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How can I get car finance if I have bad credit?

One of the easiest ways to find cheap car finance it to compare quotes with us. We’ll show you the best deals from a variety of the UK’s most trusted car finance providers. You can compare hire purchase agreements based on, APR, deposits, term and age of vehicle.

There are plenty of things you can do to ensure you get the best deal:

1. 
   Choose your car wisely. See the best cars to buy.

2. 
   Make sure you buy your car from a reputable dealership. We will handle this for you.

3. 
   Make sure your car meets the minimum lenders requirements.

4. 
   A slightly newer car with less mileage may be a bit more expensive initially, but could save you money in the long run on vehicle maintenance and insurance premiums.

5. 
   Consider the lender you choose. Its important you not only get the lowest payment but you choose a lender that will help you if your circumstances change.

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We’re Bad Credit Car Finance Specialists

As car finance specialists, we understand that it’s not always possible to have the perfect credit score, whether you’ve not taken out credit before, or have experienced credit problems in the past. Bad credit doesn’t have to mean you can’t buy a car.

We know how difficult it can be to secure the right deal for bad credit car finance. That’s why we always go the extra mile to find the best deal for your individual circumstances. We’ll start by conducting a ‘soft search’ rather than a full credit check, so the initial application won’t affect your credit score. This will give us a clear indication on whether we can source credit for you and the kid of credit we can get. If what we initially offer seems right for you, only at this point, we will progress onto the full credit application.

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4.9 out of 5 on Reviews 1774 “ChooseMyCar is Ranked #1 out of 102 companies in the section Car Finance and Loan Companies with 884* 5 Star Reviews”
*as of August 2021

How ChooseMyCar can help customers with bad credit

As car finance specialists, we understand that it’s not always possible to have the perfect credit score, whether you’ve not taken out credit before, are reliant on no credit checks, need help with debt management,or perhaps you have even filed for bankruptcy. Bad credit doesn’t have to mean you can’t buy a car.

We know how difficult it can be to secure the right deal for bad credit car finance. That’s why we always go the extra mile to find the best deal for your individual circumstances. We’ll start by conducting a ‘soft search’ rather than a full credit check, so the initial application won’t affect your credit score. This will give us a clear indication of whether we can source credit for you and the kind of credit we can get. For example, you might be in need of a guarantor loan or a specific PCP (personal contract purchase) or HP (hire purchase) car finance option. If what we initially offer seems right for you, only at this point, we will progress onto the full credit application.

Here are just some of the other ways we can help:

CCJs, defaults and arrears

Our network of trusted lenders can help you find finance, even if you have CCJs, arrears, IVAs or a debt management plan. It may be that you’re self-employed. Whatever your situation, we could help you to secure car finance.

Applying won’t affect your credit score

To work out the affordability of any loan, simply use our quick finance calculator to see what you could borrow. Or, apply now to view your options. All without affecting your credit score.

Approved, reputable dealerships

All our trusted dealerships are handpicked by our experts. That means quality cars, from quality dealerships. So, you can feel safe in the knowledge that your experience will be smooth from beginning to end.

Representative 21.4% APR

We’re always transparent with our finance deals. Plus, we always find you the best rate. For starters, our representative APR is just 21.4%. Because putting you first is what we do best.

I have poor credit and I’m worried that I won’t be able to get car finance – what are my options?

If you have a poor credit rating due to missed payments or anything else, we understand just how of a worry it can be when looking for new finance arrangements. But having bad credit isn’t going to stop you from needing to be on the road with your own personal transport – here at ChooseMyCar, we understand this. In fact, having a car might be crucial to continue earning and begin improving your credit rating. Fortunately, you’ve come to the right place.

Whether you have a poor credit score, an IVA (Individual Voluntary Agreement), a CCJ, or if you have been refused car finance elsewhere, the friendly team of experts here at ChooseMyCar are here to help. We have years of experience helping to match customers with poor credit scores with manageable and affordable car finance across the country. Regardless of your financial situation, get in touch with us today for the guidance and advice you need.

The good news is that there are a few options open to you when it comes to your car finance application, even if you have bad credit. From taking steps to improve your credit rating and credit report, using a guarantor loan for added financial security, using our online car finance calculator to make sure of what you can afford, we will work alongside you as a finance company who will support and guide you through the process. Making a finance or loan application when you have bad credit can be daunting – we are here to help.

