Can you get car finance with bad credit?
It can seem harder to get accepted for car finance if you have poor or incomplete credit history, but there are options out there
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Will I get accepted for car finance with bad credit?
If you're wondering how to get car finance with bad credit, there are a few things you'll need to keep in mind.
Applying for finance with poor credit history can mean that some lenders won’t offer you the funds to buy your car as they’ll view you as more likely to miss payments.
Poor or incomplete credit history might also mean you have to pay a higher interest rate, if you do get offered the car finance.
Not all lenders offer car finance for bad credit. If you're applying for car finance with cinch or any other lender, your credit history will usually be assessed before you're accepted for the loan.
You won't know if you can get car finance with bad credit until you either complete a full application or use an eligibility tool (such as our finance eligibility checker).
An eligibility checker will usually use a soft search and have no impact on your credit score, whereas a full application, which is then turned down, could be detrimental.
Car finance providers will carry out credit checks to assess whether you're a good candidate for a loan.
While soft credit checks don't show on your credit report, hard checks are recorded. This means that other lenders looking at your report can see them and may view too many hard checks in a short time period as a sign of overusing credit.
Being turned down for finance can make other lenders less likely to accept your application.
Car finance with bad credit
It’s important to only apply for car finance you're confident you can repay, as you can actually improve your credit score over time by paying off the finance on time and in full.
To increase the chance of getting accepted for a better finance deal in the future, you can improve your credit score by checking the information the credit companies hold is correct, staying at an address for three years, building up a history of paying back loans, and settling any debts.
In the short term, there are a few ways that will still let you get behind the wheel, so don’t let a bad credit score get you down.
Can I get car finance with bad credit?
It’s possible to get car finance with bad credit, as long as you’re reasonable with your needs.
If you're applying for finance on a vehicle that’s out of your budget or a bit unusual (such as imported classic cars), you’re less likely to get accepted.
Look at your budget and decide what a sensible choice is for your next car and make sure you’ll be able to keep on top of the payments.
All of the cars you’ll find on the cinch website are available for car finance, and our lenders will take you through your options if you’re struggling with your credit score.
Can I get car finance with no credit history?
Maybe you’ve just turned 18, or you’re new to the UK and haven't been able to build up some credit history yet – this might mean you have a ‘thin’ or ‘no’ credit history.
You should still be able to get car finance, but you might find that interest rates are higher, or you need to pick a lender who specialises in these situations.
The good news is that if you keep on top of your payments, car finance will help you build a good credit report.
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How to get car finance with bad credit
Getting car finance with poor credit history is possible – with a few adjustments. You might find that your monthly payments are higher as interest levels might be raised, but there are ways you can make it work.
Car finance for bad credit:
Offer a larger deposit
You might be able to get lenders to agree to car finance if you offer a larger deposit, as this gives the lender some added security.
The higher the deposit, the less your finance company will need to lend you – it’ll see this as a lower-risk deal.
See if you can add a guarantor to your finance agreement
Adding a guarantor to your finance agreement is a good way to minimise more of the risk for your lender as they’ll know they have someone else there for security.
If you don’t keep on top of your payments, your guarantor will be responsible for them. This way, the lender knows it has some added security for getting its money back and can show that somebody close to you has enough faith in your finances to have your back.
Guarantor loans are less common now, so you might need to shop around to find a finance provider that has this option.
Here at cinch, our providers don’t offer guarantor loans, so you’ll need to explore other options with us.
Find lenders who work with bad credit
There are lenders out there who specialise in working with people who have poor credit, so it might be worth checking these out.
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How to improve your credit score for car finance
Improving your credit score can be a long process, but it doesn’t need to be a difficult one. There are a few easy steps you can take to build up credit over time, so getting car finance in the future will be an easier process.
Check for errors on your credit report
Small things on your credit report can have a big impact. Spelling errors can often go unnoticed – have you spelt your address correctly? These quick fixes could improve your credit score without much effort at all.
You’ll need to visit one of the three main credit reference agencies to check for (and fix) any errors – these are Experian, Equifax and TransUnion.
