Credit & Van Finance – How does it work?

Leasing a van for yourself or your business is a great way to avoid large upfront costs, and protect yourself from asset depreciation (in this case – your van losing value over time). However, to lease a van you will need to be approved for Van Finance.

So where does Credit come into it?

Leasing a van involves funding from a Finance Company. The Finance Company will purchase the vehicle you want to lease, and you will then pay them an agreed portion of this cost monthly, until the end of your lease. As you will be using the vehicle, but have not paid for it up-front in full, your credit rating is used to determine how likely you are to pay back the instalments.

How does it work?

To lease a van (no matter the make/model/length of lease) you will need to be approved by one of our Finance Partners. In order to decide whether or not to approve you for funding, all finance companies will perform a credit check. This is how finance companies assess the level of risk in offering funding to an individual or business. For example, if you have a low credit score, the Finance Company may decide that you are too much of a risk to lend to.

How is my Credit Score worked out?

There are three Credit Rating Agencies that provide Finance Companies with Credit Scores: Experian, TransUnion and Equifax. Your personal or business Credit Score is worked out by considering the following factors:

• The amount of Credit owed (& unpaid debt)
• Length of Credit History
• Payment History (whether you have paid in full & on time)
• New Lines of Credit
• Types of Credit in use

Credit scoring is by no means a simple process. Each of the credit rating agencies have different minimum and maximum credit scores you can receive – and there are no set rules showing how much a transaction can influence your credit score, whether positively or adversely.

How do I know if I have good credit?

If you are a home owner, or have a proven history of making payments in full and on time, the chances are you will have good credit.

Because they have a shorter credit history, young people tend to have lower credit scores, even if they have demonstrated they can keep up with repayments.

Only using one type of credit can also have an adverse effect on your Credit Score – having used different types of credit helps prove your ability to keep on top of payments.

A percentage of your credit score is based on new lines of credit taken out. So, if you’re looking to lease a van, it is important to know that opening multiple new lines of credit beforehand can lower your credit score.

Using a large percentage of your credit limit is also important to watch out for. This is factored into your credit score as amounts owed, and therefore doesn’t help make you look creditworthy.

The big one to consider when you’re looking at your credit history is whether or not you have any late or missed payments. If, for example, you have ever defaulted on a loan or have a County Court Judgement (CCJ) in your name, the Finance Company may consider you a risk to lend to.

If you are unsure of your credit rating you can check your credit score online, or Contact Us and speak to one of our experienced advisors.

Is there a way of improving my Credit Rating?

To improve your Credit Score, you need to build up a history that shows Credit Rating Agencies that you can reliably make payments in full and on time.

There are a few things you can do:

• Make sure you’re on the electoral roll – This proves where you live
• Keep your credit usage low – Try and use 50% or less of your credit limit
• Show consistency – Keep up with payments, don’t keep changing personal details or address where possible
• Don’t apply for multiple new lines of credit – this will make Finance Companies think you are overly dependent on credit
• Consider a credit building card – these are designed to help improve your credit rating.
• Don’t borrow more than you can afford – Auto Finance Companies often carry out Affordability Checks, but it’s a good rule of thumb whatever the line of credit you’re taking out.

Improving your credit rating can take some time, but a great credit rating will have some really useful benefits in the long run.

What is the process at Global Vans?

It’s always good to know where you stand. At Global Vans we want to make sure you get the van you want, at the price you want, with a finance option that suits you or your business.

• Together we will find the exact vehicle you are looking for, and talk through which of our finance options will best suit you.
• We will make sure you are happy with all of the details and propose you to one of our Finance Partners.
• Our Finance Partners will then perform a credit check to make sure you are a good candidate for funding.
• Once you are approved its plain sailing – we secure your new vehicle, and work towards delivering it to you.

Need more information on the Finance Options available to you, check out our guide to Finance. If you can’t find the answer to your question here, or you’re ready to start talking about your new van please call us on 01179625314 to speak to one of our Van Specialists.