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.
Representative APR of 26.9%
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 to make your monthly payments before applying for credit.
By honouring your payments, you can start to improve your credit rating, which will make it easier to get credit next time.