Register to vote
Finance companies will be taking a good look at your details and will be thrown off if you aren't registered at your chosen address. Getting on the electoral roll is an easy way to make sure all of your details line up.
Keep hard credit checks to the minimum – choose soft checks where you can
There are two types of credit checks – hard and soft. Soft credit checks won't leave behind any evidence on your credit report, but hard checks will show up when other lenders take a look.
If a lender notices that you’ve had lots of hard checks for loans and have maybe been turned down, it could see this as a sign of bad money management. Try and stay soft where you can, until you’re ready to go ahead with an application.
You’ll always need a hard check eventually – and some lenders can’t even do soft checks – but try and only go ahead with hard checks when you’re 100% sure about the finance.
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Does someone you’re financially linked with have bad credit?
If you are linked financially with someone who has poor credit, this could be hurting your own credit score.
Do you have a mortgage with someone else, or a joint bank account? Check with them how their credit score is looking and think about how that could be affecting you.
You can apply for a ‘notice of disassociation’ with each credit reference agency if you don’t need to be linked to the person anymore.
Pay off your debts
This is a simple one, and we know it isn't always as straightforward as it sounds, but paying off money owed is the best way to improve your credit.
If you can keep on top of your payments, lenders will usually be happier to offer finance.
Paying off debts can also have a negative effect on your credit score as it could lead to a thin credit history.
Controlled lending with on time payments can help keep your report healthy with evidence that you’re a good borrower.
Consider a credit card
Sensibly using a credit card can help build your credit score. You can put regular purchases on your credit card that you know you can pay off, and use this as a way to show you’re capable of borrowing money and paying it back.
It’s important not to take advantage of your credit card, as getting into more debt and struggling to pay will negatively affect your credit score.
Will I get accepted for car finance with bad credit?
It's impossible for us to tell you for sure if you'll be accepted for car finance without knowing your individual circumstances.
You'll need to speak to a car finance provider to see where you stand and go through the finance application process.
There are a few scenarios that you might be concerned about when applying for car finance with poor credit history:
Car finance with very bad credit
Some car finance applicants might describe themselves as having very bad credit history.
This might include a history of missed payments, outstanding debts, failing to stick to credit agreements, having a CCJ or even declaring bankruptcy.
If you know you have very bad credit history, you might still want to speak to a lender and see if there's a scenario that could work.
You might also want to consider if car finance is right for you at this time. If your credit report is suffering because of your current financial situation, it's worth evaluating if this is the right time to add another loan.
Bad credit CCJ car finance
A County Court Judgement (CCJ) is a type of court order that's filed against a person with outstanding debts.
If a court issues you with a CCJ, you'll be sent a letter detailing how much you owe, who you'll be paying, and the payment deadline.
It's typically much harder to get car finance with a CCJ in place as lenders will see this in your credit history and see you as a risky borrower.
If you have bad credit in general, adding a CCJ to the mix can mean you'll have a very tough time being accepted for car finance.
It's up to the lender to decide if they can offer car finance with bad credit and a CCJ. They'll look at your individual circumstances to make a decision.
Bad credit car finance for unemployed
It is possible to get car finance when unemployed, but having bad credit can make this tricky. Bad credit car finance for unemployed people is typically harder to come by.
Lenders look at affordability and will want to know if you can cover the cost of car finance. If you're unemployed, you'll need to show that you have another source of income to cover the finance payments.
This means you can still get accepted for car finance with benefit payments like Income Support, as long as you can show you can pay back the lender after covering your bills, debts and other payments.
Some lenders might offer higher rates of interest to those with bad credit, or you may be able to offer a larger deposit to increase your chances of being accepted.
Car finance - bad credit and no guarantor
Guarantor car finance is not as popular in recent years and might be harder to come by, but it was previously a popular option for those with bad credit.
Having guarantor car finance means that you can add another person to your agreement who will be responsible for your debt if you don't pay.
This can give lenders extra peace of mind if you have bad credit.
You might find it harder to find guarantor car finance options these days and our lenders here at cinch don't usually offer this.
So, don't worry if you can't find a guarantor for your car finance. Instead, you might want to focus on increasing your credit score and becoming a more attractive finance applicant.
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