Bad Credit Car Finance
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Finance Calculator: How Much Can You Afford to Spend On A Car?
Borrowing £6,500 over 48 months with a representative APR of 21.4%, an annual interest rate of 21.4% (Fixed) and a deposit of £0.00, the amount payable would be £196.24 per month, with a total cost of credit of £2,919.52 and a total amount payable of £9,419.52
How can I get car finance if I have bad credit?
One of the easiest ways to find cheap car finance it to compare quotes with us. We’ll show you the best deals from a variety of the UK’s most trusted car finance providers. You can compare hire purchase agreements based on, APR, deposits, term and age of vehicle.
There are plenty of things you can do to ensure you get the best deal:
We’re Bad Credit Car Finance Specialists
As car finance specialists, we understand that it’s not always possible to have the perfect credit score, whether you’ve not taken out credit before, or have experienced credit problems in the past. Bad credit doesn’t have to mean you can’t buy a car.
We know how difficult it can be to secure the right deal for bad credit car finance. That’s why we always go the extra mile to find the best deal for your individual circumstances. We’ll start by conducting a ‘soft search’ rather than a full credit check, so the initial application won’t affect your credit score. This will give us a clear indication on whether we can source credit for you and the kid of credit we can get. If what we initially offer seems right for you, only at this point, we will progress onto the full credit application.
Frequently Asked Questions
Yes. While your Credit Score is important for Lenders when they decide on your eligibility, it doesn’t dictate it. While a good Credit Score could get you a better deal, specialist Lenders and Finance Arrangements (like Guarantor Loans or Joint Purchase) can get you behind the wheel even if you have very poor credit. You just need to talk to the right Lender.
Yes. There is no minimum Credit Score for securing Car Finance but a lower Score can put add additional costs to the interest rate al you are offered. Lower scores often come with higher charges and interest rates (APR), meaning you pay more over the full term of your Loan. So long as this fits within your monthly finances, you can drive away in the car you need, even with a Credit Score of 500.
There is no minimum Credit Score for securing a loan of any kind, including Car Finance. A score as low as 200 will impact the charges and interest (APR) you’ll be offered on you loan, however. This means that you could pay much more over the length of the loan than someone with a higher score. Some Lenders might refuse a score this low but you could still be accepted by Poor Credit specialists.
We work with accredited and approved Low Credit Lenders from across the UK to find you the best deal.
Yes. While a new car is more expensive, with higher monthly repayments, the technicalities of finance for New and Used cars are near-identical. If you can demonstrate that you can afford the deposit and monthly payments, Bad Credit needn’t prevent you getting finance on a New car, though it might make it a more difficult and expensive.
Any dealership registered with the Financial Conduct Authority can work with lenders or brokers to offer any legal Car Finance solution, including deals for those with poor credit. If a dealership knows they’ll be paid by the lender, there’s a good chance they’ll sell you the car: the risk is with the Lender.
We work with trusted Lenders all over the UK to offer Affordable Car Finance deals to our customers, no matter what their credit history. Choose a car from one of our dealers and we’ll find you the finance to buy it.
- If a lender cannot validate your income digitally, we’ll need your last 2 months payslips. Some newer banks are hesitant to share dates on earning, which is why we may ask.
- A copy of your driving licence or a provisional copy, if you’re a new driver.
- You may be asked to share open banking details if you have a lot of gambling alerts on your file or evidence that you have recently take out more credit.
- Some lenders have restrictions on the age and mileage of the car you want to buy – generally a car that has traveled less than 120,000 at purchase, and is not older than 10yrs old at the start of the agreement.
The process of securing your car through us varies depending on the lender you choose and your personal circumstances. We work hard to ensure the process is as quick, easy and painless as possible by taking care of as much of the paperwork as we can on your behalf.
As a broker, we don’t have direct control over the exact timing of the finance and delivery but you’re always welcome to talk to us about your purchase, every step of the way.
