Finance2Credit: finance when you purchase a car isn’t on many people’s top 10 list of things they want to do.

In fact that’s an understatement, it’s usually something we try to get through as quickly as possible and can be a downright stressful experience.

But if you learn how the process works then you should be in a better position for the finance to go through without complications.

Credit Score

The first thing you need to do is to find out what your credit score is. This score is a calculated number based on many factors to show how you are credit worthy (or not).

If you’ve had problems paying finance in the past then your credit score may not be too healthy.

You can find your credit score from a number of companies. I suggest you do a search on the Internet for your country and you should find many sites offering this service.

If your score isn’t that great then you can ask the company you used to calculate it for advice on how to improve it and how it may cause problems getting finance. Paying off your credit cards can help it but it can take a long time to improve.

Pick the Right Lender

You also need to use a company that can choose from a number of financing companies. Ask the car dealer or lending company if they are restricted to use only one finance firm.

Having more than one gives you greater choice to find a finance plan that works well for you.

Be Aware of Extras

As well as organizing the main loan, the company you’re dealing with will probably offer you extra plans.

Two of the common extras are;

  • Credit Insurance
  • Credit Life Insurance

With credit insurance you pay extra each month to insure you in case you start having problems paying off the loan. Depending on the plan it can cover some or all of the payments while you can’t work for example.

Credit life insurance is similar but usually pays off the whole loan in the sad event of your death.

You should think hard before stepping into the car dealership or other lending company regarding if you need this insurance or not.

Read the Small Print

Due to regulations I believe there are less ‘dodgy’ lending companies around these days but it is still prudent for you to read all the small print before you sign on the dotted line.

It might be boring and possibly embarrassing while the salesperson sits there waiting for you but it’s important that you are fully aware of what you’re signing.

Photo thanks to this Flickr page.