve the amount of lenders willing to review your application, giving you more opportunity to have your application approved.
Gets you on the road sooner
Using a guarantor can help you to get your new car and get on the road sooner than taking the time to build your credit profile through other means.
Potentially better terms
If your guarantor has a good credit history, then lenders may be more likely to offer you better terms than you otherwise may receive.
Final thoughts
Guarantor car finance is here to help you out, it can help you in many ways and if you’re a young person who is newly building a credit profile then guarantor finance may be the ideal way for you to get finance whilst building a good credit profile for yourself – helping you down the line.
Using a guarantor helps to ensure you can get the best terms possible for you if you’re without a credit history. Guarantor car finance can help you with many issues, and can help to ensure that you will get your car finance secured quickly and get you on the road as soon as possible!
Get guarantor car finance to help you build your credit profile and get you on the road as soon as possible.
