If you’re looking for a car loan, but are worried that you won’t be eligible due to your credit rating, think again! Even if you have a low credit score, you may still be able to borrow money to purchase a car. Having bad credit doesn't have to mean that you’re unable to take out a loan, though it can mean some lenders won’t consider your application.
The main thing with a poor credit history is to compare lenders and shop around. Your options may be slightly more limited, but there are plenty of specialised lenders for bad credit that could help. And if you’re unsure where to start, Wheelie Good Finance offer plenty of helpful tips and advice on car finance, bad credit car loans, and much more.
What is Car Finance for Bad Credit?
When it comes to bad credit car finance, it’s important to understand what bad credit means. Your credit score is a number determined by information on your credit file, or credit report, which records any credit you borrow, as well as regular payments like your utility bills.
Your credit score can change, depending on which company is calculating the number, as well as any changes in your financial situation. You can find out your credit score for free using sites like Experian and Credit Karma. And if you have a poor rating, they also offer tips on how to boost your credit score.
So when we talk about car finance for bad credit, this generally refers to people who have had financial difficulties in the past, and now find it harder to borrow money. One way for lenders to assess your affordability is to look at whether you paid previous loans on time. Therefore missed or late payments can make it more challenging to take out a vehicle loan, and you may need to approach a specialist lender.
Car Finance - Bad Credit Loans
There are any number of reasons why someone might have a poor credit history. Often, it’s due to factors outside of your control, such as losing your job. In such cases, it’s common to miss a few payments, while you’re getting yourself back on track. Unfortunately, if these late or missed payments are reported on your credit file, this can lower your credit score.
But there are many specialist bad credit lenders that will take your personal circumstances into consideration when making a loan decision, rather than basing it solely on your credit history. Lenders may even be able to help you if some form of legal action has been taken in regards to your finances, in addition to having a low credit score. These actions could include:
- Having an Individual Voluntary Agreement (IVA)
- Having a County Court Judgement (CCJ)
- Experiencing bankruptcy in the past
Many self-employed people have difficulty taking out car loans too, often due to a bad credit rating. As these individuals don’t have a regular income, it can be challenging to budget for monthly expenses, which can result in them falling behind. But this doesn’t mean that you won’t be able to borrow money - many loan providers will still consider your application if you’re self-employed.
Bad Credit Car Finance Eligibility
In terms of bad credit loans, most lenders look at more than just your credit score. When making a loan decision, they’ll also consider things like your employment history, as well as your income and expenditure. And when it comes to eligibility with our car loan providers, there are four main criteria. You will need to:
- Be aged 21 or above
- Be a UK resident
- Have a regular income
- Have a full or provisional driving licence
Even if you have a poor credit score, you may still be able to take out a car finance agreement with one of our lenders. Many vehicle loan providers understand that a bad credit history doesn’t always mean someone isn’t able to manage their money. Often, your credit history is exactly that - history. If your current financial situation shows that you’re able to make the due repayments, various vehicle lenders should consider your loan application.
How to Apply for Poor Credit Car Finance
When it comes to applying, you may be worried about getting accepted for car finance with bad credit. But there are a few things you can do in order to increase your chances of acceptance. Firstly, it’s a good idea to have a deposit ready to put down on the vehicle. While there are some lenders that offer no deposit car finance, paying a deposit shows the lender that you’re committed to the repayments, and demonstrates that you are able to save money.
Another thing to consider is using a broker service like Wheelie Good Finance. As we work with a number of reputable lenders, we can do all the hard work for you, ensuring that you meet the eligibility requirements of the loan provider you’re put in touch with. And as we’re experts in our field, working in the finance industry for over a decade, we’re also here to answer any questions you may have.
It’s furthermore a good idea to use a car finance calculator before applying for a vehicle loan. This can help you determine what you can afford to repay each month, and what sort of vehicle you can afford. While many people want a flashy sports car, a more sedate vehicle may be a better option! And once you’ve used the car finance calculator, you could be one step closer to owning your next set of wheels!