Bad credit car finance

Each car finance provider will take its own view on your credit rating before deciding whether to offer you finance and at what rate. The better your credit score, the better deal you’re likely to get. However, through our partners, Motiv, we work with specialists in dealing with those with bad credit scores, so will always try to find a solution that works for you. 

You aren’t allowed to take loans out while you’re going through bankruptcy. It gets easier once the bankruptcy has been discharged, but there’ll still be a mark on your credit history that will prevent you from getting the best deals for a minimum of six years. This means you will be able to get car finance eventually. In the meantime, it’s worth trying to build up your credit score in other ways.

You can get car finance if you’ve been issued with a County Court Judgment (CCJ), but approval is harder to come by. Lenders are likely to charge more to customers with a CCJ, or you might have to seek car finance from a specialist lender. Once the CCJ is marked as paid, it should be detailed on your credit rating and help with getting finance in the future.

You can apply, but you’re not guaranteed to be approved. Loan defaults stay on your credit record, and will show up when a lender looks at your application. This can make it harder to get all kinds of credit in the future.

MoneySuperMarket uses a soft search of your credit history to ascertain whether you’ll be eligible for the loans we list. This will not harm your credit score. However, if you then apply for a loan you’re not likely to get, the lender will use a hard search which may affect your score.

You may still be able to get car finance if you have no credit history, but it may be more expensive. Options to help include starting to build your credit history through other sorts of borrowing, such as a credit card – although make sure you understand how they work and keep on top of repayments. Some car finance providers may also allow a guarantor to co-sign an agreement with you. Alternatively, a few specialists may do no-credit-check finance, but again this is likely to be more expensive.

You’re likely to get a better deal on your car insurance policy if you pay an annual lump sum rather than in monthly instalments. This is largely because in a way monthly payments are similar to taking out credit – you’ll be covered in full, but without having paid the full amount yet. 

Paying monthly can be useful as you’ll be able to spread the cost out, but you will end up paying a little extra overall.

Just like any loan, you will be able to pay off your bad-credit car finance early, but you may face an early repayment charge.

Calculate whether the amount you will save in interest will outweigh any financial penalty you receive. You may also want to consider other factors, such as being free of car finance if you want to borrow elsewhere, i.e. a mortgage or different loan.

This will depend on the type of car finance you are seeking. For car finance such as hire purchase or PCP you are likely to have to pay a deposit whether you have bad credit or not. If you take out a car loan, you will simply be borrowing the money to pay for the vehicle so won’t need a deposit.

This will depend on your financial situation and the view taken by the car-finance provider. Key factors include how much you can afford for the monthly repayments – dictated by your income and outgoings – and your credit rating.

Whether car finance is a good idea with a bad credit score depends on the individual. If having a reliable car is critical for you to be able to earn an income, then car finance could be justified even if it takes a chunk out of your income. But if the car would be more of a luxury and your finances really can’t stretch to further borrowing, then it would probably be a mistake.

MoneySuperMarket gives you lots of clever ways to save a lot, by doing very little.

• Take control of your credit score by checking and improving it for free with Credit Monitor

• Never overpay again with Energy Monitor, our energy monitoring service

• Over 50 ways to Get Money Calm

So how do we make our money? In a nutshell, when you use us to buy a product, we get a reward from the company you’re buying from.

But you might have other questions. Do we provide access to all the companies operating in a given market? Do we have commercial relationships or ownership ties that might make us feature one company above another?

We commit to providing you with clear and informative answers on all points such as this, so we have gathered the relevant information on this page.