Bad credit
Car finance

What is bad credit car finance?

A credit rating is a score given by credit reference agencies to evaluate the likelihood of businesses and individuals being approved for credit by lenders. Generally, the higher the rating, the greater the chances of being approved for credit.

A bad credit rating usually results from missed payments or past financial difficulties, and improving it can take a significant amount of time. The process is further complicated by the lack of a universally defined bad credit score, as the UK’s three main credit reference agencies use different scales to determine and measure ratings.

Here are the current definitions of a poor/very poor credit score according to Experian, Equifax, and TransUnion:

• Experian: 0-720
• Equifax: 0-438
• TransUnion: 0-566

The good news is that your credit score isn't permanent. If your score falls within these ranges, there are steps you can take to improve it.

Can I get car finance with bad credit?

Certainly, it is feasible to secure car finance even with bad credit history. While having a low credit score doesn't necessarily prevent you from borrowing money to purchase the car you require, it might result in certain lenders being hesitant to approve your application.

If you have bad credit history and are in search of a car, or if you've faced rejections from other lenders before, this is where a specialized broker like Carboom can step in to assist. As one of the largest providers of car finance for individuals with bad credit in the UK, we excel in aiding customers in securing car loans despite their credit challenges, drawing upon our extensive 10 years of experience in this field.

We may also be able to help with car finance to you even if:

• You are in an Individual Voluntary Agreement (IVA)
• You have a County Court Judgment (CCJ)
• You’re looking for car finance when self-employed
• You have experienced bankruptcy in the past
• You are looking for car finance on benefits
• You are looking to get car finance with an overdraft

Can I get car finance with no credit history?

Yes, Carboom could offer you car finance with no credit history. Having no credit history can make it more difficult to get accepted for car finance. If you’re looking for a no credit car loan, you might have to use a specialist broker or lender.

People without a credit history could be perceived as riskier prospects by lenders, as there is no data available to gauge their financial responsibility. If you fall into this category, the car finance options accessible to you might resemble those available to someone seeking a bad credit car loan. Consequently, you might need to consider utilizing a direct lender specializing in bad credit car finance, such as Carboom.

You might have heard that you need to apply with a guarantor or joint applicant if you have bad credit. This is not always the case, and guarantor finance is less common nowadays, but there are some specialist lenders available who could help.

How to get car finance with bad credit

Our expert team would be happy to help, even if you have a very low credit or have very bad credit.

To get car finance you’ll need:

• Monthly earnings over £1,000 (net after tax)
• To be aged between 21 and 75
• A full valid UK driving licence
• 3 consecutive months of payslips

We can provide car finance to customers with bad credit as long as it meets the following criteria:

• Car finance from £4,000 – £40,000
• Maximum of 120,000 mileage on the vehicle
• No older than 14 years at the end of the agreement

Reasons for bad credit

You might have bad credit due to:

• Limited Credit History: You've never taken out a substantial loan or credit agreement, or you've always paid in cash, resulting in little or no credit history.
• Credit Association: You've shared credit or finance agreements with someone who has or had credit issues, linking your credit file to theirs.
• Poor Financial Decisions: You've made poor financial choices in the past, such as taking out large credit agreements with repayments you couldn't afford or pay on time.
• Previous Loan Rejections: You've been declined by other finance lenders. This is often seen with self-employed individuals due to difficulties in proving income.
• Missed Payments: You have multiple missed payments across different accounts, possibly leading to defaults or County Court Judgments (CCJs), which can stay on your credit file for up to six years.

How can you improve your credit score?

The good news about credit scores is that they aren't permanent; you can take steps to improve them over time. However, it's important to remember that this process isn't exact, and results won't be immediate. Additionally, each credit reference agency uses a different system to calculate your score, so your score may vary depending on the agency.

If you want to improve your credit score quickly, consider the following steps:

• Pay your bills on time
• Check for mistakes on your credit report
• Don't use all your available credit
• Avoid making multiple credit applications at once
• Register on the electoral roll
• Make regular payments on time
• Check your financial associations
• Use a credit builder credit card to build your credit score
• Avoid moving home if possible
• Keep old accounts open to maintain a long credit history

For more information on improving your credit rating, visit our How to Boost Your Credit Score page.

What your bad credit car loan could look like

How to apply for car finance with bad credit

We offer bad credit car finance across the whole of the UK, so we could help get car finance near you. To apply for car finance with bad credit, we would suggest using our car finance calculator. This will give you an idea of what your car finance could look like, depending on what payment term and the amount you are wishing to borrow.

It only takes 5 minutes to fill out our online form, so do it today to get a free and no obligation car finance quote