If you have a poor credit score guarantor car finance can be a good option. But before proceeding with a guarantor car finance, you should have a clear idea about guarantor car finance. Here we are presenting a brief of this car finance procedure.
What is guarantor finance?
The concept of the guarantor is very simple and straightforward. The guarantor will act as a third party that will be responsible to make the repayments on your car finance deal in case of your failure to make the payment. The lender need not worry about the payment. If you are unable to pay for any reason, the guarantor will pay on your behalf of you. As the lender has greater security, they will like to lend.
With a guarantor, you can apply for any regular car finance you prefer including the Personal Contract Purchase (PCP) or Hire Purchase (HP). For the PCP contract, you have to pay an optional final payment to keep the car. However, HP breaks down the total cost of the car and set the charge based on your affordability.
When should you consider guarantor finance?
When you have a limited credit history, you have to struggle hard to get a loan from a reputed financial institution. Most lenders prefer to choose borrowers who have a good credit score or sufficient credit history. They don’t like to approve those traditional car finance deals that have no or limited credit history. In this situation, guarantor finance is a great solution to avail finance on a car. It will increase the chances of securing finance during a car purchase.
If you are a young driver and have little to no credit history guarantor finance could be a good option. It increases the likelihood of being able to afford a better car. Guarantor makes all your payments on time and improves your credit rating. It allows you to purchase your desired car.