One of the questions that we are often asked is, is it possible to get car finance if I have bad credit? There are a few options available to you. Having poor credit does not instantly mean you will be declined, there are a lot of companies and lenders out there who are willing to give you credit, even if your credit score isn’t the best. Unfortunately sometimes it does mean that the interest rates from these lenders can often be very high.
This does mean however knowing what your options are can give you the best chance of being able to retain car finance that is affordable.
A Bad Credit Rating. What Is It?
A credit rating can reduced to a bad credit rating due to issues such as missed payments for e.g. mortgage repayments being missed or late. Also CCJ’s and bankruptcy claims can also affect your credit rating.
Each lender has a list of criteria that they use when assessing the risk of if you application is worth the risk. There are many different aspects they take into consideration, and bad credit score doesn’t always mean an indefinite no. Just because one lender has decided you are too much of a risk doesn’t mean that all other lenders will think the same and reject the application.
The amount you are borrowing can also affect the chances of you being accepted, For example if you have applied but been rejected for a mortgage does not mean you won’t be accepted for car finance. This is because the amount you are applying for is less than that off a mortgage.
How to apply for car finance if you have a bad credit score?
Applying to as many companies as you can is not the way to improve your chances of being accepted. In fact being declined on multiple occasions can actually contribute to making your credit worse. The aim is to do your research.
If you really believe that you will be declined then research is the key. This will allow you to find the best finance company for your situation. You can also spread your loan application over a longer period of time as this can sometimes make the repayments cheaper. Having your credit score checked before applying may not ensure you get accepted but it may help give you have an idea of what the outcome maybe.
A lot of agencies that are used for credit checking will conduct a ‘soft check’, although this will leave a note on your credit check but this won’t be visible when a full credit check is conducted. This is called a ‘hard check’. You also have access to comparison websites and finance providers. On these types of websites you can enter your details on their online applications to find out what the likelihood of you being accepted. Here at the car finance companies we specialise in getting finance for people with bad credit.
Another way to help increase your chances of getting finance is to ensure all outstanding loans. Paying these off before applying for car finance can help show you are a suitable person to lend to. Also using a guarantor can also help make you more likely to be accepted. Try our online HP Finance Calculator today here.
Will anyone give me car finance?
Having bad credit does not always mean that you will be forced to go with a finance lender that specialises in credit for people who have bad credit. The lenders who specialise in high risk clientele often have very high interest rates but they are more likely to give you a finance.
Interest rates from the majority of dealerships tend to vary between 0% APR up to around 7%APR. These are relatively low interest rates, lenders who specialise in higher risk credit scores can often have very high % APR, these can be up to 50%. With interest rates this high means this can be a very expensive plan. This however is not always the case. Here at The Car Finance Companies we ensure that the highest interest rate we have is 30% APR which is a lot less that 50%. We are able to take the frustration away of trying to find car finance as we have a very good relationship with reliable outside finance companies who work closely with us to ensure you receive the best option for you and your situation.
You can also speak to your bank, these can offer you loans. If you have good enough credit, this would be another option that may be a possibility, But if this is not something you would want to consider then we have access to finance companies.
Do you need a car now?
Do you need a new car right this moment? It may be beneficial if you don’t need a car instantly to wait a short amount of time. This will give you time to help improve your credit score. There are a few ways in which you can do this including making sure your are on the electoral roll, getting something small like a TV or a games console on credit and making the monthly repayments on time or even a credit card. These can all help improve your credit score if you decide to take this route.
So is it possible to get car finance with a bad credit score?
So here at The Car Finance Companies we can pass your details over to possible lenders. This takes the stress out of finding your own. It also might mean you find a better deal, The Car Finance Companies have good relationships with outside lenders. The one area you need to focus on is the monthly repayments. Can you afford them? The overall cost of the vehicle including the APR (annual percentage rate). The small print is important. Make sure you are aware if there are any penalties if you leave the agreement early and if there is any other charges.
So yes the answer is yes! It is possible to get car finance if your credit score is bad. Also by taking out car finance and ensuring that the repayments are on time, you are going to make your credit score better.
The Car Finance Companies provide you with a massive selection of used cars and vans. We are based in Liverpool, Merseyside but can deliver UK wide. Check out our stock range and give us a call on 0151 523 4000 to get started on getting that dream car today!