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What Is the Best Way to Finance a Car with Bad Credit?


Getting a loan of any kind when you have bad credit is trickier than when you have good credit.

But that doesn’t mean to say you cannot get financing.

This is especially true when it comes to financing a car.

So what is the best way to get finance for your car if your credit history isn’t in great shape?

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 come up with a figure for 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.

There are lenders who 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 in lending to people with bad credit histories, and they 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.

Representative APR of 27.9%


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

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, so it could increase your chances of getting approved – and could also lead 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.

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