Guaranteed car finance is something more than just a marketing pitch. However, it is not an absolute option available to all car buyers irrespective of credit score, past track record and choice of vehicle.
What are the features of any guaranteed car finance loan option? Most common features include
- Anticipatory assessment of credit score, bank statements, proof of income and other documents necessary when determining eligibility of borrower.
- Lender makes first move. Assesses credit score and offers specific sum as guaranteed car finance.
- Borrower is required to complete formalities, submit documents and provide information for verification of repayment capacity.
- The price of car being purchased cannot exceed the guaranteed car finance amount.
- The approval is always in principle and subject to confirmation. The guarantee in guaranteed car finance is conditional and never absolute.
Guaranteed Car Finance Benefits
- One can avoid instances where car is chosen and the deal is all but finalized only to fall through due to lack of finance.
- Eligibility for car finance can be ascertained in advance. A specific amount available as guaranteed car finance will simplify the purchase process.
- Decision to buy add ons and accessories can be put off if guaranteed car finance amount is not high. Conversely, all necessary accessories can be purchased if one is certain one can afford it after having secured guaranteed car finance.
- Interest rates remain negotiable. The option of increasing down payment to reduce rates is always present.
- One can aggressively negotiate with other lenders if one has one or two guaranteed car finance options in hand.
- One can negotiate aggressively with dealers and demand higher discounts as option of negotiating with another buyer is always open.
- Frequent loan rejections and its adverse impact on the credit score can be avoided with guaranteed car finance.
Though very beneficial, the option of guaranteed car finance may not be suitable for all. Following persons must think twice before applying for guaranteed car finance.
- Borrowers with very poor credit score. Lenders may not guarantee any amount and this may further affect the credit score.
- Very safe borrowers. Those certain of securing even the most expensive car loan. Can skip guaranteed car finance.
- Borrowers seeking specific car model purchase. It is difficult to get guaranteed car finance for a specific amount in advance as a lot depends on the discretion of the lender.
Beware of the following marketing tricks used in the name of guaranteed car finance.
- Talking about guaranteed car finance only to inform later that no such guarantee will be given.
- Charging extra interest just to provide the in principle guarantee. The guarantee is not absolute and paying high interest throughout the tenure of the loan does not make sense.
It is advisable to use the Internet to check out offers from different lenders before choosing a car finance option. The web offers free research tools and forums to discuss and clarify doubts before proceeding.