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There are a great many myths when it comes to car finance and getting a car loan, and it is often because of these myths that people either avoid the whole car finance industry, or overlook or ignore potential avenues which could prove far more suitable. In this article we look at some of the myths and assumptions which people encounter in the world of car credit finance, and unearth the truth, helping you to approach getting cheap car finance with a more open mind and a safer wallet. One of the first myths people tend to hear about is that you should never apply for car finance too many times because your credit record will be damaged if you get turned down a few times. This means that often what happens is that people make one or two brief attempts to obtain car finance, and then either give up entirely or dive straight into the arms of a company which offers what seems to be a guaranteed car finance scheme suitable for those with bad credit. This means that customers have often entered into an arrangement without doing the necessary research in order to check that they're getting the best deal. The truth is that when you apply for credit the result of that application is never recorded on your credit history. If you apply for car credit and you are turned down, a footprint is left on your credit history to confirm that the company carried out a check, but whether the application was unsuccessful, successful, or even that you were approved but declined the offer yourself, no further information is ever noted, and after a while the entry automatically drops off your history anyway. The reason why people are afraid to have too many footprints on their credit history is because credit firms will become cautious if there are several applications or checks within a very short space of time. If you apply for car finance from 20 different companies on the same day - perfectly possible if you use the internet - there's no way for those companies to know whether the other applications were successful. If they were, then it's possible that you accepted the offer, thereby committing yourself to a score of loans, and clearly overstretching your budget, increasing your risk factor. But as long as you spread your applications out over the course of a week or two rather than several in a single day it makes no difference at all. The next myth is that you have a credit score. There is no such thing as a credit score on your credit history. What happens is that each car finance firm will use your credit history to calculate a score based on their own unique criteria. Each firm will use different data, attribute different weightings and use different calculations and processes to arrive at a final score. Just because one car finance firm turned you down does not mean they all will, since the scoring may well be quite different from one company to another. The third myth is that you have one single credit history - you don't. There are three major credit reference agencies in the UK, and finance firms with whom you deal will not necessarily register your details with all three. Sometimes only one credit reference agency will be notified of an application, a check or an account. If you apply to two different car finance firms you may well find that one of them checks your credit status against a different agency from the first, meaning quite different results may be possible. A fourth myth is that all car finance firms will use your credit history to make a decision. There are some car credit companies which are more interested in your current circumstances than your past. Your credit history may be spotless, but you may also have just lost your job and have no income. Your application may be out of desperation to obtain money before your credit record becomes a mess. Just as easily it may be the case that you have a poor credit history because you were made redundant a few months back, but that since then you have found a great job and have a good income once more. By finding a car finance company that can offer you cheap car finance based on your current circumstances you stand a better chance of a fairer deal.
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