Can you get a car on finance with bad credit is a question many people ask. One of the most popular ways to buy a new car is through some sort of lease or finance. If you have a low credit score, you may have heard that it’s impossible to get a car on finance or you’d be offered a sky-high interest rate. However, this isn’t strictly true. It can be harder to obtain a car finance approval if you have a low credit score but here are ways in which you can help to increase your score and your creditworthiness.
Why is credit score important for car finance approvals?
Your credit score is important when it comes to any form of finance or credit. There are so many benefits of having a good credit score, not only can it help you get easier acceptances, but it can also improve the car finance deal you are offered. Your credit score reflects how you’ve handled your finances in the past. When you apply for car finance, lenders will assess your credit worthiness. This is the likelihood of you paying back your finance on time and in full.
Your credit score shows how you handle credit and missed, or late payments can lead to a low credit score. This increases the risk to the lender, and you are less likely to stick to the requirements of your finance agreement based on your previous behaviour. People with better credit score usually get access to the best car finance rates and also find it easier to get a car finance approval.
If you have a low credit score, don’t worry, there are many options available for people who want to finance a car with bad credit, but it can be worth taking some time to prepare your application first.
Can you get approved for car finance with bad credit?
It can be possible to get a car on finance with a bad credit score, but it can be helpful to work on your credit score before you start applying. Your credit score can affect not only your chances of approval but also the rate you are offered. It’s true that having a bad credit score can mean that you get offered a higher interest rate. However, this doesn’t have to mean sky high payments that make your deal unaffordable.
When it comes to bad credit finance, it can be about fixing your credit score, choosing the right subprime lender, or finding the right car finance deal for your circumstances.
How to increase your chances of being approved for car finance with a low credit score?
It can be possible to get a car on finance with a bad credit score but there are certain factors you could consider before you start applying for finance.
Make payments on time
If you currently have any finance or credit, it’s best that you stick to the rules of your credit agreements to help prove your creditworthiness. Making payments on time and in full is also one of the easiest ways to help rebuild a low credit score. By meeting the deadlines of your current financial agreements, you are showing evidence to future lenders that you can be trusted to handle your finance responsibly.
Fix any mistakes on your credit report
It can be handy to get into the habit of checking your credit score regularly and seeing what you can improve on. When you check your score, you should make sure all your information is accurate and up to date. Having information on your credit report that isn’t correct can negatively impact your score. Also, lenders will use your report to cross reference the information listed on your car finance application.
If your information does not match, the lender could be worried that it is a fraudulent application in your name.
Clear any existing debt first
Many people also find themselves with a low credit score due to their existing debt. Having high levels of debt and using the maximum of your credit limit can harm your score. Where possible you should try to clear your existing debt before you start applying for finance. Lenders may think you can’t handle any more credit and clear some debt first will help to make your car finance deal more manageable.
Remove financial links
When you take out car finance with someone else, you will become financially linked on your credit file. If you no longer have active credit with someone who has a poor score, it can be best to dissociate yourself from them. It’s not uncommon for their low credit score to be negatively impacting yourself too. You can contact the credit referencing agency who provided your credit score to remove them from your report.
Save up for a deposit
Whilst there are many car finance deals with no deposit but it can be beneficial to have a deposit to put down for car finance. Putting more in for your finance deal means you don’t have to borrow as much; it makes your loan amount smaller and can also instil more trust with the lender as it looks like you are more financially responsible. A smaller loan amount can also help to reduce your monthly payments and make your car finance more affordable.
*Collaborative post
Debz Louise is a plus-size blogger based in Yorkshire. Behind many nationwide campaigns such as #WeaAreTheThey & winner of Best Blogger at the UK Plus Size Awards, she talkas about life as a plus-size 40-something woman in South Yorkshire.
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