Bad Credit Car Finance
If you’re looking to get yourself a new car, one of the major options to consider is car finance, which you’ve probably already encountered frequently as you search for the best deals for bad credit. When you’re looking at car finance deals, you’ll want to be sure that you’ve got a good understanding of the type of car finance that’s in front of you – it isn’t always the same and each different type of finance works differently, with some more tailored to certain people than others. To help you to navigate your way through the car finance maze, we’ve put together our comprehensive guide to bad credit car finance, where you’ll be able to find all the information you might need to make an informed purchase decision. Read on to learn more about the deals available here at ChooseMyCar!
First, let’s take a look at the different types of car finance that are available.
Each of these forms of car finance enables drivers to get back on the road in a safe, comfortable vehicle that’s available at a more affordable price than they would be to buy with a single up-front payment.By utilizing a finance deal, you will be able to spread the cost of the vehicle over a number of years, with a monthly payment plan in place to help you manage to cost over the course of the contract.
This is a type of car finance where the full cost of the vehicle is spread across the duration of the contract. There is no large balloon payment at the end of the contract – you’ll either become the owner of the car automatically after the last payment, or after paying a small final fee, which can be as low as just £1.
Personal contract hire
With this type of car finance, your monthly repayments tend to be much lower than with other deals such as HP car finance, however you will not own the car at the end of the contract. Instead, you’ll have the option to either hand the car back or select an upgrade – this is an ideal type of car finance for those who want to ensure they’ve got a new set of wheels on a regular basis.
Personal contract purchase
Similarly to HP and PCH deals, you will spread the cost over a number of years and repay the credit amount over a series of monthly payments. The factor that sets PCP aside is the lower monthly payments and option to buy at the end of the contract. Should you wish to purchase the car once the agreement is over, you’ll be able to pay a pre-arranged balloon payment.
This is just a brief overview of the different types of car finance that are available to those who suffer with poor credit, but you’ll be able to read more about each of these further down the page.
How ChooseMyCar can help customers with bad credit
As car finance specialists, we understand that it’s not always possible to have the perfect credit score, whether you’ve not taken out credit before, are reliant on no credit checks, need help with debt management, or perhaps you have even filed for bankruptcy. Bad credit doesn’t have to mean you can’t buy a car.
We know how difficult it can be to secure the right deal for bad credit car finance. That’s why we always go the extra mile to find the best deal for your individual circumstances. We’ll start by conducting a ‘soft search’ rather than a full credit check, so the initial application won’t affect your credit score. This will give us a clear indication of whether we can source credit for you and the kind of credit we can get. For example, you might be in need of a guarantor loan or a specific PCP (personal contract purchase) or HP (hire purchase) car finance option. If what we initially offer seems right for you, only at this point, we will progress onto the full credit application.
Here are just some of the other ways we can help:
CCJs, defaults and arrears
Our network of trusted lenders can help you find finance, even if you have CCJs, arrears, IVAs or a debt management plan. It may be that you’re self-employed. Whatever your situation, we could help you to secure car finance.
Applying won’t affect your credit score
Approved, reputable dealerships
All our trusted dealerships are handpicked by our experts. That means quality cars, from quality dealerships. So, you can feel safe in the knowledge that your experience will be smooth from beginning to end.
Representative 21.4% APR
We’re always transparent with our finance deals. Plus, we always find you the best rate. For starters, our representative APR is just 21.4%. Because putting you first is what we do best.
I have poor credit and I’m worried that I won’t be able to get car finance – what are my options?
If you have a poor credit rating due to missed payments or anything else, we understand just how of a worry it can be when looking for new finance arrangements. But having bad credit isn’t going to stop you from needing to be on the road with your own personal transport – here at ChooseMyCar, we understand this. In fact, having a car might be crucial to continue earning and begin improving your credit rating. Fortunately, you’ve come to the right place.
