Can I Get Car Finance With Bad Credit?

car finance

People find their application for car finance on the rejection list because of their bad credit scores. It can result in major disappointment if you can afford the repayment. Moreover, the credit score is not the perfect way to predict the conduct of a borrower.

The decision of the service providers is understandable since they don’t want to take the risk with their investment. Nevertheless, it is not the end of the road for your dream to own a car. You can still get the loan application approved since bad credit is not the primary concern for many lenders in the industry.

Problem with Credit Check

Lenders will use your credential to get your credit history for the loan application from the authority. It will have your past conduct with the debt repayment and the existing list of debt. The missed payments, defaults, CCJs, and other major incidents will cause a significant impact on your score.

Moreover, it doesn’t explain the situation that led to the decline in credit score. You may face a sudden financial crisis with no means to pay the instalments. People become more responsible for their finances over time after learning the consequences.

Financial institutions check the credit score to follow the guidelines of government authorities for a safe lending environment. Some of them will not reject the application for bad credit if they can afford the repayment. They will give a chance to explain the reason for it along with an assurance for the timely payments.

How to Find Car Finance for Bad Credit

The financial industry is aiming towards online services to become accessible for every customer. Therefore, it is easier than ever to find a loan that suits your requirement. Here, you will find important tips while trying to get a car finance approval for bad credit.

Check Your Credit Score

You should check your credit score regularly to make changes before it’s too late. The constant negative points on your score will motivate you to make significant changes in your lifestyle. Thus, leading to timely repayment of existing liabilities and no new debts because of the habit to overspend.

Moreover, sometimes an error can hurt your credit score. You should notify the authorities of these mistakes to improve your score. The process can take a month to complete, which can delay the application approval for your existing finances.

You should also check your credit score to find eligibility for a loan option. The rejection will reflect on your credit history to cause further damage. Therefore, do not apply for a loan where the credit score doesn’t meet the eligibility.

Assess Affordability

Affordability is critical to managing the loan throughout the repayment period. People often find the loan overwhelming because they cannot afford the instalments. Thus, it will put unnecessary stress on your budget, leading to missed payments and defaults.

The lenders will assess your affordability from the income and account statement of the past few months. Thus, it creates a strong case for approval or rejection of your loan application. Thus, it makes no sense to apply for a loan you cannot afford only to get waste time and effort.

Create a budget to find the manageable instalment without creating a mess of your finances. Also, consider the various new expenses of owning a vehicle, such as fuel, maintenance, and repairs. It will help make the repayment easier and improve your chances of approval.

Provide Payment Assurance

You should contact the lender’s representative to reassess your loan application after a rejection. Again, they may send the application to the rejection list because of the score on your credit profile. The reason for the score is unknown to them, even if it was genuine.

You can explain the income sources and affordability for the loan amount to convince them. You can also give them the reason for the bad credit score, and they may reconsider your loan application. The lenders are aware of the financial problems their customers face to provide a reasonable solution for them.

Save More Money for Down Payment

Down payment will define your initial equity over the new car. You should try to increase the down payment as the loan amount will reduce. Thus, saving money on the overall cost and the monthly instalments to make the loan affordable.

For lenders, the increase in down payment will reduce the risk for car finance. It will reflect positively on your profile with more responsible fund management. Your chances of approval will increase even with a bad credit score.

Check Income-Debt Ratio

Lenders will check your income-debt ratio as an affordability measure for a loan amount. It gives a great idea of the financial condition of an applicant and their debt situation. The ratio will set an expectation for the financial behaviour of a customer after the application is approved.

A low ratio will reflect incompetent fund management with extreme dependability on credit. Therefore, you should repay a few debts to increase your income to debt ratio. Take a debt consolidation loan to make the repayment easier with low-interest rates and the duration of your choice.

Search Online

Once the eligibility is clear, you should start your search for the available car finance option. Numerous options are available based on your profile and requirement in the financial industry. However, you must prepare yourself with the knowledge of financial terms to find the best offer.

Banks often use the lack of knowledge to strong-arm the applicant in negotiation. They may highlight the problems in your application with a little focus on the other eligibility criteria and repayment capacity. Moreover, you will not fall for the promise of a lower interest rate to find certain additional expenses in your loan agreement.

Select Direct Lender Over Banks

You should consider the services of direct lenders over banks for their personalised offers. They may provide guaranteed car finance with bad credit if you can afford the repayment. Thus, a better chance of loan approval compared to the stringent policies of banks.

These are independent lenders with no broker to facilitate the loan process. You will deal directly with their representative to find the best offer for your requirements. There are no upfront charges to create doubts for safety and security.

Moreover, there are multiple benefits available if you are dealing with a direct lender. You gain more control over the repayment process. They may offer flexible repayment options with holidays and term extensions during financial troubles.

Avoid Dealership Suggestion

Dealerships often partner with a car finance provider for mutual benefits on every deal. These are different business entities from your dealership and manufacturer with an unknown customer experience. Therefore, you cannot expect the same services from them as the dealership.

Moreover, the dealership is not liable for their conduct to avoid any interference in your matter. The interest rates are often high to make a hefty profit on your purchase. The customers often skip the research part because of the more accessible access to the funds.

Check the offer from the dealership suggested finance provider but avoided trusting them without a price comparison. You should return home after receiving an offer from them and compare it with the online lenders. Consider them as any other finance provider keeping in mind the terms and overall cost of the loan.

Find a Co-Signer

You may not get a low interest rate for your profile because of the increased risk. But there is a way to convince the financial institutions to provide interest rates similar to someone with a good credit score. You need to find a co-signer with a perfect credit score to get the loan application approved.

Their affordability and credit history will compensate for the ineligible part of your previous loan application. The investment will get easier for lenders since the co-signer can afford the repayment if you default on the payments. The overall cost will reduce significantly along with the increase in available credit amounts.

Though, you must consider the consequences of the guarantor loan before applying for it. It may create problems in your relationship since the co-signer will be held responsible for the loan repayment. The situation can get awkward if they reject your proposal to sign as a guarantor.

Walk Away

You should not let the lender decide the terms and conditions of your car finance. They may have a solid argument for offering high-interest rates because of your bad credit. Still, the number should remain within a reasonable amount.

Moreover, they may include unnecessary charges to make more money from your situation. Your submission to their arguments will only increase problems for your finances. Thus, walk away from the offer if it seems the lender is using an unfair advantage or the overall cost is outside your budget.


To sum up, car finance for bad credit will cost more because of the increased risk profile. It is reasonable for the lenders to offer more interest rates since they are willing to consider your application even after a history of missed payments. However, you should use the available resources to find the best offer from numerous lenders in the financial industry.


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