Peoples biggest concerns when it comes to financing a used car


Buying a used car can be an exciting endeavour, offering a more cost-effective alternative to purchasing a brand new vehicle. However, the process of financing a used car can be riddled with concerns and uncertainties. In this article, we will explore some of the most significant concerns that people face when it comes to financing a used car. We will delve into the worlds of bad credit car finance, no deposit car finance, and car finance for the self-employed, shedding light on the challenges and solutions associated with each.

Woman Contemplating Car Finance Options

Bad Credit Car Finance

For many individuals, having a less-than-perfect credit score is a significant hurdle when seeking car financing. A poor credit history can lead to concerns about approval rates, interest rates, and the overall feasibility of securing a car loan. Here’s a breakdown of the major concerns associated with bad credit car finance:

a. High-Interest Rates: One of the primary concerns for those with bad credit is the prospect of exorbitant interest rates. Lenders may view individuals with poor credit as higher-risk borrowers, which can result in significantly higher APRs (Annual Percentage Rates). This can make the cost of borrowing more expensive over the life of the loan.

b. Approval Odds: Concerns also revolve around loan approval odds. A low credit score can lead to fears of rejection, which can be frustrating and disheartening for potential buyers.

c. Limited Vehicle Selection: People with bad credit may worry about having access to a limited selection of vehicles. Some dealerships and lenders may restrict the choices available to borrowers with lower credit scores.

To address these concerns:

i. Credit Repair: Consider improving your credit score before applying for a loan. Pay down debts, correct inaccuracies on your credit report, and establish a history of on-time payments.

ii. Subprime Lenders: Explore subprime lenders who specialise in bad credit car financing. These lenders may be more lenient and offer competitive rates to those with lower credit scores.

iii. Co-Signer: Enlist the help of a co-signer with good credit to increase your chances of loan approval and secure more favourable terms.

No Deposit Car Finance

No Deposit Car Finance Concept

No deposit car finance is an attractive option for individuals who want to purchase a used car without a substantial upfront payment. However, concerns often arise regarding the terms and costs associated with this type of financing:

a. Higher Monthly Payments: One primary concern is that by not making a down payment, the monthly payments are likely to be higher. This can strain the budget and make people hesitant to commit to such a financial arrangement.

b. Loan Duration: Extended loan terms are common with no deposit car finance, which can lead to concerns about the total cost of the loan and the amount of interest paid over time.

c. Vehicle Depreciation: Concerns about the rate of depreciation and the potential for negative equity – when the car is worth less than the loan balance – are also prevalent.

To address these concerns:

i. Budgeting: Plan your budget carefully to ensure you can comfortably handle higher monthly payments. Keep in mind the total cost of the loan, including interest.

ii. Shorter Loan Terms: If possible, opt for a shorter loan term to reduce the overall interest paid and mitigate concerns about depreciation.

iii. Gap Insurance: To address concerns about negative equity, consider purchasing gap insurance, which can cover the difference between the car’s value and the outstanding loan balance.

Car Finance for the Self-Employed

Self-employed individuals often encounter unique challenges when seeking car financing. The irregular income, documentation requirements, and concerns about approval can make this process daunting. Let’s delve into the major concerns:

a. Income Verification: Self-employed individuals often have concerns about providing income verification. Traditional lenders may require tax returns and other documentation, which can be challenging for those with fluctuating incomes.

b. Higher Interest Rates: Like bad credit borrowers, self-employed individuals may worry about being perceived as higher risks, leading to concerns about higher interest rates.

c. Approval Difficulty: The self-employed often fear that lenders will be less likely to approve their applications, given the perceived instability of their income.

To address these concerns:

i. Financial Documentation: Keep thorough and accurate financial records, including tax returns, bank statements, and profit and loss statements, to streamline the income verification process.

ii. Specialised Lenders: Seek out lenders that specialise in car finance for the self-employed. They may be more attuned to the unique financial situations of self-employed individuals.

iii. Build a Strong Credit Profile: Working on building a solid credit history can help mitigate concerns about high-interest rates.


Financing a used car can be a source of significant anxiety for many, especially when dealing with issues like bad credit, no deposit options, or being self-employed. However, by understanding these concerns and implementing the recommended solutions, potential car buyers can navigate the financing process with more confidence and ensure that they get the best deal possible. Regardless of your financial situation, there are options available to help you get behind the wheel of your dream car.

Share this article:
We’re rated Excellent Trustpilot
4.9 out of 5 on Reviews 1774
“ChooseMyCar is Ranked #1 out of 102 companies in the section Car Finance and Loan Companies with 884* 5 Star Reviews”
*as of August 2021