Bad Credit Car Finance: How to Improve Your Chances

Getting car finance is a good way to spread the cost of your vehicle, breaking it down into affordable monthly payments. Car finance is a popular method of payment when getting a new car, whether you’re applying for HP or PCP with good or bad credit, there will be a car finance option for you.

Ideally when applying for any sort of finance your credit file should be in good standing, however this isn’t always the case. If you have bad credit, you can still get car finance, we’ll discuss the different routes you can take and how they can help you to get on the road.

What is bad credit

Your credit score is determined by your credit history and helps lenders to decide if you are eligible for them to lend to.

Bad credit happens when you miss payments or have a mark on your credit file such as a CCJ, this indicates to future lenders that you have missed past payments.

These things on your credit file can make you seem unreliable in your repayments, and as such you would be considered ‘high risk’ by lenders – this could result in higher interest rates.

Can I get car finance with bad credit

In most cases yes, you can. However, you will likely be limited in your choice of lenders which will result in higher interest rates, so be prepared to pay a little more on your monthly payments.

There are lenders who specialise in bad credit car finance, these will be your best chance at getting car finance.

Lenders may also deny your application due to affordability concerns or unstable income, so you should ensure that you choose a car that you can afford.

What can I do to help my application

There are a few things you can do to help you application get approved. This includes getting a guarantor.

A guarantor is someone, usually a friend or family member, who will back up your application. Essentially, they support your application by agreeing to take responsibility if you default on your repayments. Make sure to discuss this with your lender or broker to ensure they are happy with this arrangement.

You could otherwise try to increase your credit score by holding off on getting a car and focus on paying bills on time.

Putting down a large deposit can also help you get finance as you’ll be borrowing less.

Final thoughts

It is possible to get bad credit car finance, however there are things you should be prepared for, and things you can do to increase the likelihood of your application being accepted.

Its important you can ensure you can afford to make your payments every month otherwise your car may be taken back by the finance company and you could be taken to court.

You can get bad credit car finance; just ensure you can afford the monthly payments. If you make your payments on time, it could increase your credit score which will help you to get finance in future.