If you have been looking for car finance or a car loan then one of the options you may have been considering is something referred to as guaranteed car finance. Many of us have been struggling from time to time over the past year or two, and very few of us have escaped the recession with a blemish free credit history or credit record.
The trouble is that anything less than a perfect credit record can cause all sorts of problems, including making it exceptionally difficult to get cars on finance. Trying to get any sort of credit these days is much harder than it was, but trying to get a car loan or car finance can sometimes feel an impossible task.
But with several companies offering guaranteed car finance, and offering open invitations for people to apply even if they have no credit history at all, or their credit record is poor, it is certainly worth considering. If you have missed a few payments over the past year or two, or even had a default or two - perhaps a Country Court Judgement (CCJ) entered against your name, you may well have given up on yourself as a lost cause.
It is entirely understandable, and being turned down for car finance or for a car loan is not only frustrating, it's also disheartening. In some cases it can also be rather embarrassing, and for that reason many people give up - perhaps a little too easily. If you have been in this position, you'll certainly know the frustration of needing a car, but being unable to get cars on finance - and few of us these days have enough spare capital and enough faith in our jobs to pay for a car up front.
Getting a car loan is the only option, but what do you do if your credit record is too weak to support your application? The idea of guaranteed car finance, or bad credit finance certainly sounds appealing, having been declined so many times before, and been frustrated at every stage of the process, being offered a guaranteed solution, whatever your circumstances certainly sounds very appealing.
But you might also be wondering what the catch is. The reason getting car finance or car credit is so difficult these days is because it isn't just consumers who have been feeling the pinch. Credit companies and other financial institutions have really been suffering - especially those who took risky decisions.
As a result the companies are having to be much more careful in order to play it safe and survive through the next few months. But since this is the case, how is it possible that some firms are able to offer guaranteed car finance?
At first glance it seems both a fantastic solution, and a total conundrum.
There are two main points worth noting, and these underpin the reasons why you are more likely to be able to get guaranteed car finance rather than a car loan from a standard finance dealer or bank.
The first of these points is that unlike a credit card or a loan, a car loan is placed specifically on a single product, and that product is likely to hold most of its value for at least some time. If a credit card company offers you a couple of thousand pounds' worth of credit you can easily go and blow the whole lot on holidays, travelling clothes, food and drink - with nothing to show for it at the end. If you don't pay your credit card bill, the company has nothing they can have back from you which can be sold to recoup their costs.
However, in the case of car finance, if the company transfers the money directly to the dealer of your choice, then in effect the finance firm owns the car until you have completely cleared the loan off. If you fail to make payments then the car finance firm is able to take the car back, and if necessary re-sell it to get at least most of the money back. This is one of the factors which can make car finance firms slightly more open to taking on consumers who may otherwise be considered risky.
The second factor is that guaranteed car finance is usually offered by those car credit firms who don't rely entirely on a credit record. Instead, by finding out more about your current circumstances, rather than the past created thanks to a recession, they can make a more balanced judgement and offer you a car finance solution which matches your current situation, rather than simply being blinkered by credit histories and credit reports.
With these two points in mind, applying for guaranteed car finance means giving yourself the best chance to be treated more fairly, and get back behind the wheel much sooner than you thought.