Are you an expat in the UK looking for a car loan? Then you’ve come to the right place. At Concept Car Credit, we offer car finance solutions even to those who can not get credit anywhere else. 100% professional and as experienced by thousands of satisfied customers.
In this feature, we’ll get a bit into the reasons why applying for a car loan is so hard in the UK right now and what you can do to improve your chances.
If you just want to apply for car finance and don’t want to wade through all the information, just give us a call to discuss your application. Or head right over to our online form where you can already send us most of the information we’ll need to assess your case.
One of our friendly experts will then get in touch with you swiftly.
It can happen to returning UK expats and first time car buyers, too!
Aa an expat, you can feel pretty alone. You’re in a foreign country, possibly far away from home, trying to orientate and organise yourself. And then you can’t even get a car loan or a mortgage even if you’re earning a decent wage!
That said, you’re not the only one facing these issues.
For one, UK citizens returning from an extended stay abroad are pretty much in the same boat with you. Effectively, they, too, can get snubbed by banks and credit unions.
And, for very much the same reasons, students and first time car buyers will often come to us looking for a loan because they’ve been rejected elsewhere.
But, no need to dispair. We’ll help you get car finance without extortionate interest rates.
Why are banks loathe to extend credit to these groups?
As we’re sure you know, finance is a business based on the correct assessment of risk: The lender gives you money and receives it back plus interest. The system only works if the large majority of borrowers actually follow this simple plan and do not default on their credit.
The lower the risk, the better and the cheaper the loan becomes. The higher the risk, the higher the interest rate, to cover the lender in case something goes amiss. In case of a very high default risk, some lenders may refuse to extend credit because they feel things are getting too dangerous. So, if that’s the case, you’ll have to come up with an alternative plan.
We’ve written about this a lot over the years on our blog and why we believe we can still get you a great deal in cases where most banks are no longer willing to do so.
But things get really complicated if you don’t have any credit history to speak of.
In this scenario, after all, the bank have nothing whatsoever to base their decision on. They can neither set interest rates very high nor very low. They can not set them at all.
This problem applies equally to expats from abroad, returning expats from the UK and students or first time car buyers.
But expats from abroad have a particularly hard time.
This is because on top of this already pretty big issue, they have a few troubles more.
Especially if you’ve just come to the UK, you may not even have a registered address yet, which is quite possibly an even bigger red light for lenders. Thankfully, you can ask to get put on the electoral roll very easily to remedy this.
But there’s something else you can do very little about!
Which is the fact that you can not use your credit history from abroad not your credit score for your current application.
The reason is that credit scores mean very different things in different countries and are by no means comparable. Depending on where you’re from, they may also not be as tightly regulated. All of this means that lenders do not trust any ratings from outside the UK.
And although the credit score has lost in importance over the past few years, banks can start to feel pretty fragile if they’re forced to forego it altogether.
Some large companies will be able to help you with this issue.
They can, through a costly and complex process, ask for your foreign credit score to be verified here in the UK. Once completed, lenders can then safely juxtapose it with those of UK borrowers and calculate a fair and representative rate.
That said, this service is not open to everyone. In fact, it is reserved for the privileged few. So don’t count on your employer being able to facilitate this procedure (although it can’t hurt to ask).
And there’s more!
As if all of that wasn’t enough, expats face a couple more obstacles:
If you are receiving your wage in a foreign currency, currency fluctuations can make it hard for the bank to gauge exactly how much you’re earning. Also, these fluctuations inherently make your income more vulnerable. Lenders, as a rule, would rather prefer you earn less in Pounds than more in a foreign currency.
Whether or not your job is secure depends on the current market situation of your employer and the market as a whole. Both are harder to assess if the company you work for is based in a foreign country. Bigger banks may be able to draw from their network of branches to gather information, but for local car dealers, this is simply not an option.
Even if you can find a dealer willing to lend to you, interest rates can be astronomical.
Let’s take a look at some of the solutions at your disposal to improve your chances of success when looking for car finance as an expat in the UK.
Expat Car Finance Step #1: Get a UK bank account
This is quite clearly where it all starts. A UK bank account instantly instills a bit of trust in the lender, regardless of everything else.
It means the money is actually easily accessible and it should be easier to convert it to Pounds as well.
It also suggests you are here to stay for a little bit longer and not planning on leaving again as soon as possible. Stability is top priority for car finance providers.
Expat Car Finance Step #2: Get a UK credit card
As mentioned, the lack of a comparable credit history is the main reason why you are finding it hard to get credit in Britain (or anywhere else for that matter, the problems expats are facing are pretty much universal!).
So the best and most helpful thing you can do is to gradually build a credit score yourself. This is how that works:
Get a credit card if you can get one. That latter provision is an unfortunate caveat, since even applying for a CC can be hard for expats. However, you should be able to find a bank willing to do this if you just keep searching long enough.
After you’ve secured your personal credit card, use it to make all your payments with it. Ask for all household bills to be put on the name that’s on the card (i.e. probably yours). Obviously, make sure never to be late with any payment!
Over time, you will, build a credit history than lenders can use to estimate your risk this way. And even if this short history is not particularly meaningful, they can definitely draw at least some tentative conclusions from it.
Expat Car Finance Step #3: Ask for your wage to be paid in Pounds
Not always possible, but worth a try.
You need to be clear about the fact that this comes with potential issues for you. It isn’t just that some employers may not like it. You, too, can have disadvantages from this approach.
After all, it means that your wage can end up being worth a lot less if the Pound drops in value against the currency of your home country when you return.
That said, this step can make a huge difference in terms of getting a loan.
Expat Car Finance Step #4: Consider temporary alternatives
If you’ve only just arrived in the UK from another country, chances of actually getting approved for a car loan are very slim regardless of your particular financial or employment situation.
Which means that even if you have a helpful employer, earn a decent wage and have taken all the necessary steps towards getting car finance, things may take some time.
In these cases, it is definitely worth it to consider a few alternatives to buying a car:
Car subscriptions and car pooling can be temporary solutions to your transportation problem. They are usually quite a bit more expensive if you’re making frequent use of a vehicle. But you should usually be able to pay for these services with a credit card.
If you need the car only on occasion, renting will do the trick. Clearly, this is by far the most expensive option, so only make use of it very sparingly.
If you have enough on the bank, get a really cheap car that you can buy without taking up a loan. Drive it until you’ve spent some time in the UK and can expect to get better treatment by lenders.
Expat Car Finance Step #5: Talk to us
Sometimes, these compromises just won’t do. That’s where we come in.
Concept Car Credit specialises in non-credit-score car finance. Meaning, we try to help anyone put at a disadvantage by the current system. This can be either because their credit rating is low, because their income is below average, or because they haven’t built a credit history yet.
Our approach is based on the thought that ratings are usually no sensible indication of your current spending power. Instead, we look at your wage, your spendings and how much you can safely commit to each month.
Most of our loans work with lower monthly payments and longer terms. This reduces the risk of a default and allows you to stabilise your situation while you’re building a new home for yourself.
Interested in expat car finance from us? Then get in touch now!
Our phone number for all questions or a first quote: 0800 093 3385 Our contact form for applying directly for a loan.