Can I Get Car Finance with Bad Credit?

If you've been wondering whether it's possible to secure car finance with less-than-perfect (Fine, we’ll say it – bad) credit, you'll be relieved to know that you can indeed. The key phrase here is ‘can’, meaning that although the possibility exists, your options may be limited… but more on that later. For now, let’s break down what will be covered below so you can find out what kind of finance will best suit those unfavourable credit ratings.

Table of contents

  1. Impact of Bad Credit
  2. What Bad Credit Can Buy
  3. Applying for Car Finance with Bad Credit
  4. Improving Your Chances of Securing a Loan
  5. A Path Forward, Regardless of Credit

Impacts of Bad Credit

Your credit score and history can be used to tell lenders (car dealerships, private dealers, etc.) the likelihood of you meeting their monthly finance payments. A low credit score might signal some level of risk. Missing payments, financially associating with someone with a low rating, having multiple outstanding debts, or even lacking a prior credit history can contribute to a low credit score.

The good news? Officially, there’s no minimum credit rating required for car finance approval… However, some lenders, on a private case-by-case level, may not be willing to work with poor credit ratings if it poses a risk to them. This could result in a decision to restrict what you can access, see increased interest rates, or even not offer finance at all.

What Bad Credit Can Buy

Most dealers will usually offer a Personal Contract Purchase or Hire Purchase when you have bad credit. This is because you’re securing a loan on a car, allowing them to repossess it if you’re unable to keep up with finance payments. But even with a challenging credit history, there's a wide range of cars within reach:

  • Budget-Friendly Used Cars – See our used cars here
  • Fuel-Efficient Models – See our most fuel-efficient cars here
  • Subcompact and Hatchback Options – Such as the Mazda 2, available on finance here

Leasing can be an attractive option for individuals with bad credit. While traditional financing may come with higher interest rates, leasing typically occurs at a lower credit score. This allows you to get behind the wheel of a newer car with lower monthly payments.

Applying for Car Finance with Bad Credit

Starting your search for a car finance deal is easy; our experts can assist you in finding the best car for your credit rating. We recommend having the following information on hand:

  1. Loan Details: The desired loan amount
  2. Personal Details: Such as name, occupation, and address
  3. Financial Information: Monthly income before tax

Lenders use your credit reporting agency to assess your creditworthiness. These agencies collect and maintain credit information, including credit scores and credit histories.

Improving Your Chances of Securing Finance

  • Register on the Electoral Roll: Being registered to vote can positively impact your credit score. It provides proof of your address and stability.
  • Build a History of On-Time Payments: Ensure that you make all your existing and future credit payments on time.
  • Verify Your Credit Information: Ensure that the information held by credit agencies is accurate and up to date.
  • Reduce Outstanding Debts: Work on paying down existing debts, especially high-interest ones like credit card balances.
  • Consider a Guarantor Loan: If you have a trusted friend or family member with a good credit history, you may consider applying for a guarantor loan.
  • Save for a Larger Deposit: A larger down payment can reduce the amount you need to borrow, making you a less risky borrower in the eyes of lenders.
  • Apply for a Smaller Loan Amount: Be realistic about the loan amount you need. Applying for a smaller loan may increase your chances of approval.
  • Improve Your Financial Stability: Lenders may consider factors like your employment stability and income. Maintaining a steady job and increasing your income can enhance your appeal as a borrower.
  • Establish a Stable Address: Staying at the same address for an extended period can be beneficial for your creditworthiness. Lenders may view stability as a positive indicator.

A Path Forward, Regardless of Credit

At Eden, we believe everyone should be able to drive the car they desire. Whether you're dealing with a challenging credit history or simply new to credit, we're here to help you find a car finance solution that fits your needs.

Rest assured you're not alone if you're concerned about your credit situation. Many individuals have successfully obtained car finance despite facing similar circumstances. Our team is dedicated to assisting you in your journey towards car ownership.

Remember, it's not just about getting a car; it's about taking positive steps towards building a stronger financial future. Let us be your partner in this endeavour.

Ready to explore your car finance options? Contact our team today and take the first step towards driving the car you've always wanted.

Contact our Car Financing Experts