When looking to purchase a new vehicle and take advantage of many of the great finance deals available, you may have found it difficult if you have a history of poor credit. It can seem there is a preference for customers who have good credit, as it represents a smaller risk to the lender. The good news is, however, this doesn’t mean it’s impossible to get car finance with bad credit. Instead, it’s all about where you choose to apply.
Bad Credit Specialists
If you currently have a low credit score, some lenders may not even entertain the idea of lending to you, with automated decision making filtering out those that do not match a lender’s requirements. However, not all lenders use computer-generated decisions based on your credit score and are more willing than others to approve a loan for a new or used car. There are specialist bad credit car loans available if the banks and dealerships have turned you away recently. This type of lender will take into account that you have a history of poor credit and will work out a finance option for you on a car that you can afford. This means they will take the time to assess your affordability to ensure they meet responsible lending guidelines and that you can afford to maintain a car loan.
Assessing Your Finances
If you have bad credit, be prepared that you may need to show the lender that you have the available disposable income. If you can’t show your affordability, then the lender may not be able to help you, even bad credit specialists. You should look to break down your income and outgoings so that you can determine how much you have leftover after all of your current essential monthly payments. Some lenders may even help you do this during an application, but it’s best to be prepared before agreeing to any loan. By knowing what your disposable income approximately is, you can apply with confidence that you can afford it. If you find there is very little leftover each month, you may want to reconsider your options first.
Check Your Credit Report
As well as finding bad credit specialists and assessing what you can afford towards car finance, you may want to check what the lender can see on your credit report. When a credit check is performed, a lender will see your full credit history and your current rating. It’s a good idea to check this yourself, especially if you haven’t for a while or have never checked it before. This way, you’ll understand what’s causing you to have a poor credit rating and you may be able to improve it with a few changes. Sometimes you may find inaccuracies in your file causing your credit score to be lower than it should. Most credit reference agencies will help resolve any issues like this so that your report is as accurate as possible. Once you know the reasons for a less than perfect credit score, you can start to address them.
By looking into your credit report, taking the time to assess your finances, and finding lenders who can help, even if you have poor credit, your chances of approval for car finance will be improved.