Poor Credit Car Finance: How To Get Car Finance With Bad Credit

Buying goods on finance can be a real headache. This is especially true for cars, with many companies wary of letting the customer walk away with a fair deal. Poor credit car finance, in particular, can definitely be tricky. 

Often, the repayments are crippling and carry excessive fees and penalties that make buying a car on finance a daunting prospect. 

Despite this, research shows that over three-quarters of cars are sold with some form of finance attached. Finance remains a popular alternative to paying vast lump sums of cash, and for good reason. 

Ultimately, it is a more flexible way of structuring repayment and it does not require long periods of saving only for you to spend it all on a single transaction

Having poor credit does not automatically exclude you from getting finance, nor should it. It does, however, make certain lenders less willing to lend to you. And, more likely to impose harsh terms that assume you won’t be able to pay back the debt.

Because of this, it is absolutely crucial to carefully decide on both the terms of the financing agreement. As well as who will be lending the money. 

Customers with poor credit should not automatically assume they can’t receive financing. But they should be careful who they get the finance from and how they agree to pay it back.

This article will discuss poor credit car finance and hopefully provide some alternatives to the bad deals that often abound in this area.

How Does Poor Credit Affect Car Finance?

Your credit rating might seem like some innocuous, irrelevant number pulled from thin air. But, in actual fact, it has a serious impact on your ability to take out loans. Especially if you want poor credit car finance.

For most money lenders, a credit rating represents how likely it is that you will pay the money back under the terms of the agreement. For example, if you are late with repayments or cannot meet a specified repayment, you are a less credible buyer in the eyes of money lenders. And thus your credit rating slips. 

Lenders typically estimate your ability to pay loans back through a couple of indicators. First, they might look at your credit score to see your history of paying back similar loans. 

Second, they could ask you to provide proof of your income. This is to gauge how likely you would be to repay in the event of some external changes to your circumstances.

All of this combines to create a situation where lenders hold all the cards. For customers who wish to receive car finance with bad credit. It is very easy to agree to a bad financing agreement and subsequently struggle to pay it back. 

Often, interest rates for customers with poor credit are artificially swollen by lenders worried they won’t be able to recoup their losses. But it doesn’t have to be like that. Even if you have poor credit car finance is still doable! 

How To Get Car Finance With Bad Credit

Nowadays, there are a wealth of online companies that specialise in providing reasonable, personalised financing agreements that won’t break your budget’s back. 

There are also a few different types of standard financing agreements that make paying back a loan much easier and less stressful. Understanding the different ways that you might be able to receive finance is an excellent first step in entering into a sustainable and sensible contract.

But before you look through online vendors and finance options. There are a series of simple steps that can help raise your credit score. Many of these can be completed from the comfort of your own home and take as little as five minutes to finish. 

Perhaps the simplest means of improving your chances of getting finance is by registering to vote. By being on the electoral register, lenders will be able to quickly and easily find your personal details. Which could tip the balance in your favour when they decide whether to offer you finance. 

This might sound strange. But most financing experts would advise this and it is one of the quickest things you can do to improve your chances.

Next, it’s worthwhile to have a look into your own credit history. This will show you previous loans you may have had in the past. And could help you identify trends in your financial past that might help you improve your credit score in the future. 

If possible, it’s also a good idea to settle any debts you can. Unblemished credit history makes it almost impossible for a lender to reject financing. 

So, What Next?

By now, you’ll be ready to confront the nuts and bolts of your financing deal. Even if you have poor credit car finance is still very possible. 

As mentioned earlier, it is worthwhile for anyone looking for car finance for very poor credit to consider the different methods of doing so. 

Hire Purchase (HP) agreements are perhaps the most common financing agreement readily available. Under this structure, the buyer puts down an initial deposit before paying a series of predetermined monthly payments.

Once all of these payments have been met, the buyer becomes the owner of the car. 

This is a very popular method for people looking for financing assistance. As it means that after the contract is over, you own the car and are free to sell it or use it as long as you like.

Another common structure is the Personal Contract Purchase (PCP). The terms of this agreement are slightly more complex, as the estimated Guaranteed Minimum Future Value (GMFV) of the vehicle. Along with your annual mileage is built into the contract. 