A CCJ (County Court Judgment)

The first type of car finance we offer for those with bad credit is CCJ car finance, which helps those with County Court Judgements to get back on the road despite their past financial troubles. Having a past or present CCJ can hurt your chances of being successful in credit applications, but it does not mean that you will be automatically refused car finance – there are lots of variables, with specialist bad credit car finance providers offering tailored plans that account for your specific problems. With the help of a bad credit car finance expert, you’ll be able to find a finance plan that works best for you, meaning you could be back on the road much sooner than you initially might have thought.

How will a CCJ impact my car finance application?

Once it has been issued, your CCJ will remain on your credit file for 6 years, meaning that it will continue to make it tough to gain access to car finance or other forms of credit for that period. A will remain on your file even after the debt it relates to has been paid off, which means there are likely to be long lasting repercussions if you are handed one. This is one of the things that will be taken into consideration when you are being considered for credit and often contributes to your score being lower than you would like it to be.

This lower rating on your credit score becomes an issue when you are applying for new credit agreements, as it indicates that you have a history of failing to make payments on outstanding debts to the point where an official order had to be put in place for payments to be made. Whilst you may not fail a credit check solely down to your CCJ, a low credit rating will often result in the applicant being subjected to higher interest rates than those who have healthier scores might.

Guarantor loans: everything you need to know

If you’re struggling with bad credit and looking to gain approval to an affordable car finance deal, it’s likely that the idea of a guarantor loan has crossed your mind. For many, this appears to be one of the most difficult ways to gain access, but is that really the case? Below, we’ll take a look at some of the pros and cons of guarantor loans to show who this type of car finance may be a good option for, and who may be best served choosing a different option. We’ll also look into the intricacies of guarantor loans, looking at how they work, who will be able to be your guarantor, and how a missed payment could impact both you and your guarantor.

What are the elements that affect my credit score, and how can I improve it?

Your credit score, or credit record, is essentially a history of your past behaviour when it comes to credit agreements. A lot of things can affect your credit score, such as taking on a lot of new credit, the length of your credit history, your mix of credit arrangements and more. However, payment history is the most important part of determining your credit score and it has a very significant impact on your credit profile overall. Lenders are most interested in knowing whether you will be able to keep up with monthly payments and make your payments on time.

As such, a bad credit score is most often the result of failing to adhere to prior credit agreement such as missing payments or making late payments. For example, if you have failed to repay a mortgage, missed payments on a mobile phone deal, failed to repay a loan, credit or prior finance agreement, then you are very much at risk of damaging your credit score.

Having a bad credit score will in general make it more difficult to have future credit deals approved and to secure funds for purchases such as those for a home, car, or other vehicle. Your credit score affects how a lender views your eligibility when deciding things such as:

• Whether to lend you any money at all
• How much money to lend to you
• What interest rate should be set on the amount that is loaned to you

Think of your credit score, credit report and credit history as something like your very own financial footprint. It behaves like a record of your financial history with other creditors that allows potential future lenders to assess how safe it is to offer you finance or credit. If you have missed payments, made late payments, or been declared bankrupt, then your credit history will reflect this.

The good news is that you are able to make your own eligibility check by checking your credit score with a credit reference agency (CRA) – and this is often done entirely for free. It’s important to understand that having bad credit won’t necessarily stop you from undergoing your own car finance journey, but it may make the process more expensive and long winded.

Defaults on payments

One of the most obvious things to keep an eye out for is defaulting on your payments more than once – any default that is held against your account will have a negative impact on your score and will remain on your credit file for quite a while, which can often be a deterrent to potential lenders in the future. A default is awarded when payments on your current outstanding loans have not been made, resulting in falling behind with your debt and breaching your pre-agreed payment plan set out by the lender. If the default is cleared within a few days, there is a chance that your error will have been cleared before it could appear on your report, however, if it is left for a longer period of time then it will certainly leave a lasting impression.

Loan application rejections

When you’ve got poor credit, you’re likely to find it hard to get credit, so this can also be a clear indication that your credit profile might not be in the best shape. If you’ve found that your recent loan, credit, or finance applications have been coming back with rejected responses, it’s highly likely that you are suffering from bad credit caused by mismanaged finances and unpaid arrears, and late payments. If this sounds like the situation you find yourself in, it could be time to look into ways that you can improve your credit score.