Whether you have a poor credit score, an IVA (Individual Voluntary Agreement), a CCJ, or if you have been refused car finance elsewhere, the friendly team of experts here at ChooseMyCar are here to help. We have years of experience helping to match customers with poor credit scores with manageable and affordable car finance across the country. Regardless of your financial situation, get in touch with us today for the guidance and advice you need.
The good news is that there are a few options open to you when it comes to your car finance application, even if you have bad credit. From taking steps to improve your credit rating and credit report, using a guarantor loan for added financial security, using our online car finance calculator to make sure of what you can afford, we will work alongside you as a finance company who will support and guide you through the process. Making a finance or loan application when you have bad credit can be daunting – we are here to help.
Your finance options if you have bad credit
If you’re looking for bad credit car finance, it’s likely that you fall into one of the common bad credit categories that typically make it more difficult to find car finance with most lenders – whilst this may seem like a hindrance, it doesn’t have to be. Here at ChooseMyCar, we’re experts when it comes to providing our customers with an affordable car finance package, even if they have bad credit. You can find more information on the types of bad credit car finance that we offer below:
A CCJ (County Court Judgment)
The first type of car finance we offer for those with bad credit is CCJ car finance, which helps those with County Court Judgements to get back on the road despite their past financial troubles. Having a past or present CCJ can hurt your chances of being successful in credit applications, but it does not mean that you will be automatically refused car finance – there are lots of variables, with specialist bad credit car finance providers offering tailored plans that account for your specific problems. With the help of a bad credit car finance expert, you’ll be able to find a finance plan that works best for you, meaning you could be back on the road much sooner than you initially might have thought.
How will a CCJ impact my car finance application?
Once it has been issued, your CCJ will remain on your credit file for 6 years, meaning that it will continue to make it tough to gain access to car finance or other forms of credit for that period. A CCJ will remain on your file even after the debt it relates to has been paid off, which means there are likely to be long lasting repercussions if you are handed one. This is one of the things that will be taken into consideration when you are being considered for credit and often contributes to your score being lower than you would like it to be.
This lower rating on your credit score becomes an issue when you are applying for new credit agreements, as it indicates that you have a history of failing to make payments on outstanding debts to the point where an official order had to be put in place for payments to be made. Whilst you may not fail a credit check solely down to your CCJ, a low credit rating will often result in the applicant being subjected to higher interest rates than those who have healthier scores might.
Guarantor loans: everything you need to know
If you’re struggling with bad credit and looking to gain approval to an affordable car finance deal, it’s likely that the idea of a guarantor loan has crossed your mind. For many, this appears to be one of the most difficult ways to gain access, but is that really the case? Below, we’ll take a look at some of the pros and cons of guarantor loans to show who this type of car finance may be a good option for, and who may be best served choosing a different option. We’ll also look into the intricacies of guarantor loans, looking at how they work, who will be able to be your guarantor, and how a missed payment could impact both you and your guarantor.
How exactly does your bad credit affect your application?
It’s important to understand the relationship between your credit score and your ability to make further full credit applications. Knowing that bad credit might have a negative impact on your ability to apply for new finance agreements is one thing, but why exactly is this so important to lenders?
Well, people can have bad credit for a number of reasons, but the most common reason is often having missed payments due to financial difficulties in the past. If you have fallen behind on your repayments for other credit agreements, this will negatively impact your credit score – which will be seen by any other potential lenders when they run a credit check.
Any lender wants to be assured that you will keep up with your monthly payments and that everything will be made on time. This is part of any lending criteria and a lender will look for missed or late payments as part of your credit file – and this might affect your ability to secure a car finance agreement.
Other things that can affect your credit rating and your ability to get car finance include having an IVA (Independent Voluntary Arrangement) – in which case any responsible lender will ask for written confirmation from your Insolvency Practitioner that you have been approved to borrow again.
What is my credit score, what affects it and how can I improve it?
