How do I get car finance with bad credit history?

car finance with bad credit history

You’re not alone in having a bad credit history. But don’t give up hope: you can get car finance with bad credit history. If one finance company has turned you down, it doesn’t mean they’re all going to refuse you the chance of running a new car.

Go for companies specialising in bad credit

The reason some finance companies turn down drivers with bad credit histories is that they’re not geared up to deal with payment defaults.

First off, try companies that advertise to drivers with bad credit histories. You’re more likely to be successful than with big name brands that are only interested in drivers with good credit scores.

It’s a bit like insurance. If you’ve been banned for drink driving and are looking for cover, companies that advertise to drivers who’ve lost their licence often have lower premiums than mass-market brands.

Find a friend

Again, a bit like with insurance, having a friend you can make the application with can save you money. If your partner has a good credit score, apply for finance with them. Their good credit score will drag yours up.

Unfortunately, the opposite is also true. If the bad credit score holder defaults on the payment, it will adversely affect the person with the good credit history.

Consider your credit score

The first thing a finance provider will do is look at your credit score. A simple way of improving yours is to use a credit card responsibly. That means buying things on credit and ensuring you pay the card off at the end of the month.

Experts advise people who want to improve a bad score to make small everyday payments on their credit card and pay them off immediately. This shows lenders they can trust you to behave sensibly.

Also consider paying regular bills by direct debit. Again, this shows you have a mature and conscientious attitude to money.

Become a proof reader

Not literally. Just make sure that you fill your application form out correctly. For example, is the address you’re using the one that’s on the electoral register for you? It should be. Equally, make sure you’re using the correct name if you’ve recently changed yours for whatever reason.

car finance with bad credit history
Carry out a credit card audit before making your application (Picture by stephen-phillips-hostreviews on unsplash)

Do a spending and credit card audit

Look at how you live your life. If your credit cards are maxed out and there’s other outstanding debt, finance companies might consider you a liability. You appear as if you can’t support your lifestyle on your income. In turn, that makes a car finance provider wonder if you’re taking on too much to be sustainable.

One expert advises keeping credit cards at 25% below their limit. That shows you’re on top of your borrowing and less likely to default.

Don’t be in too much of a rush

If one company turns you down for car finance, carry out some of the steps above. It’ll take you a bit of time to get your financial house in order and that’s no bad thing. The longer you leave it between applications – we’re talking up to six months – the more likely you are to be successful. Good luck!

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