Credit card applications

Much like with loan applications, you will need to pass a fairly comprehensive credit evaluation in order to be offered a credit card – a credit card is essentially loaned money which must be repaid on time, or you’ll face default, debt and poor credit. People with bad credit may often find it difficult to find credit card providers who are willing to offer them a card, with the options that are available often relying on high interest rates and sub-par bonuses to minimise the risk on their behalf.

On top of this initial credit check during your application process, most card issuers will routinely conduct further checks throughout the time that you have a card, continuously monitoring any improvements or decreases in your creditworthiness to ensure that you are still an eligible recipient of the credit being offered, or if your credit limit could be increased due to improved credit ratings. If you notice a change in your credit limit or eligibility for credit cards, it’s highly likely that your credit score has changed.

Debt collection agencies

If your loans and credit lending has got out of control, you may be contacted by a debt collection agency – these are companies that are in place to ensure that debts are paid in one way or another, whether this is through threats of repossessing your assets or with them actually actioning this and sending bailiffs to collect items in the amount of your unpaid debt. The first thing you should do in the event of being contacted by a debt collection agency is to verify that the debt being collected is in fact tied to your account – if the accounts in question are genuine, you’ll then need to ensure that you are getting your payments up to speed as soon as possible to avoid further action including repossession.

Job application failure

What many don’t know is that when you’re applying for a new job, you’re often submitted to some form of credit search, usually a soft search, which gives the employer the opportunity to take a closer look at their new potential employee. A person’s credit file is often a great indicator of how they manage their finances, which is particularly important for high ranking positions such as directors, executives, or finance staff. When you’re having trouble finding a new job, it’s worth considering whether your credit score could be impacting how appropriate you look for these roles to a potential employer.

If you’d like to have a credit check carried out on your account, you always have the option to do so – there are regulations in place to ensure that every person is able to view their credit score for free, however, some services may charge a fee. These paid services can often be far more informative, giving a deeper insight into your finance and credit history to highlight how well you rank and where you could improve.

So how do I improve my credit rating to make it easier to get a good finance agreement?

The first step in getting a good car finance bad credit deal is always to start taking steps to improve your credit score. Here at ChooseMyCar, our finance team specializes in providing manageable bad credit car finance agreements, but our financial advisors always recommend improving your credit score to help access better deals. Fortunately, there are a few things you can do to help this, including:
Man pushing the needle up on a credit score gauge

Registering to vote – This is a simple one, making it an absolute must. Your prospective lender will always perform a credit check before making a lending decision. To do this, they’ll need your name and address – something you can make much easier for them by registering on the electoral roll.

Identify and address any issues with your credit history – Our finance advisors always recommend regularly reviewing your credit score, as well as getting hold of your full credit history. Doing this means you can make sure that there are no mistakes while also taking steps to begin making repayments on any current credit you have.

Make your repayments on time – Making sure you don’t miss any payments avoids accumulating current debt that reflects badly on your credit history. This demonstrates to your new lender that you are more likely to keep with payments on any used car finance deals they approve you for. Doing this will improve your credit score over time as well as helping you to secure a more beneficial and affordable car finance deal.

Don’t open too many new loans and close unused credit accounts – If you have a lot of new loans opened recently, your lender will be able to see this and might take it as an assumption of financial difficulty. Generally speaking, the more loan applications you make, the more likely it is that your credit score might decrease. On top of this, unused current credit accounts should be closed to clear this from your current history.

Knowing you have bad credit can be stressful and it can potentially close doors to you when it comes to finance and loans. But knowing where to start on your journey of improving your credit score is also difficult. Fortunately, here at ChooseMyCar we have some fantastic resources on our website. Among these is our guide to improving your credit score, which is a great place to start for anyone hoping to apply for car finance with bad credit.

How do I check my credit score for free online?

Thanks to the many tools that are available online, it’s actually incredibly easy to check your credit score – it’s actually more difficult trying to find a preferred credit checking service! When you’re searching for online credit checking tools, you’ll want to focus on the features that each platform offers, as this’ll help you to differentiate between the wide range of services that are available. With features such as credit card suggestions based on approval rates for people with similar scores to yourself, step by step guides on how to improve your credit score, and weekly reports available, these apps and online tools have never been more sophisticated than they are right now!

