If you’ve previously been refused car finance, then you may think getting car finance is impossible. However, having bad credit doesn’t mean that you can’t get accepted but there may be a few steps in which you can take to increase your chances of getting car finance with bad credit.
Check your credit
The first thing you should do is to check your credit file. Even if you know that you have bad credit already, it’s good to get into the habit of checking your credit score and credit file regularly. It is recommended that you check your credit score each month to keep on top of things. You can use a reputable credit referencing agency such as Equifax to check your credit report for free.
When you check your credit file you should make sure all your information is accurate and up to date. If you spot any mistakes on your credit file, you can contact your credit referencing agency to make a dispute. If you check your file and your credit is worse than expected and you don’t need a car straight away, you could consider rebuilding your credit score before applying for car finance with bad credit.
Save up for a car finance deposit
If you’re considering a Hire Purchase or Personal Contract Purchase deal, you may need to put down a deposit to secure your finance deal. Having a deposit to put down for finance can have several benefits for you. Without a deposit, lenders are taking more of a risk to as they need to lend you more and you may have had problems in the past making repayments. You can also benefit from less interest as the more money you put down, the less you have to borrow from a lender. Some lenders may require you to put down a deposit, but many car finance brokers have lenders who can offer no deposit car finance.
Use a car finance broker
Many people still only think you can obtain car finance at a car dealership. However, it may save you time and money to use a car finance broke. Even if you have bad credit, car finance brokers work with a wide range of lenders and help you get matched up with the most suitable lender. Bad credit car finance specialists can help you get approved for car finance with bad credit.
A car finance broker is essentially the middleman between you and the lender, but they have access to a large lending panel. Instead of applying with multiple finance companies (which can negatively impact your credit score), you can apply with a car finance broker once and then get matched up with the most suitable lender for you.
Pay off your current debts first
It may be tricky if you need a car straight away, but it can be beneficial to pay off as much or as many of your debts as you can. It can help to increase your credit score and can also have a positive impact on potential lenders and also help to increase your savings in the long run. Lenders look at the amount of credit you already have when deciding if you can handle any more. If you have high levels of debt, then you could be declined for more finance or credit.
Register on the electoral roll
In the UK, the electoral roll or open register is a list of all the names and addresses of people who are registered to vote. Even if you don’t want to vote in UK elections, being on the electoral roll can help to get you approved quicker. Many lenders use the electoral roll to check that your details are correct, verify that you are who you say you are and also your current living address. Lenders tend to favour people who are more settled and don’t move around as much, so this can work in your favour.
We hope you found these tips for getting car finance with bad credit useful.
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