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Getting Finance (Advice)

You want to get finance on a car, but you’ve got a bad credit rating.

Are you out of luck?

The short answer is no.

You can still get finance on a car with bad credit, and while it makes it slightly trickier, you still have options.

Here’s some information on why you could still get finance, and some tips on how to go about it.

Find Out Your Credit Score

It is always worth starting out by finding out your credit score.

To do this, simply visit a credit-checking agency like Experian and carry out a check.

You will then have a much better idea about what you can expect when you start applying for credit.

One of the other benefits of doing this is that you may be able to improve your score.

This is only really possible if you are in no rush to buy a car because it can take some time to improve it.

This could involve paying off outstanding loans, registering on the electoral roll or taking out a credit card and paying it off each month.

Consider Your Options for Car Finance

Even if you do not have the time to improve your credit score, you may still be able to get finance on a car.

The best option is usually to approach a specialist in car finance rather than a general lender.

Explain your situation, and find out if they are likely to approve your application. They may have some suitable deals for people who have bad credit ratings.

You will also find that there are lenders who specialise in lending to people with bad credit.

Depending on your specific situation, there is a good chance that they will approve your application.

The downside is that they usually charge higher rates of interest, but they may be suitable for your situation.

When you have found a few lenders who may provide you with finance, compare them and find out which looks like the most suitable option for you.

Remember to look at the annual percentage rate (APR) they charge as well as the monthly payments you can expect to make.

Total cost of credit
Total repayment
payments of
Representative APR of 24.9%

Our car finance calculator helps you see how much your car loan repayments will be on a monthly basis.

Simply select how much you are looking to borrow and for how long.

Don’t Approach Too Many Lenders

One word of warning here: don’t start making lots of applications in a short space of time. It’s not a case of applying to them all and hoping one of them will approve you. If you get declined by numerous lenders, this can hurt your credit score.

If you think that you may be declined credit, spread out your applications and take your time rather than applying to lots of lenders.

Find Out If You Can Make a Larger Deposit

If the interest rate is high, there is another option to consider.

If you have some savings available, find out if you can pay a larger deposit in return for lower interest rates.

A larger deposit reduces the risk for the lender and gives them more confidence, so this is something worth considering.

Make Sure You Can Afford It

Wherever you end up applying to, always make sure you are aware of the small print so you know exactly how much you will be required to pay back each month.

Finally, be confident that you can afford monthly payments before applying for credit.

By honouring your payments, you can improve your credit rating, making it easier to get credit next time.

Work Out Your Budget

Before you approach a lender, work out how much you can realistically afford to pay back each month.

This involves creating a basic budget with all your ingoings and outgoings.

Once you figure out how much you can afford to pay back each month, this will give you a good starting point about the type of car you can buy and the size of loan you can reasonably expect to get.

Find a Specialist in Car Finance

There are many types of lenders who you could approach, but your best option is normally to go with a specialist.

Some lenders specialise in car finance as well as specialising in lending to people with bad credit.

These will often be the most reliable option for people in your situation.

These lenders have a lot of experience lending to people with bad credit histories and are therefore more likely to consider lending to you.

Research Interest Rates

Just because you find a car finance lender who is willing to provide you with finance, this does not mean you should ignore your other options.

There are many lenders on the market, and their products will all be different.

Some will have higher interest rates than others, while some will allow you to pay back your loan over a longer period of time, so it pays to do your research.

Don’t expect to get the lowest rates of interest.

One thing about having bad credit is that you are likely to be offered higher rates. But that does not mean you should not look around.

You may find that you are able to get a much better deal simply by spending a few minutes researching the market.

Save Up a Large Deposit

Another option to consider is to save up a larger deposit.

The larger the down payment, the lower your interest rate is likely to be.

Why? Because you present less of a risk.

This also means you will be borrowing less overall, which can help reduce the loan term. It could help to sway the lender’s decision and get you approved.

If you have no deposit then see our page for “bad car credit no deposit” here.

Get a Cosigner

This is where you get a cosigner with a good credit score, and they apply for the loan with you.

The idea is that they are vouching for you – if you don’t pay back the money, they will.

This reduces the risk for the lender, increasing your chances of getting approved – and leading to a lower interest rate.

Try to Improve Your Credit Score

These are the factors to keep in mind when you’re looking for the best way to finance a car with bad credit.

Start by searching for a specialist car finance lender, particularly one that provides finance to people with bad credit histories, because this is often your best bet.

But make sure you study your options and do your research because ultimately this will increase your chances of finding the very best deal for your situation.

Finally, consider improving your credit score if you have the time.

There are many ways to do this, some of which are easier than others, like taking out a credit card and paying it off every month.

Slowly, this will help to improve your score – making it easier next time you want to get a loan.

Total cost of credit
Total repayment
payments of
Representative APR of 24.9%

Our car finance calculator helps you see how much your car loan repayments will be on a monthly basis.

Simply select how much you are looking to borrow and for how long.

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