Car finance is offered on a rate for risk basis, if a lender looks at your credit score and can see that you have not missed any payments in the past, you will be seen in general as a low risk so will be able to gain a lower rate of finance.
If however you have missed payments or have defaults and CCJs, lenders will see you as high risk and the rate you will pay will be higher.
Although car finance is secured against the car itself, If a lender needs to repossess a car or take legal action, this in turn is very expensive so lenders will only offer finance based on the risk of the deal.
Lenders will review your credit file and look at the affordability of a loan before you can take it out. Many companies have recently introduced something called “Open Banking’, this lets the lender confirm with your bank very quickly and safely your income and expenditure over a few months so they can ensure it's affordable for you.
However, it's also worth being aware that it's important to look around to get the best deal or apply through a broker like Quick Car Finance who works with a panel of lenders that can compare the best options for you.
The difference between buying a used car on finance from a Franchise Car Dealer and a Finance Broker like Quick Car Finance is that the Franchise Dealer is obliged to offer particular finance packages. Many people fall for this because it is convenient as you can drive the vehicle off the forecourt straight away. However, this is not necessarily the best rate out there and you may not be aware of the costs involved, so ensure you review the agreement, check the type of finance you’re taking out and that it’s affordable for you, even if you need to pay for a service, MOT or any maintenance on the vehicle.