Unlike with HP contracts, PCP requires the customer to pay an additional lump sum at the end of the contract if they wish to own the car. However, the monthly repayments are usually substantially lower. Ideal for people who might be considering switching to a new car once the contract expires.

Both of these common agreements have pros and cons that each customer should consider before deciding how they will finance their car. 

Although PCPs have smaller monthly repayments. HP contracts normally work out cheaper if you are intending on purchasing the car. If it’s small payments and no commitment that you’re after. PCP contracts are a great way of minimising expenditure and commitment to a vehicle. 

Ultimately, everyone will have their own set of circumstances that they must consider when making a decision like this. There is no single correct way to receive financing. But often deciding on the appropriate repayment structure is a great way of ensuring your budget does not stretch too far.

How We Can Help With Poor Credit Car Finance

Thanks to the internet, it has never been easier to access professional financing assistance. Companies like us at Fairsquare have entire sections of their websites dedicated to explaining financing options and helping you to get the very best deal that you can. 

Fairsquare has a wealth of articles and blog posts that describe how finance affects vehicle transactions. As well as what you can to secure a better deal.

There is also an extensive FAQs section which is invaluable in answering many of the key concerns you might have.

Perhaps the best feature of our site is the finance calculator, located on the front page. With this, customers can run through a variety of finance scenarios to see how the length of the credit term.

As well as the amount of credit that would affect the repayment terms. The calculator can be easily adjusted to suit your credit score, with ratings from excellent to very poor included. 

The resulting calculations show how the terms can impact Representative APR, the fixed-rate, cost of credit, and the total amount repayable. It is a simple, personal tool that will no doubt be invaluable to a host of potential car owners.

Once you have selected the terms of your finance on the tool, you are ready to get an example quote on poor credit car finance with one click of a button. This requires you to input some personal information. But it is all laid out logically and only takes a few minutes to complete. 

What’s more, the process is free and is instrumental in helping you run through various scenarios to find what’s best for you. Tools like this go a long way to wrestling power back from the lenders, saving you time, money, and stress.

Now You Know All You Need To Know About Poor Credit Car Finance

A poor credit rating might seem like it disqualifies you from receiving finance to help pay for a car. Whilst lenders may be reluctant to offer reasonable structures of repayment, there are several tools that can be used to even things out when trying to find poor credit car finance. 

Fairsquare is a fantastic place to start for anyone, regardless of your credit score and what type of financing agreement you’re looking for. Our website is robust and holds up against any other online advisors. 

What’s really great about Fairsquare is that it affords you the opportunity to test the waters with their Car Finance Calculator.

By letting you run through a host of different scenarios. Like increasing the size of your deposit or shortening the repayment window. Fairsquare offers clarity in an often confusing and daunting area.

The most important weapon that a borrower can have is an awareness of the situation. After using Fairsquare, you can be sure that you will be well informed and aware of the implications of any changes to your circumstances.

Armed with this knowledge, it has become far easier for people with all kinds of credit histories to secure car finance with bad credit deals that are perfect for them. Even if you have poor credit, car finance is still doable! 

Ready For A New Car?

Check out new cars and used cars here to set the wheels in motion! Find your perfect car today…

Leave a Reply

Your email address will not be published.

Legal disclaimer: FairSquare Europe Limited is a company incorporated in England & Wales (Reg No: 08023305). and having its Registered office address at 3 Brindley Place, Birmingham, B1 2JB. FairSquare Europe Limited is authorised and regulated by the Financial Conduct Authority for credit-related regulated activities, Firm Reference Number 715086

We act as a credit broker not a lender. Fairsquare shall act independently in sourcing credit from our panel of funders.

As a credit intermediary, we maintain a panel of Lenders who are reputable and experienced in the motor finance industry and consumer credit sector and offer products and services to suit a variety of credit strengths.

FairSquare is committed to ensuring that applications for credit to finance your car are placed with the most appropriate funder for a transaction. As we act as a credit broker, we will receive a fixed commission for introducing you to a finance provider, any such amount a lender pays us will not affect the interest rate you pay under your finance agreement, all of which are set by the lender concerned.

Finance is subject to status. Applicants must be 18 or over.