Many people still think that getting bad credit car finance is impossible. It’s a common misconception that people with bad credit or people who have no credit history can’t get approved for finance. It can be a little harder to get approved and you may need to put some work in prior to a car loan application.
Bad credit car finance is a specialist car finance deal which helps people with a low credit score get car finance. There is a common misconception that people with bad credit will only be offered sky high interest rates, but this is not true. There are many bad credit car finance specialists such as Refused Car Finance who can help you get an affordable car finance deal.
Prepare yourself for a credit check
Most car finance companies will need you to pass a credit check to get accepted. You should be wary of any car finance companies who are offering car finance without a credit check as it can result in high interest rates. Car finance companies want to be assured that you can be trusted to pay back your car loan. They want to take a look at your credit score and your past repayment history. If you’ve had trouble making repayments in the past, lenders will see you as more of a risk. Whilst it is possible for people with bad credit to get approved for finance, having a good credit score means you can benefit from lower interest rates. This reduces the amount you will pay overall.
Improve your credit score
Improving your credit score can put you in the best position possible in all aspects of your financial life and can also open you up to better finance offers and more room for negotiation. There are a few ways in which you can easily increase your credit score.
Pay your bills on time
The easiest way to increase your credit score is to pay your bills on time and in full. Making late repayments or missing payments can seriously harm your credit score.
Clear existing debt
It can be hard to get approved for finance when you already have existing levels of debt. It can indicate to potential lenders that you can’t handle any more finance or forms of credit.
Keep your credit utilisation low
Having credit isn’t a bad thing but you should try to keep your credit utilisation under 30%. For example, if you have a credit card with a limit of £1,000, you should only use around £300 or less.
Build a credit history
You can find yourself with bad credit if you don’t have a credit history. If you are applying for no credit car loans, you can consider getting your names on some sort of bills such as a mobile phone contract or utility bills
Register on the electoral roll
In the UK, lenders use the electoral register to help identify who you say you are and your living address. Not moving around as often and having a fixed address can make you seem more stable to finance lenders.
Save up for a finance deposit
For many types of finance, you may be required to put down a car finance deposit but putting down a little more money at the start of your finance deal can be really beneficial. Putting a deposit down for car finance lowers the amount that you borrow from the lender and your monthly repayments. It can also give the lender more confidence that you can be trusted to pay back your car loan.