Deals like 0% finance on used cars can help keep car-buying costs right down. But what if you have a poor credit rating? Does that mean you’ll never qualify for any decent deals? Not necessarily – there is still hope. Our guide to ‘getting car finance, even if you have bad credit’ is here to help.
If you’re on a low-income or you’ve missed payments in the past, you might find that it’s difficult to obtain finance on a car. But there is hope - you can still get a car loan if you’ve got bad credit and in some cases, you could even qualify for certain offers, including 0% finance. You just need to go about applying in an informed, sensible way.
The first step to getting car finance when you have bad credit is to really understand your situation.
Understand your financial situation
First up, if you think you might have bad credit, you need to check. Understanding where you stand financially will help you make the right decisions about how you’re going to apply for credit. And besides, it might not be as bad as you think.
In our Tips of Buying Cars on Finance post, we explained how you need to obtain a credit report to understand your credit score. By checking your report you can see what lenders see, and you can also check if there are any things you could do to improve your rating before you apply. There are many companies who let you see your credit rating for free or with a 30-day free trial. We recommend:
Decide on your budget… And stick to it!
Once you’re clued up on your credit score, you can start to think about your budget. What can you realistically afford each month? How long will you be able to keep up the payments on a loan?
When working out your budget, look at your earnings and current outgoings, and factor in what you need left over for things like food, the odd night out and emergency lightbulbs or whatever.
Top tip: When budgeting, write everything down. We know people say that all the time, but seriously – after a week of writing down every penny you spend, you might be shocked. It’s amazing how much that daily coffee or impromptu after-work drink can add up.
It’s important to remember your situation when you come to shopping for car finance and your next fancy car. Getting 0% finance on used cars doesn’t have to be the only goal – there’s always a range of other offers and deals than can help you cut costs in different ways. If you’re initially denied 0% finance, speak to a professional advisor to discuss other options. Remember, one of cartime’s finance team could help.
At this point, start looking at car deals. Then you can begin to understand what kinds of offers are out there, and what kind of price you should expect to pay for the models you might be interested in.
Then, start to contact car finance lenders
As with credit cards, there are many lenders to choose from. Be careful if applying for deals from the big names that promise the best rates; as many of these are only able to do so by offering high interest plans, over very long terms. You’ll also probably need a guarantor and might get denied a fair few times, which can have a negative effect on an already suffering credit score.
Choose a lender that specialises in car finance for bad credit, or a firm that will discuss your situation with you before you get accepted or rejected. Tools like our Car Finance Calculator can get you on the right track, giving a good indication of the types of offers you can expect to be able to go for.
While lenders can seem scary, many are very fair and will offer open, honest advice. Just as much as there are a few bad apples out there, there are good eggs too. Many understand that your history might not represent your present or future, and will look at you as an individual rather than a number on a credit score.
Most people do need a car. Whether it’s to get to work, do the weekly shop or pick the kids up, there are many times when the bus just simply won’t suffice. If you’re looking to buy a car, or if yours has become a bit of an old banger and you’re looking to update it, a used car is a great low-cost option – and obtaining the right finance plan for you will help you stretch your budget even further.
If you’d like to talk to one of our friendly team about getting car finance even if you have bad credit, give us a call. We’ve got a range of deals including HP, PCP and 0% finance on used cars, so whatever your needs there’ll be something to suit you.