How Car Dealers Deal with Bad Credit.
Car Dealers want to sell cars. It does pay the bills, after all. They’re likely to help you out as much as they can.
Dealerships do, however, have to undertake something called “due diligence”. This is a fancy way of saying they must make sure that anyone buying a car from them can definitely afford it.
The great thing about dealerships is that they tend to be very well regulated, in the UK at least. While they really want to sell you a car, they won’t if they don’t think you can afford the finance. This protects you and it protects them.
But a No from a dealership might not be the end of the story.
Dealerships usually work with a single Lender – either a well known industry Lender or a Finance Company set up by a Car Manufacturer. These Lenders may not be specialists in Low Credit Car Finance, however.
The good news is that you don’t have to borrow from a Dealership’s preferred Lender: you can go to a specialist and arrange the Finance with them. They will then pay the Dealership and you pay the Specialist Lender.
Most Dealerships offer Finance, either by themselves or, more commonly, through a third party. How easy it is to secure depends on you and the dealership. Obviously, the dealer’s main motivation is to sell you a car but they’re legally bound to take appropriate care when offering finance so they will still ask you questions and arrange the usual Credit Checks.
It is more difficult to get Car Finance without any Credit Score at all but not impossible. If you put down a very large deposit and could show that you have a significant profit into your bank account every month, there are specialist lenders who would allow you skip a Credit Check. Without the security of a Credit History, however, the risk to them is higher and they are likely to pass this on with higher fees.
Much like standard Hire Purchase agreements, a Pay As You Go Finance agreement starts with a deposit. You then pay monthly installments until the entire cost of the car is covered, at which point the car becomes your property.
The difference is that Pay As You Go providers install a remote system to immobilise your car if you miss a payment, much like a pay as you go phone will stop working if not topped up.
That depends entirely on the dealership and the finance company they’re working with. Every dealership is different and not all of them use the same Credit Agency to assess your Credit Past.
Talk to your Dealership in advance and get their opinion. Work through some numbers and see if they’ll offer you finance or not.
There are many benefits from buying from a main dealership rather than a private buyer. The biggest is that Dealerships are regulated, as is the Finance they offer. This offers peace of mind if anything goes wrong with the car or your circumstances change quickly. Many dealerships also offer extended warranties and can bundle in servicing for less than you might pay privately.
That said, a Dealership may not offer the most affordable Finance on the market and it is worth shopping around to find the best deal.