Car Finance with a CCJ

Having a CCJ can make it difficult to find lenders willing to approve a deal with you for car finance, mortgages and various other credit related agreements. Having a CCJ will likely go hand-in-hand with having a bad credit score, so It’s imperative that you spend time educating yourself on what a CCJ is and how it can affect your chances of obtaining car finance before you apply.

What is a CCJ?

A County Court Judgement (CCJ) can be granted against you when you fail to repay any debts that you owe. This is common practice across the UK and the following steps will be completed before you are issued with one:

  • Debtors will issue you with a warning letter declaring how much you owe them
  • If you cannot afford to pay this back they will move on to legal action
  • A judgement will be passed that details how much you owe and how you’ll need to repay it

How long does a CCJ last on your credit file

A CCJ will remain on your record for 6 years once it has been issued. This means that even after you’ve paid off what you owe it can linger and make it difficult to get car finance or other credit deals. This is one of the things that will bet taken into account when your credit score is being calculated and may result in you having a bad credit score. As it remains on your file even once you’ve paid it off, it can still negatively impact your chances of getting approved for credit agreements.

Can I get Car Finance with a CCJ?

Car finance and CCJs can be a complicated mix. At these times it’s even more important than usual to ensure that you have a regular income and having a car could be key to this. We understand that everyone’s situation is different and we’d encourage you to use our car finance calculator to see what you can afford.

If you have a CCJ and are interested in applying for car finance then we’re happy to help you find the best option for you. Applying will allow you to find out your eligibility for car finance, even with a CCJ. If you want to understand more about car finance for people with bad credit or find out about IVAs check out our guide.

Managing your finances and avoiding a CCJ

While it’s best to pay off debt quickly it doesn’t stop many from struggling to meet debt repayments. If you are one of those struggling we would recommend getting advice through a reputable debt advisor. We’d recommend someone like the debt charity Step Change.

Often you can come to an agreement over a repayment plan without having to go through court action.

Managing your finances efficiently and paying off your debts quickly and ideally early can reflect very well on you. It shows lenders that you can budget effectively and are a sensible borrower.

Keeping a monthly budget is of utmost importance, especially if you’re considering entering a new credit agreement. You need to know your own finances and capabilities before you show lenders what you can offer. 

How to lessen the impact of a CCJ on your credit score

If the worst does happen, and you end up being placed on a CCJ there are a number of ways that you can lessen the impact.

  • If you pay up promptly, within one month of the CCJ being issued, then it won’t be recorded on your credit report
  • If you are in a situation where the CCJ can be disputed, and you can prove to a court that you shouldn’t have been issued one in the first place, you may be able to get it cancelled. You should only take this route if you are sure thing.
  • Talk to a credit agency, like Experian or Equifax about your credit file and how the CCJ is affecting it. They may be able to offer you suggestions and advice on how best to minimalise the impact.
  • If an insurance company was responsible for the debt, or more than 6 years have elapsed and it’s still on your file, you can contact a credit agency and get them to remove it. The same is true if you followed the first points above, and paid it off quickly or managed to dispute it. Sometimes it will still be on your file in these circumstances, and you may need to contact an agency to remove it.

Otherwise, the best way to minimise the impact of a CCJ on your credit score is to take steps similar to those when improving your credit score. These steps are generally good financial practice and may well help you be approved for car finance with a CCJ.

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Frequently Asked Questions

While you won’t need a good credit score to flat out buy a car, it can affect things if you want to get car finance. Overall the better your credit rating the better deal you’ll get on your car finance.

A poorer credit score may mean you are either denied car finance altogether by some lenders or else face higher interest rates or monthly repayments. That shouldn’t put you off though, at ChooseMyCar we are experts in bad credit car finance and can even help people with CCJs or IVAs get car finance. For more information on raising your credit score, check out our guide.

The amount you can afford to spend on a car will vary depending on your situation. The important thing is to make sure you can afford any repayments that your car finance agreement sets out. Missing repayments can cause issues between you and your lender and could end up in court or affecting your credit rating. 