Your credit score, or credit record, is essentially a history of your past behavior when it comes to credit agreements. A lot of things can affect your credit score, such as taking on a lot of new credit, the length of your credit history, your mix of credit arrangements and more. However, payment history is the most important part of determining your credit score and it has a very significant impact on your credit profile overall. Lenders are most interested in knowing whether you will be able to keep up with monthly payments and make your payments on time.
As such, a bad credit score is most often the result of failing to adhere to prior credit agreement such as missing payments or making late payments. For example, if you have failed to repay a mortgage, missed payments on a mobile phone deal, failed to repay a loan, credit or prior finance agreement, then you are very much at risk of damaging your credit score.
Having a bad credit score will in general make it more difficult to have future credit deals approved and to secure funds for purchases such as those for a home, car, or other vehicle. Your credit score affects how a lender views your eligibility when deciding things such as:
- Whether to lend you any money at all
- How much money to lend to you
- What interest rate should be set on the amount that is loaned to you
Think of your credit score, credit report and credit history as something like your very own financial footprint. It behaves like a record of your financial history with other creditors that allows potential future lenders to assess how safe it is to offer you finance or credit. If you have missed payments, made late payments, or been declared bankrupt, then your credit history will reflect this.
The good news is that you are able to make your own eligibility check by checking your credit score with a credit reference agency (CRA) – and this is often done entirely for free. It’s important to understand that having bad credit won’t necessarily stop you from undergoing your own car finance journey, but it may make the process more expensive and long winded.
What affects my credit record?
Your credit score is exactly how potential lenders will determine how eligible you are for certain loans such as credit cards, mortgages and more. When it comes to the car finance process, it’s important to know that potential lenders will always run some form of credit check at first. There are a lot of different things that can affect your credit score, including:
- Your current financial situation regarding debts
- Your current credit availability, alongside how much of this you are using as active credit
- Your history of making credit payments and repayments
- Your credit searches
- Your presence on the electoral roll
If you have a good credit score, then this shows that you are more likely to keep up with your car finance repayments without missing monthly instalments. As such, ideal lenders are more likely to offer you a car finance deal with more manageable full monthly payments at a preferential rate.
Signs of bad credit
Without undergoing a formal credit check, it can be tough to know whether you have bad credit, but having a test carried out on your account can contribute to a poor score, so that has the potential to leave you in an incredibly sticky situation. If you’re wondering how you might be able to spot whether you have bad credit without undergoing a credit check, here are a few of the telltale signs to look out for:
Defaults on payments
One of the most obvious things to keep an eye out for is defaulting on your payments more than once – any default that is held against your account will have a negative impact on your score and will remain on your credit file for quite a while, which can often be a deterrent to potential lenders in the future. A default is awarded when payments on your current outstanding loans have not been made, resulting in falling behind with your debt and breaching your pre-agreed payment plan set out by the lender. If the default is cleared within a few days, there is a chance that your error will have been cleared before it could appear on your report, however, if it is left for a longer period of time then it will certainly leave a lasting impression.
Loan application rejections
When you’ve got poor credit, you’re likely to find it hard to get credit, so this can also be a clear indication that your credit profile might not be in the best shape. If you’ve found that your recent loan, credit, or finance applications have been coming back with rejected responses, it’s highly likely that you are suffering from bad credit caused by mismanaged finances and unpaid arrears, and late payments. If this sounds like the situation you find yourself in, it could be time to look into ways that you can improve your credit score.
Credit card applications
Much like with loan applications, you will need to pass a fairly comprehensive credit evaluation in order to be offered a credit card – a credit card is essentially loaned money which must be repaid on time, or you’ll face default, debt and poor credit. People with bad credit may often find it difficult to find credit card providers who are willing to offer them a card, with the options that are available often relying on high interest rates and sub-par bonuses to minimise the risk on their behalf.
On top of this initial credit check during your application process, most card issuers will routinely conduct further checks throughout the time that you have a card, continuously monitoring any improvements or decreases in your creditworthiness to ensure that you are still an eligible recipient of the credit being offered, or if your credit limit could be increased due to improved credit ratings. If you notice a change in your credit limit or eligibility for credit cards, it’s highly likely that your credit score has changed.
