If you have a poor credit rating and buy a popular model of car like the Ford Fiesta and the Ford Focus on finance, you may find yourself paying a lot more than you ought to. These two Ford cars are among the most popular models bought in recent years; but the credit experts at USwitch, an online comparison company that helps buyers compare prices for finance, personal finance, utilities and communications, say a bad credit rating will disadvantage you if you choose to buy your car under a credit agreement. A poor credit rating can even affect Ford battery prices if you pay for your purchase with a credit card rather than upfront. Thats because youre more likely to be charged a higher rate of interest for credit, and if you dont pay off your credit card in full each month, it will cost you more to pay for a Ford battery than it should.
For context, USwitch has discovered that an applicant with poor credit who wants to buy a brand-new Ford Focus on finance will pay £36,221 for the car over time. Someone with a good credit rating, though, will only end up paying £26,778. And thats a difference of nearly £9,500. Similarly, buying a Fiesta on finance could cost up to £7,000 more if your credit rating is poor.
Personal Finance expert at USwitch James Andrews said that drivers could prevent having to pay such a hefty extra cost by taking the necessary steps to improve their credit rating before they opt to buy a car with a finance deal. Among the simple things people should do is to register to vote at their home address, ensure some of their utility and communications bills are paid in their name and have some credit history. However, its essential to make sure your use of credit is only around 30 per cent or less of your available credit limit. These are all things that will have a positive impact on their credit score.
According to Andrews, when a buyer first applies for credit for a new car, the first check dealers make is of their credit report to see what their current score is. The dealership will have access to information about what the buyer has purchased on credit in the past and whether theyve made repayments on time.
In recent years, theres been a massive increase in customers using finance to buy cars. Consumers have become used to paying monthly instead of paying the full price of the car upfront.
In fact, the Financial and Leasing Association (FLA) states that 91 per cent of new cars were bought using financing in 2019. The number of new vehicles sold dropped in 2020 simply because fewer people were able to travel, and there was less demand for new cars due to the pandemic lockdowns. But since the relaxation of the restrictions, the association has reported that there has been a resurgence in sales. Statistics show a 1,286% growth in the first quarter of 2021. Fifty thousand models, many of which will have been the ever-popular Ford Focus or Fiesta, were purchased by consumers in April 2021 alone. Ford battery prices have remained constant even with such an increase in car demand.
Whats more, the used car market has also shown an upward surge this year. Sales have risen by 1,061% in the period from January to April 2021 compared to the same months in 2020, as buyers were finally able to return to the car showrooms.
Experts say that this shows the car finance market is only going to grow ever larger in 2021 and 2022.
FLA Director of Research and Chief Economist Geraldine Kilkelly said that the UK automotive industry can expect to see a 20 per cent growth by the end of this year and is set to increase even further next year as car showrooms reopen and our freedoms return. And that can only mean the consumer car finance market is therefore also set to increase. The removal of the barriers imposed by lockdown and the increasing confidence of consumers will contribute largely to the strong recovery in the car industry experts expect to see in the second half of this year.
Kilkelly said that their research shows that new business for car financing will grow by 19 per cent by the end of 2021, and a further 13 per cent increase is predicted by 2022.
How Do You Get a Bad Credit Score?
A credit reference agency rates the individuals credit score based on their history of borrowing and repaying the money. You can expect your credit rating to drop if you miss payments, default on debts, have county court judgments, or have filed for bankruptcy.
If lenders see any of these factors in your credit history, you are more likely to be seen as a high-risk borrower. This will lower your chances of approval of applications for loans, credit cards, or mortgages.
And even if you are accepted for a loan or finance deal, your lender is likely to charge you a significantly higher rate of interest. Thats because lenders see people with lower credit scores as a higher risk, anticipating that they are more likely to miss repayments. Lenders impose these higher interest rates to improve their chances of recouping their money as quickly as possible.
Improving Your Credit Score
Registering on the electoral roll can help improve your credit rating because lenders can see you have a fixed address where they can find you if you default on payments. This also makes it easier for them to check whether the information you have provided to them is correct. Paying bills regularly and on time can also help improve your credit rating because lenders can see youre a reliable and responsible borrower. Missing payment dates, by contrast, can be a red flag to a lender.
Building your credit history also helps lenders assess your ability to repay credit. If you already have a line of credit, keeping your credit utilisation low will help improve your rating. Its best to ensure your credit balance is kept below 30% of your available borrowing. If you have used between 50 and 70% of your available credit, lenders are more likely to worry that youre overstretching yourself and will be unable to keep up payments on any new finance taken out. You should aim to pay off some of your credit to improve that percentage before you head to the car showroom.
Finally, checking your credit reports on a regular basis for any mistakes and having them addressed if you find them is also a good way of improving your credit score rating.
Buy Quality Batteries Online
If youve taken the plunge and bought a new Ford vehicle, you also need to find a reliable and trustworthy supplier of replacement parts to protect your investment over the longer term. Car batteries are often the part that needs replacing soonest on a new car, so make sure that any Ford battery you buy in future years is high quality.
At Orius Batteries, you can rely on us to supply car batteries from some of the best-known brands on the market. Every battery we sell is backed with a lifetime warranty, giving you peace of mind that your product will perform well over the longer term.
Use our handy battery finder tool to find the right battery for your vehicle, place your order before 3 pm, and your new battery will be will you the next day. Whats more, delivery is free of charge across the UK.