To work out what you can afford, try our car finance calculator.

Your car finance may have been refused for a number of reasons. These are generally one of the following: 

  • Poor credit history or a bad credit score - read our tips on improving your credit score
  • You don’t meet the criteria for qualifying for that lender’s finance
  • Your employment status - some lenders won't approve you if you are unemployed or self employed
  • Type of driving license
  • Age - this could be because you're too old or a young driver. 

For more information on why you may have been declined, please read our guide on being refused car finance.

Guarantors will have to undergo a credit check at the same time as the borrower. This is done to make sure that they are in the right situation to be making any repayments if they are called upon, and the lender will want to see that they are reliable.

The length of a car finance agreement will vary for a number of reasons. The overall length of a term is usually measured in 12 month increments. 

These terms usually start with a minimum of 24 months (2 years) upt to a maximum of 96 months (8 years). Generally terms for used cars are shorter than those for long cars. 

While the monthly repayments will likely be lower on a longer term plan, it’s worth working out how much interest you’ll pay if you opt for something over a longer period of time.

It is possible to get car finance with bad credit. Many lenders provide loans and finance options specifically for people with bad credit.

Personal loans can be a great car finance option if you have bad credit. And a guarantor loan may help you avoid higher interest rates; this is where a friend or family member co-signs the loan, agreeing to meet payments if you're unable to.

With pre-approval on a personal loan, you can walk into the dealership like a cash buyer. You can be in a better position to negotiate on price. And you can avoid the stress of the finance office.

Your credit file is checked if you apply for car finance. And you'll usually have to provide proof of ID, address, and income. The specific documents you'll need ultimately depend on the finance provider you go with.

Providers will check your credit score when you apply - initially via a soft search. They'll perform a hard credit check if you choose to enter into a contract with them. Most lenders will need to see your driving licence - full or provisional. You may also be asked to provide:

  • Your passport - for proof of ID
  • Utility bills or council tax letters - for proof of address. These usually need to be dated within the last three months.
  • Payslips - for proof of income and to make sure you can afford the payments. Some providers may ask to see a few months' worth.

While it’s not ideal, there are circumstances that may occur that stop you from making a payment.

If you are unsure about your ability to make an upcoming payment we would recommend contacting your lender. This way there may be something that can be worked out before the payment is missed.

If you’ve already missed your payment, and can afford to make it, contact your lender as soon as possible to make the payment. You may incur a late fee, but making the payment can stop anything else from having.

If you continue to miss payments there is a chance your car could be repossessed and you will still owe for missed payments. Your credit rating will also be negatively affected.

A guarantor loan is different from other loans in a couple of ways. First of all, they include a third party. That third party will be someone you know who will act as a guarantor and will make any of the payments you miss. Secondly, guarantor loans are generally unsecured, meaning they aren’t placed against an item, like the car in a car finance agreement, so the car is unlikely to be reclaimed if a payment is missed as the guarantor will step in and make it.

Yes, you can get car finance using a guarantor. Having a guarantor may make a lender more likely to accept someone with bad credit or no credit history as a borrower. This means they can be a good option for people in these situations. 

While a guarantor can help someone who has bad credit get approved for car finance, they themselves cannot have a poor credit score.

While it’s not uncommon, and often preferred by lenders, for a guarantor to be a homeowner, it’s not essential. They could be a renter or even live with their parents. The important thing is that they can prove that they can afford to make any missed repayments.

A guarantor is someone that will meet payments if you miss one. They are usually a parent, but can be anyone not directly linked to you financially, i.e. you can’t have a joint account with this person.

Read our guarantor loan guide.

Having a guarantor can help you to get a loan when you otherwise may not have been able to, i.e. when you are a young driver, self employed or have bad credit.

Lenders may look more kindly on someone in one of these situations if they have a guarantor so they know that there’s less chance of a missed payment.

Read our guarantor loan guide.

County Court Judgements may affect your chances of being approved for car finance, however it won’t definitely stop this. As experts in car finance we may be able to help those on CCJs that want to apply for car finance.

For more information read our full guide on CCJs and car finance.