Debt collection agencies
If your loans and credit lending has got out of control, you may be contacted by a debt collection agency – these are companies that are in place to ensure that debts are paid in one way or another, whether this is through threats of repossessing your assets or with them actually actioning this and sending bailiffs to collect items in the amount of your unpaid debt. The first thing you should do in the event of being contacted by a debt collection agency is to verify that the debt being collected is in fact tied to your account – if the accounts in question are genuine, you’ll then need to ensure that you are getting your payments up to speed as soon as possible to avoid further action including repossession.
Job application failure
What many don’t know is that when you’re applying for a new job, you’re often submitted to some form of credit search, usually a soft search, which gives the employer the opportunity to take a closer look at their new potential employee. A person’s credit file is often a great indicator of how they manage their finances, which is particularly important for high ranking positions such as directors, executives, or finance staff. When you’re having trouble finding a new job, it’s worth considering whether your credit score could be impacting how appropriate you look for these roles to a potential employer.
If you’d like to have a credit check carried out on your account, you always have the option to do so – there are regulations in place to ensure that every person is able to view their credit score for free, however, some services may charge a fee. These paid services can often be far more informative, giving a deeper insight into your finance and credit history to highlight how well you rank and where you could improve.
So how do I improve my credit rating to make it easier to get a good finance agreement?
The first step in getting a good car finance bad credit deal is always to start taking steps to improve your credit score. Here at ChooseMyCar, our finance team specializes in providing manageable bad credit car finance agreements, but our financial advisors always recommend improving your credit score to help access better deals. Fortunately, there are a few things you can do to help this, including:
Man pushing the needle up on a credit score gauge
Registering to vote – This is a simple one, making it an absolute must. Your prospective lender will always perform a credit check before making a lending decision. To do this, they’ll need your name and address – something you can make much easier for them by registering on the electoral roll.
Identify and address any issues with your credit history – Our finance advisors always recommend regularly reviewing your credit score, as well as getting hold of your full credit history. Doing this means you can make sure that there are no mistakes while also taking steps to begin making repayments on any current credit you have.
Make your repayments on time – Making sure you don’t miss any payments avoids accumulating current debt that reflects badly on your credit history. This demonstrates to your new lender that you are more likely to keep with payments on any used car finance deals they approve you for. Doing this will improve your credit score over time as well as helping you to secure a more beneficial and affordable car finance deal.
Don’t open too many new loans and close unused credit accounts – If you have a lot of new loans opened recently, your lender will be able to see this and might take it as an assumption of financial difficulty. Generally speaking, the more loan applications you make, the more likely it is that your credit score might decrease. On top of this, unused current credit accounts should be closed to clear this from your current history.
Knowing you have bad credit can be stressful and it can potentially close doors to you when it comes to finance and loans. But knowing where to start on your journey of improving your credit score is also difficult. Fortunately, here at ChooseMyCar we have some fantastic resources on our website. Among these is our guide to improving your credit score, which is a great place to start for anyone hoping to apply for car finance with bad credit.
How do I check my credit score for free online?
Thanks to the many tools that are available online, it’s actually incredibly easy to check your credit score – it’s actually more difficult trying to find a preferred credit checking service! When you’re searching for online credit checking tools, you’ll want to focus on the features that each platform offers, as this’ll help you to differentiate between the wide range of services that are available. With features such as credit card suggestions based on approval rates for people with similar scores to yourself, step by step guides on how to improve your credit score, and weekly reports available, these apps and online tools have never been more sophisticated than they are right now!
In addition to this, you’ll actually find that most of these services are free to use! On certain platforms, you may find a premium version that requires payment to use – these will usually be more feature-heavy and offer more benefits – but even in these cases it’s likely that this same platform will offer a free version that’s still very useful. By law, everybody is able to access their credit score for free as it is deemed a right, rather than a privilege, so you can simply request to be given your credit score if you want to skip the apps and platforms that many provide.
