What car can I afford on finance?

Buying a car is a large investment, so many people don’t purchase one from savings; rather, they submit a finance application to financing companies, taking out a loan which they repay over time by making monthly payments. However, the main question for you is to understand how much money a lender can provide you, or in other words, the maximum amount you will be able to borrow.

In general, there are two ways to determine the funds that can be borrowed:

• using online calculators;
• contacting specialists who will evaluate a large number of factors.

The first method is quite clear, so let’s discuss the second method, or rather, all the key points that can affect the size of a loan to finance a car — for example, credit score and history, the length of the agreement, the value of the car that you want to get, and more.

1. Financial Considerations

If you were going to buy a car on finance, then the lending organisation will need a large amount of data about the client in order to understand how appropriate it is to approve the loan. That is, most likely, specialists will examine your credit score and study your financial history (your disposable income, your expenses). All of these metrics affect the affordability of a loan and the terms a company is going to offer — including how much they're willing to give you.

2. Budget Considerations

The amount of car finance offered will also depend on the client's budget and the amount of possible monthly repayments. Usually, a loan is given for a period of 12 to 60 months, so they will have to calculate what repayment payment size you can cope with without it being burdensome for you —the company will probably ask for financial statements.

3. Credit History

If you are going to get a line of credit or traditional car finance, keep in mind that the conditions for borrowing funds will directly depend on your credit history. If you previously paid your debts on time and met all the requirements, then the loan amount is likely to be suitable. If you missed payments in the past, the amount you will be able to borrow will be less, and the interest rate will be higher.

4. Your income

The next important factor that will affect the amount of car finance you can get is your income. Moreover, it’s not just the figure that’s important, but also the quality of finance management: if a company sees that you regularly spend money on various things without focusing on your available budget, then the terms of the vehicle solution you’re offered are unlikely to be as attractive.

5. The Car's Value

Even if you decide that you will regularly pay every month and can afford your dream vehicle, the decision regarding your car finance will still be made by the company, based on your income and the cost of the used or new car. An example: if your income is below average, but you want to buy a car with a cost of £50,000, then it’s unlikely that the lender will accept the application and let you borrow that much.

It is worth choosing a car based on your financial capabilities after realistically assessing all the details. It is possible that you will have to abandon your original plan and opt for a more affordable car if it is clear that it’s too expensive and that your finance borrowing application will not be approved.

6. Length of the contract

When discussing the details of the car finance agreement, remember that the chosen term for the repayment of all funds that will be borrowed will also affect the loan amount. Usually, long-term contracts allow you to get more money and have more choices of cars. But if you want to quickly close the loan, then the company is unlikely to give a large one.

7. Amount of the deposit

When filling out an application for car finance, be sure to indicate the amount of the deposit (the very first payment) that you can pay. The fact is that this also affects the size of the potential car loan — the larger the initial payment, the more opportunities available to the client. That is, even if you’re choosing an exclusive vehicle at a high price on an average income, you should not be afraid of having your loan application rejected if you are able to pay a fairly large deposit and borrow less.

8. Understanding your goals

The mistake of many customers is to think only about a limited purpose. That is, you should not contact the lender if you have chosen only 1 or 2 rather expensive cars, and in case of refusal, you will be left with no other options.

Therefore, before submitting a car finance application, carefully research the market and select a dozen or more different options that will fit your budget and financial capabilities. You should know exactly what you want and how much money you need for a particular car, and without a detailed study of the market, this cannot be achieved.

Contact our brokers for consultation

As you can see, the finance amount for buying a car depends on a huge number of different factors. Some of them can be directly influenced by the client in order to improve their prospects, and some are just the dictates of fate. On the other hand, most finance companies are very client-oriented, so they are likely to find you the best conditions for an automobile contract that fits your needs perfectly.

If you want to know exactly how much money a lender is ready to let you borrow for the purchase of a vehicle, then contact Carplus brokers for advice — our experts will tell you the probability of obtaining the desired loan for the desired car!