Can I get car finance with poor credit history?

Yes, you can get car finance with poor credit history, but it may come with higher interest rates and stricter terms. Many lenders specialise in helping individuals with bad credit, but you’ll need to demonstrate affordability and reliability. Here’s what you should know:

1. Types of Car Finance Available:
   • Hire Purchase (HP):
     • Secured against the car, making it more accessible for those with poor credit.
     • You pay a deposit and fixed monthly instalments, and ownership transfers to you after the final payment.
   • Guarantor Car Finance:
     • A guarantor with good credit co-signs the agreement and commits to covering payments if you fail to do so.
     • This can increase your chances of approval.
   • Specialist Bad Credit Lenders:
     • These lenders focus on offering finance to people with a history of defaults, missed payments, or CCJs (County Court Judgements).
2. How to Improve Your Chances of Approval:
   • Provide a Larger Deposit: A higher deposit reduces the loan amount, making it less risky for the lender.
   • Show Proof of Income: Demonstrating a stable income reassures lenders of your ability to meet repayments.
   • Choose a Cheaper Car: Opting for a more affordable vehicle reduces the loan size and monthly payments.
   • Check Your Credit Report: Review your credit report for errors or inaccuracies and dispute them if necessary.
   • Use a Guarantor: Having someone with strong credit back your application can improve approval odds.
3. Considerations When Applying:
   • Higher Interest Rates: Expect to pay a higher APR due to the perceived risk of lending to someone with poor credit.
   • Shorter Loan Terms: Some lenders may offer shorter repayment terms to reduce their risk.
   • Credit Check: Each application involves a hard credit check, so avoid applying to multiple lenders at once.
   • Affordability Assessment: Lenders will assess your income and expenses to ensure you can afford repayments.
4. Risks and Cautions:
   • Defaulting Risks: Missing payments could further harm your credit score and result in repossession of the car.
   • Predatory Lenders: Be wary of unscrupulous lenders charging excessively high interest rates or including hidden fees.
5. Alternatives to Consider:
   • Save for a Larger Deposit: Reducing the loan amount can make it easier to secure finance.
   • Improve Your Credit Score: Take steps to improve your credit before applying for finance.