Bad credit can have an impact on various elements of our lives, especially when it comes to applying for financial help. A low credit score means lenders are less likely to approve your application, and if they do, you may be subject to higher interest rates. Bad credit car finance can be a helpful option for those that need a car to get from A to B but have a poor credit history. This type of car finance can open doors for those that may never have thought a car was accessible to them. Below, we’ll take a closer look at how you can access a vehicle of your choice with the help of bad credit car finance.
Understand your credit situation
When exploring your options with car finance with bad credit, it helps to first get a better idea of your current financial situation. Check your credit score – the three-figure number that shows creditworthiness – so you can understand how potential lenders see you. If your credit score is low, explore bad credit car finance lenders that may be able to help you. You could also look to improve your score if you can before applying for finance, as this may result in lower interest rates and an overall better deal when it comes to terms and conditions.
Set a realistic budget
Once you’ve assessed your credit situation, you can then move on to developing a budget for your car finance. Determine the amount of money you have coming in each month, and subtract your primary, non-negotiable payments. From here, you can determine with the amount left over how much you can afford to pay towards your car monthly. This will allow you to choose a vehicle that suits your budget and means you can protect yourself from financial difficulty.
Explore different car types
Whilst car finance options can make newer, more expensive models more accessible, it’s essential that you explore a variety of car types to find an option to best suit your budget and needs. Try not to set your heart on a model before you get an idea of what’s out there. Being sensible and choosing an affordable, reliable car means you can benefit from the freedom being able to drive from A to B brings, whilst also remaining within your budget. Keep an open mind to find a vehicle that suits both your lifestyle and your bank account.
There is a range of lenders you could choose from that offer bad credit car finance, including specialist motor finance options for those that have CCJs, defaulted on loans, or are on benefits. With so many options available, doing your research means you can get a clear idea of the options on offer to you, so you can make an informed decision.
When researching lenders, make sure you are aware of the interest rates on offer to you, as well as repayment terms and conditions. Make sure your lender offers high-quality customer service – this is imperative when entering into an agreement that can impact your finances. Read reviews on bad credit car lenders to ensure you’re getting an unbiased opinion of the service they offer.
Consider a co-signer
When it comes to improving your chances of approval and enhancing your car options with bad credit car finance, you could always consider a co-signer. If you are trying to find a vehicle that fits within your budget and is reliable with a poor credit score, asking a family member with a higher credit score than you to act as a guarantor on the loan could be beneficial. You should make sure your co-signer knows that if you cannot pay the agreed amount, the responsibility falls onto them. This can bring down the overall cost of interest and enhance your chances of approval.
Save for a deposit
If you have a specific car in mind that is slightly out of your price range in terms of monthly payments, saving for a deposit may help bring down the overall costs. Whilst bad credit car finance options may not require a deposit towards the car, saving for a deposit shows lenders that you’re committed to the purchase, and could therefore reduce the overall interest they charge you. If you can, making the effort to save before entering into an agreement may open doors for you to benefit from more affordable finance on a car that you love.