Can I get car finance when I have bad credit?

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Keeping on top of your finances isn’t always easy, and it’s not always possible to maintain a perfect credit score. In fact, it’s incredibly hard to do so. Sometimes factors are out of your control, and sometimes it’s just too easy to let things slip and find yourself with an IVA, CCJ, DMP or facing bankruptcy. But if you have bad credit, you may be wondering whether you will be able to secure a finance deal for a new car – the good news is that, while most standard lenders won’t approve your application, there are specialist lenders you can work with to get your hands on the keys to a new car, despite your bad credit.

There are actually a range of different options available to you. It may be that a specific PCP (personal contract purchase) deal works best for you, or a HP (hire purchase) deal is the long term investment you need. For some, a guarantor loan can overcome many of the difficulties that applicants with bad credit have when securing car finance.

The most important thing is to find a lender who will work alongside you to help you find a new car despite a bad credit score. While many standard lenders will either refuse your application or offer you a deal with expensive premiums, there are lenders out there that specialise in providing bad credit car finance deals.

Finding car finance with bad credit

Having a poor credit rating due to missed payments, bankruptcy, a lack of credit history or anything else makes it difficult to secure car finance. This is because lenders want to be reassured of your ability to meet monthly repayments. If you have a lack of evidence supporting your ability to do so, then lenders won’t want to lend you the credit necessary for a new car.

But the truth is that just because you have bad credit, this doesn’t change the fact that having a car is a personal necessity. From picking the kids up to school to your daily commute and simply travelling to the shops, you might need your own personal transport to properly enjoy daily life.

Some of the best things you can do to help improve your chances at being offered a manageable and affordable deal include:

  • Getting on the electoral roll – Any lender is going to need to find your personal details as part of their credit check. Being on the electoral roll helps this. While it won’t transform your credit history, it’s always good to make a potential lender’s life a little easier.
  • Pay off existing debts – While this might sound obvious, it’s certainly not worth discounting. While paying off debts won’t remove them from your history, it will show a potential lender that you are making positive efforts to improve your credit rating and are being financially responsible.
  • If possible, cut ties to people with bad credit – This isn’t always going to be possible, but it’s worth noting that having a shared mortgage or bank account with someone who has a bad credit rating can affect your chances when applying for car finance.