How can car finance impact my credit score in the long run?
One of the most intriguing things regarding car finance is the way that it is so deeply intertwined with your credit score – initially, you’ll find that you must have a score deemed acceptable to even gain access to car finance, but beyond that, you’ll come to realize that your car finance can actually begin to impact your credit score too! The way that it impacts your credit score will completely depend on how well you manage your monthly repayments – if you’re strict and ensure that every payment is made on time and in the full amount, you’ll prove that you are a reliable borrower that presents a reduced risk to future lenders. On the other hand, irresponsible borrowers who fail to make repayments or are found to make payments late will be waving a red flag to any future lenders, which could harm their chances of gaining access to credit in the future.
Credit scores are calculated using an array of intelligent personal information that the Credit Reference Agencies (CRAs) have available to them when you submit to a credit search. Whilst each different CRA uses a slightly different method to determine your score, the basic concept remains the same – high scores are better and low scores need to be improved.
Your personal information:
Your name, address, salary, relationship status, and living situation will all be considered to determine your creditworthiness. The more stable you appear to be, the safer you are to offer credit to.
Your credit history:
This will take into account any credit that you currently have or have previously had. By looking into this, the CRA is able to investigate your behaviour in regards to using credit – if you’re responsible and sensible with credit, you’re likely to have a higher credit score.
One thing that many don’t consider is how applying for credit agreements can actually impact your credit score in turn; by applying for credit too often, you start to appear desperate for credit or overly reliant on credit, which is a huge red flag for lenders. Each time you apply for credit, a search will be done on your credit file – these searches leave a mark and can be seen by future prospective lenders.
If you’ve ever been involved in a bankruptcy, had a CCJ, or been under the restrictions of a debt management plan, this will likely play a part in lowering your credit score. Each of these events relates to previous financial trouble or trouble repaying debts, which will deter lenders from offering you credit without substantial benefits on their side such as high deposits or increased interest rates.
Why is your credit score different with each CRA?
Simply put, this is because each of the credit reference agencies calculates credit scores in a slightly different way, giving different weight to certain factors that they deem more or less important when determining whether you are a suitable applicant.
In most cases, your score will be calculated using the FICO system – this is an algorithm that CRAs use to calculate scores based on the relevant factors. By basing the scores on this system, they’re able to give you a score that’s based upon a standardised scale, however, the issue arises when the context is added into the algorithm, which is why different scores occur.
In some circumstances, the CRA may deem one factor to be more important than another, so they will increase the weight that it holds within the calculation, and vice versa. As this is down to the discretion of the CRA, this can vary depending on each individual CRA and the specific context under which you are applying for credit.
In short, this is why you are given varying scores when checking your credit rating using a selection of different CRAs. If you want to learn more about credit scores, what impacts them, and how you can improve yours, check out our comprehensive guide to credit scores!
What information do Credit Reference Agencies hold?
In the age of GDPR, data protection, and a world full of hackers, it’s never been more important to ensure that you’re keeping your data as safe as possible, which means you are right to be cautious about offering up your personal data to credit reference agencies online without knowing what they’ll do with it after your credit check is complete.
The main thing to remember is that giving your data to a CRA is very safe – they’re some of the most secure data handlers in the world and follow every guideline to the letter when it comes to your data. This allows you to benefit from their credit reporting services without having to worry about breaches or fraud.
Upon closer inspection, you’ll probably be surprised to learn just how much the CRAs know about you – credit checks are so comprehensive and detailed (as they have to be to get an accurate reading of your creditworthiness) that they know even the most minute details about you. Whilst this may seem a little excessive, it does mean that your credit score is incredibly accurate.
Some examples of the information that credit reporting agencies hold are:
- Your utility provider
- The banks that you are registered with
- All of your current and previous credit cards
- Any outstanding loans
- Your mortgage information
- Your address
- Any court orders such as a CCJ
- Your presence on the electoral roll