HP? PCP? Credit score? Answering the UK’s most searched questions about personal finance
The cost of living crisis continues to affect many taxi drivers and motorists in the UK and more and more people are choosing to use credit to pay for things. With the fall in the value of the pound leading to further price rises, many have no choice but to apply for personal loans to get by.
From figuring out how to check their credit score to getting a car loan with bad credit, the experts at Zuto car financing answer the questions most frequently asked by the British when it comes to personal finance.
The following five questions have been the most searched for personal finance queries using the Keyword Tool.
Can I apply for car financing without a credit history?
Google searches for “how to get car finance with no credit history” are up +100% in the past 12 months
When a lender approves your car loan, they consider your credit score as a true indication of your ability to make payments on time. Unfortunately, having no credit history makes applying for auto financing more difficult, but not impossible.
With that in mind, when you set up monthly bills to be paid by direct debit, such as a utility bill or phone bill, it can reassure the lender that you will most likely be making regular payments. Additionally, buyers with little or no credit may have the opportunity to discuss financing options with their lender, bank, dealer or credit union.
How do I check my credit score?
Google searches for “how can I check my credit rating in the UK” have increased by 125% in the last 12 months
You can check your credit score by visiting a free credit reporting website (like Experian), but it’s important to pay attention to the terms before creating an account. Your credit card issuer or lender may also offer free credit scores. Another complementary option may be to consult a non-profit credit counselor who aims to give you an idea of your credit situation.
What is a good credit score?
Google searches for “what is a good credit score” have increased by +129% in the last 12 months
A good credit score is between 881 and 960 which is commonly used on the credit score range of 0-999. Scores between 961-999 are considered excellent, 721-880 are considered fair and anything which is below is considered very bad. The higher your credit score, the more likely lenders are to offer you loans with lower interest rates and other favorable terms.
What is the difference between PCP AND HP financing?
Google searches for “is PCP or HP better” have increased by +350% in the last 12 months.
PCP- Purchasing by personal contact requires drivers to first deposit a deposit and then repay the financing in monthly installments. The payments cover the estimated depreciation of the vehicle instead of covering the full cost of the car. At the end of the contract, you can either return the car or exchange it for a newer model. A final “lump sum payment” can be made to own the car.
HP – Hire-purchase allows drivers to buy new or used cars. You will post a deposit and the hire-purchase will cover the rest of the car, paying monthly installments over an agreed period. You are effectively leasing the car from the lender. When you reach the end of the contract, you can then pay a purchase option to become the full owner of the car.
What is APR?
Google searches for “what is APR in credit” increased by +267% in the last 12 months
The Annual Percentage Rate (APR) reflects the total cost of borrowing. The APR can vary from lender to lender, depending on how they set their rates and the fees they charge. When taking out a car loan, make sure you know that your credit score and the amount you borrow will affect the APR.
Can I get car financing if I have bad credit?
Google searches for ‘Car finance in bad credit’ have increased by +213% in the last 12 months
Absolutely! Many people with poor credit get approved for car financing. In fact, lenders consider not only your credit score but also other factors such as affordability, credit consumption, and payment history. The advantage of auto financing is having the ability to pay affordable monthly installments (plus interest), which have been agreed to by your lender. You can learn more about car financing for bad credit via Zuto.