12 June 2023

Getting Car Finance with Bad Credit

Having bad credit may result in higher interest rates, but you can improve your credit score over time.

Securing car finance with bad credit can be a challenge, but it's not impossible. While some lenders may be hesitant to offer you a loan due to your poor credit history, there are still options available. Having bad credit may result in higher interest rates, but with responsible borrowing and timely repayments, you can improve your credit score over time.

When applying for car finance, it's important to be realistic about your needs and budget. Lenders may be less inclined to approve finance for vehicles that are beyond your means or unusual. Assess your finances and choose a car that you can comfortably afford, ensuring that you can meet the repayment obligations.

What If You Don’t Have a Credit Score?

Even if you have no credit history or limited credit, you can still obtain car finance, although it may come with higher interest rates or require specialised lenders. It's worth noting that repaying car finance diligently can help build a positive credit report.

Can You Increase Your Chances of Getting Approved?

To increase your chances of getting car finance with bad credit, there are several strategies you can consider. Offering a larger deposit can provide lenders with added security, as it reduces the amount they need to lend to you.

Another option is to add a guarantor to your finance agreement, who will be responsible for payments if you default. However, guarantor loans are less common, so you may need to search for suitable finance providers.

Steps to Improve Your Credit Score

If you want to improve your credit score for future car finance opportunities, there are steps you can take.

Start by reviewing your credit report for errors or discrepancies that could be negatively impacting your score.
Ensure that you are registered to vote, as it helps align your details and demonstrates stability to lenders.
Minimise hard credit checks, as multiple rejections can raise concerns about your financial management.
Paying off outstanding debts and managing your finances responsibly will also contribute to building a positive credit history.
Using a credit card wisely, paying balances on time, and avoiding excessive debt are all beneficial practices.

Different Car Finance Options

At AutoZone, we take pride in our ability to cater to customers with diverse financial situations, that's why we offer a range of finance options designed to accommodate your needs and help you get behind the wheel of the vehicle you deserve.

Joint Application

A joint car finance application allows two people to share the responsibility of making the repayments. It can help improve the chances of a successful application, the applicant with a good credit score can offset the bad credit. Once the car has been paid off, you’ll need to assign one of you to be the primary owner of the vehicle as only one person can be registered.

Guarantor Application

For this car finance option, you’ll need someone who has a decent credit score to help you get approved. While you’ll be primarily responsible for keeping up with payments, if you should fall behind then it will fall on your guarantor to make the payments on your behalf.

Black Box or Pay As You Go Finance

This car finance option requires you to have a small device fitted into your car to better monitor your car payments. In the event that you should fall behind on payments, you will be notified and your vehicle may be immobilised.

If you’re looking for car finance and you have bad credit, get in touch with Autozone, the UK’s leading bad credit car finance company.

Learn More: The best time to book your practical driving test

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