In addition to this, you’ll actually find that most of these services are free to use! On certain platforms, you may find a premium version that requires payment to use – these will usually be more feature-heavy and offer more benefits – but even in these cases it’s likely that this same platform will offer a free version that’s still very useful. By law, everybody is able to access their credit score for free as it is deemed a right, rather than a privilege, so you can simply request to be given your credit score if you want to skip the apps and platforms that many provide.

How can car finance impact my credit score in the long run?

One of the most intriguing things regarding car finance is the way that it is so deeply intertwined with your credit score – initially, you’ll find that you must have a score deemed acceptable to even gain access to car finance, but beyond that, you’ll come to realize that your car finance can actually begin to impact your credit score too! The way that it impacts your credit score will completely depend on how well you manage your monthly repayments – if you’re strict and ensure that every payment is made on time and in the full amount, you’ll prove that you are a reliable borrower that presents a reduced risk to future lenders. On the other hand, irresponsible borrowers who fail to make repayments or are found to make payments late will be waving a red flag to any future lenders, which could harm their chances of gaining access to credit in the future.

Your personal information:

Your name, address, salary, relationship status, and living situation will all be considered to determine your creditworthiness. The more stable you appear to be, the safer you are to offer credit to.

Your credit history:

This will take into account any credit that you currently have or have previously had. By looking into this, the CRA is able to investigate your behaviour in regards to using credit – if you’re responsible and sensible with credit, you’re likely to have a higher credit score.

Enquiries made:

One thing that many don’t consider is how applying for credit agreements can actually impact your credit score in turn; by applying for credit too often, you start to appear desperate for credit or overly reliant on credit, which is a huge red flag for lenders. Each time you apply for credit, a search will be done on your credit file – these searches leave a mark and can be seen by future prospective lenders.

Public records:

If you’ve ever been involved in a bankruptcy, had a CCJ, or been under the restrictions of a debt management plan, this will likely play a part in lowering your credit score. Each of these events relates to previous financial trouble or trouble repaying debts, which will deter lenders from offering you credit without substantial benefits on their side such as high deposits or increased interest rates.

Why is your credit score different with each CRA?

Simply put, this is because each of the credit reference agencies calculates credit scores in a slightly different way, giving different weight to certain factors that they deem more or less important when determining whether you are a suitable applicant.

In most cases, your score will be calculated using the FICO system – this is an algorithm that CRAs use to calculate scores based on the relevant factors. By basing the scores on this system, they’re able to give you a score that’s based upon a standardised scale, however, the issue arises when the context is added into the algorithm, which is why different scores occur.

In some circumstances, the CRA may deem one factor to be more important than another, so they will increase the weight that it holds within the calculation, and vice versa. As this is down to the discretion of the CRA, this can vary depending on each individual CRA and the specific context under which you are applying for credit.

In short, this is why you are given varying scores when checking your credit rating using a selection of different CRAs. If you want to learn more about credit scores, what impacts them, and how you can improve yours, check out our comprehensive guide to credit scores!

What information do Credit Reference Agencies hold?

In the age of GDPR, data protection, and a world full of hackers, it’s never been more important to ensure that you’re keeping your data as safe as possible, which means you are right to be cautious about offering up your personal data to credit reference agencies online without knowing what they’ll do with it after your credit check is complete.

The main thing to remember is that giving your data to a CRA is very safe – they’re some of the most secure data handlers in the world and follow every guideline to the letter when it comes to your data. This allows you to benefit from their credit reporting services without having to worry about breaches or fraud.

Upon closer inspection, you’ll probably be surprised to learn just how much the CRAs know about you – credit checks are so comprehensive and detailed (as they have to be to get an accurate reading of your creditworthiness) that they know even the most minute details about you. Whilst this may seem a little excessive, it does mean that your credit score is incredibly accurate.

Some examples of the information that credit reporting agencies hold are:

• Your utility provider
• The banks that you are registered with
• All of your current and previous credit cards
• Any outstanding loans
• Your mortgage information
• Your address
• Any court orders such as a CCJ
• Your presence on the electoral roll

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