Some people may have a more difficult time getting a car on finance than others because they have bad credit. But by using a joint car finance application, you can improve your chances of getting accepted for car finance. This guide will outline all you need to know about this process and how it affects both parties involved.
What is a joint car finance application?
A joint car finance application is especially helpful for people who have struggled to secure car finance loans. Instead of applying by yourself, you apply with someone else. This is typically a partner or a family member. Both individuals sign the loan agreement and take on the financial responsibility of making repayments. If you submit a joint car finance application, you are both considered co-borrowers.
How does it work?
To begin, make sure that your co-borrower lives at the same address as you do if you wish to apply for joint car financing. This means that people typically get this type of finance agreement with a partner or a family member. However, this does depend on the lender as some will accept applicants from different addresses. But as a rule of thumb, bear in mind that most will only accept you if you live at the same address.
After the applicant submits their details, a broker or lender acquires the information of the second applicant. Brokers will then go to their panels of reputable lenders to see which ones will accept the joint car finance application. Once a lender has accepted it, they will carry out a soft credit check. This credit check will not affect your score and helps the lender determine how reliable you are for making car loan repayments.
Different lenders have different requirements for joint applications that they will outline. A broker can help you negotiate these terms if you’re securing a joint car loan.
This is one of the advantages of securing your car finance through a broker. Our experienced brokers can get you some of the most competitive deals. Use our calculator to see what sort of rates you can qualify for on finance.
Typically, when it comes to joint car finance applications, there is a primary user that gets decided. This means that one of you will have one applicant who is the registered keeper once you have made all of your repayments. This is because all cars can only have one registered owner. Despite this, due to the agreement’s nature, both applicants are responsible for making the monthly payments towards the vehicle.
What happens once you receive your joint car finance loan?
Once the agreement has been signed and agreed upon by both parties, you treat the car as if it was your own. The primary user takes responsibility for the vehicle. This means they need to pay the road tax on the vehicle. Moreover, they should also take the car for its MOT test and ensure any necessary repairs are done.
Applicants determine who takes on the primary user role in the agreement. Although, despite this, the car finance provider takes on the legal rights to the vehicle. But, when the car is paid in full, the borrowers assume the responsibility. But when the car agreement ends, the applicants may have to apply for another car.
Most importantly, the joint car finance agreement must be paid by both applicants. This is because they are both legally bound to make the repayments.
Can you apply for car finance with a low income?
Sharing a car with a financing arrangement is an excellent way for low-income individuals to obtain a car loan. You can widen your options for potential vehicles by combining your finances with those of the other applicant.
Additionally, it can improve your chances of getting a car on finance if one of you has bad credit. This is because both of your credit scores are taken into account when the lender performs their credit check. However, if you both have bad credit scores, you’re more likely to get rejected by lenders. This is because they see you as a financial risk.
One of the biggest advantages of getting a joint car finance loan is that it benefits both parties. Especially if one of you is in more of a compromised financial situation than the other.
What are the advantages and disadvantages of having joint car finance?
The biggest advantage of the joint car finance agreement is that it gives you more flexibility. You can boost your chances of getting a car on finance with low income or bad credit. Also, you can expand your options of cars you can get on joint finance agreements.
If you can’t get accepted onto a car finance loan by yourself, it’s another fantastic way to get your application approved.
However, the biggest disadvantage of a joint car finance agreement is that the individuals are jointly responsible. You need to take this into consideration when submitting a joint car finance application. Because both applicants are responsible for making repayments on time, if one misses a payment or can’t afford it, it affects both of your credit scores.
It’s imperative you make sure you are agreeing to a joint car finance application with someone you can trust. The last thing you want is to get a bad credit score. Which will make future car finance applications more difficult.
In short, getting a joint car finance agreement is one of the better ways to get a car loan. You can choose from multiple options with an increased budget and are more likely to be accepted by more lenders. It is a fantastic way to secure the deal you want at a modest price.
Be mindful of the risks that come with applying for a joint car finance agreement. However, there are ways to navigate this.
That’s where using a car broker comes in. At CaloansUK, we offer many agreements for joint car finance loans. Our specialist brokers work closely with many reputable dealers across the country. We offer you the most flexible rates to suit your needs.
Bad Credit Motor Finance also offers car finance loans for customers with either bad credit or low income. We will do everything to help you secure your ideal vehicle. Because of our process, you will always be protected, while we handle the stressful stuff. Take a look at our comparison tool and get in touch and start your car finance journey with us today!