It can be easy to feel like there are no options available for those with bad credit to get the finance they need. Due to a low credit score and a history of poor credit, many lenders may turn these applicants away quickly, favouring those with better credit. But this doesn’t mean those with bad credit only have the cash purchase route to go down when looking for a new car. Here’s our short guide on how to secure a car with bad credit and drive away happy.
Focus on Specialist Lenders
Whilst many lenders may not be able to help, some specialise in car finance for bad credit, even if applicants have been declined recently. Rather than a focus on your credit history, these lenders look at your affordability and determine if you can afford the loan you want. Not only that, but some can help provide not just the car finance but also the vehicle itself, meaning applicants can find the car they need and get finance approved in one place. This not only saves time, but it means the lender can help tailor a repayment plan that matches what you can afford to pay. A credit check may still be performed, but this will be one part of the approval process overall.
Being able to afford the car finance you want is vital, especially if you already have bad credit. Even applying through bad credit lenders is not guaranteed to give you the approval you seek, so applicants should check their affordability thoroughly before applying. Many lenders will review your finances during the application process, but it is best to already know what your affordability is before applying so you can work out a budget. By comparing income with expenditure, this should leave a disposable income to work with, with the focus being on essential outgoings. You’ll then be able to reduce any non-essential spending and be left with a figure that you can use towards car finance repayments. This is an important step to take as applying for a loan without knowing you can afford to maintain the repayments is risky. Taking the time to review your finances will determine if buying a car is affordable for you and it won’t push you further into financial difficulties.
Review Credit File
Whilst bad credit lenders won’t focus on your credit rating, it is a good idea to regularly review your credit file. This is because you may have factors that are having a negative impact on your credit score that can be easily resolved. For example, something as simple as gaps in your address history or other incorrect information can affect your score. By checking your credit report, you’ll also be able to identify why your current rating is low, helping focus on what areas need to be improved overall. Every bad credit applicant should have a long-term goal to improve their rating, as this will make it easier in future to apply for credit. In the meantime, ensuring any outstanding debt is maintained will should help to slowly build your score back up, so when taking on new car finance, it needs to fit in with your circumstances and not cause further issues.
Keeping in mind using specialist lenders and reviewing both your credit file and affordability, will put you in a position to confidently apply for car finance with bad credit. You should think carefully before proceeding with any loan application and only apply if you can afford to do so.