Poor credit history can severely affect your chances of securing any sort of loan/financial service. Lenders will always tend to select the customers with stronger credit scores as they are deemed a safer bet for making their repayments. Those with a lower credit score are less likely to get competitive rates and may even be refused a loan by the majority of lenders. There are, however, ways of getting approved for credit even with a poor credit score, and there are things you can do to improve your score too.
What is Bad Credit?
Bad credit is simply when you have a history of not paying bills, or perhaps you have not had time to build up a substantial credit score. Your credit score consists of five main factors:
1. Payment history
2. Total amount owed
3. Length of credit history
4. Types of credit
5. New credit
If you have a history of not making payments, building up debt and making multiple payment commitments you cannot afford then you will be considered higher risk and will have a lower credit score. Even just being under 21 puts you at a disadvantage, as you haven’t had time to build up a decent Credit Score, all of these will therefore mean you are less likely to be accepted by lenders for finance.
Can I get car finance with bad credit?
The good news is that you can still get approved for finance with a lower score, although you may be less likely to get a deal like Personal Contract Purchase (PCP), but you may be more successful trying something like Hire Purchase (HP) as the car remains the property of the finance company throughout the period of the loan. The payments will likely be higher the lower your score is.
You may also have more success with a Guarantor Loan, which means someone else (usually a relative or close friend) also signs up to the finance plan. If you miss payments, the other person will be liable and the finance company will seek the money from them.
What if I have just passed my test?
If you have just passed your test then you will be considered a higher risk, unfortunately, as you likely are too young to have a substantial credit history. Important to note that you will need to be over 18 to sign a credit agreement.
Can I get a car with no deposit?
It may seem unbelievable, but there are occasions when you can get a new car without paying a deposit. The only exception would be for perhaps a reservation fee of a couple of hundred pounds. In fact, you typically won’t have to make a payment for 30 days, until your first repayment is due.
A no deposit car finance deal can get you on the road quickly and allow you to spread the cost of a new vehicle equally across the loan term. However, you’ll invariably end up paying more each month. These loans will also usually come with higher interest rates and higher costs overall.
Why Choose CarMoney if you have Bad Credit?
Having a lower credit score shouldn’t stop you from driving the car that you want, and we pride ourselves on providing a simple, quick & transparent way for you to finance your next car.
Simplicity: We compare the UK's top car finance lenders so you don't have to! And we can get you approved - fast!
Impartiality: We won’t steer you towards a particular lender. 100% unbiased, we simply present great financial options to you.
Transparency: Even if the rates we get you seem too good to be true, relax, they’re not!
Specialists: One of our many lenders is Moneybarn, a specialist in bad credit car finance! They are the UK’s largest provider of vehicle finance for those with bad/no credit history.
How do I apply for car finance with poor/zero credit?
Our team of expert ninjas are brilliant at not only finding you the best finance deal, but also finding your perfect car (if you haven’t already found it!) We have our simple step-by-step process:
1. We can complete a ‘Soft Search’ with the details you provide and give you an instant eligibility check with some of the top lenders in the country!
2. CarMoney is accepted at over 12,000+ dealerships across the UK, so don’t worry if you have already found the car you want.
3. Once we have your finance application and car of choice we spring into action to get you the best finance we can.
Why not try out the CarMoney finance calculator to find out how much you could be spending each month + likely APR rates!
Posted 22/04/2021 Back to Blog