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Representative 23.90% APR*
Searching won't harm your credit score
You can sort the deals by the likelihood you'll be accepted
*Source: Motiv. Accurate as of September 2024
Our partner Motiv works with a range of providers, including the big car finance brands, to help you borrow the money you need.
In most circumstances, yes. Even if you’ve had difficulties getting credit in the past, there may still be car finance options available to you.
Our partner Motiv works with a range of specialist lenders to track down some of the best car finance deals, even for those with a lower credit score.
You won’t be able to get a finance agreement from a reputable dealership without passing a credit check. This is because car finance is a form of borrowing and, as with a mortgage, loan or credit card, the loan provider needs to be confident you can afford to pay it back.
While too many credit checks in a short period can potentially lower your credit score, MoneySuperMarket’s partner Motiv runs a soft search first to show you the deals you’re most likely to be approved for.
1) Personal Contract Purchase (PCP): Pay a deposit then borrow towards some of the remaining value of the car. At the end of the contract, make a large final ‘balloon’ payment to keep the car, return it, or take out a new PCP on a new car. Compare PCP deals.
2) Hire Purchase (HP): Pay a deposit then make monthly payments. You’ll own the car after you’ve made the final payment, plus any fees. There are not usually any restrictions on your mileage during the HP contract. Compare HP finance.
3) Car loan: Take out an unsecured personal loan to buy the car outright and spread the cost by making monthly repayments. There are no extra fees to pay on top of the loan and this can be a great option if you're buying a used car. Compare car loans.
Car finance is likely to be more expensive if you have a low credit score, but there are ways you can keep costs down. These include:
Buying or leasing a cheaper car or one which won’t lose its value as quickly
Opting for a used car, which is likely to cost less overall
Extending the deal term to bring down monthly payments – although you’ll pay more in interest overall
Improving your credit score to boost your range of options and lower pricing
This table gives a guide to costs for a hire purchase deal for someone with a lower credit score (at Representative 19.9% APR).
| 36 month example |
|---|---|
Car Price | £11,000 |
Deposit | £1,000 |
Representative APR | 23.90% |
Option to purchase fee | £10 |
Monthly cost | £274 |
Total cost of credit | £6,448 |
Here are four main ways to improve your credit rating to get better car finance terms:
Serves as proof of address and is checked by lenders as part of your credit score
Not maxing out your credit limit means potential lenders will view you as managing your finances responsibly
Missed payments can leave a mark on your file that could negatively affect your rating for a long time
Check your score for free with our credit score tool. Correct any errors and get tips on improving your rating
Bad credit can make borrowing cash to buy a car more difficult – but it’s not impossible. If you’re not eligible for a personal loan due to a poor credit score, you could look at hire purchase (HP) instead. With HP, the car still belongs to the lender until you finish making payments. This makes people with bad credit less risky for finance providers, so you could get a deal for the wheels of your dreams.
Emma Lunn Personal finance expert
We’ve teamed up with Motiv to bring you the best car finance deals available
Let us know a few details about your finances and what you’re looking for
We’ll search for finance deals suited to you and your financial situation
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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.
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.
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.
No, you generally cannot get 0% finance with bad credit. These deals are typically reserved for those with a 'good' to 'excellent' credit score because lenders want to ensure that borrowers won't miss repayments.
Yes, it is possible to get car finance while on Universal Credit. There are options such as hire purchase (HP) which are available and popular due to the straightforward process. Some lenders also offer car finance with no deposit, even if you have bad credit.
