Let’s be perfectly honest about it: Car finance for people with bad credit does not enjoy a particularly good reputation. All too often, that’s for a reason. Similar to sub-prime mortgages, bad credit car finance seems to combine high risk with exploitative conditions. In some cases, too, it can award loans to people who would be better off without one.

On the other hand, even vested experts agree that the current system of credit ratings is highly flawed. A bad credit rating does not necessarily reflect on a bad financial health. More and more finance companies, it seems are beginning to realise this.

Over the past few years, the market for bad credit car finance has significantly improved. In fact, attractive car finance deals have been at the heart of the UK car market’s remarkable growth spurt. Today, there’s a wide range of serious and professional companies offering you loans at surprisingly decent rates. In this article, we’ll show you what to watch out for if you’re interested in making use of their services.

Bad credit car finance: More accessible than ever

It is certainly good to hear that bad credit car finance is no longer a complete exception. Quite on the contrary, it has become more and more popular and today takes up a significant chunk of the market.

Already back in 2012, Fox Business reported that in the USA, many customers were able to secure a loan despite a less than favourable financial status. What’s more, these loans were no longer as predatory as they used to be, with monthly instalments on a manageable level. This change in approach has paid off: Finally faced with fair conditions, customers are paying back their rates with great reliability and defaults have become rare. Clearly, bad credit car finance is well on its way towards becoming a respectable trade.

Bad credit car finance: A warning

In the UK, too, bad credit car finance is no longer the ugly little duck of the finance industry it used to be. Still, a warning seems in place:

• Even though the UK car credit industry no longer puts as hefty premiums on a bad credit rating as it used to, you will still have to pay a higher rate and higher monthly instalments compared to someone with a more solid rating.
• Many bad credit car finance providers may offer perfectly reasonable terms at first sight, but will try to include a wide range of add-ons to your contract. These can include various insurances, for example, or many rather unnecessary services. In some cases, these can be quite costly and offset even the best cad credit car finance deal.
• Seeking to benefit from your confusion, some companies are making it hard to compare their offer with those from different, competing companies. This increases the danger of making a badly informed decision at worst. And even a best case scenario, you’ll have to do a lot of maths to determine the best loan.

Bad credit car finance: How to approach it

If you’re serious about getting a bad credit car loan, you’ll need a good plan to make sure you’ll get the best possible deal. Which is why we’ve put together a five-step plan for you:

• Step 1: Check your credit rating
  The first step should always consist in correctly assessing your current financial situation. Who knows, you might be a lot better off than you thought. Analyse your savings and verify if you really require bad credit car finance.
• Step 2: Improve your finances
  If you’re facing financial hardship, it is never easy to make further cuts. Still, it pays to take a closer look. Every improvement can make the difference between getting a great or a poor deal.
• Step 3: Compare offers
  As mentioned, the market for bad credit car finance is not exactly known for its transparency. So you’ll have to make things easier for yourself by determining exactly how much money you’ll spend with different companies.
• Step 4: Avoid banks
  It may seem like logical to approach your personal bank for a deal, but this is rarely a good idea. Car finance companies offer specialised services that cater to your needs a lot better and may often have better terms to boot.
• Step 5: Make sure you’re getting your money’s worth
  Most articles on bad credit car finance deal exclusively with the financial part. That’s hardly a sensible approach. After all, what you really want is not just a cheap deal, but a decent car!

Before speaking to someone about a loan, therefore, set up a list of essentials and basic requirements for the car you’re looking for. If what you’re being offered does not meet these criteria, it’s better to blow the deal off.

Car finance at Concept Car Credit

At Concept Car Credit, we know all about the problems of bad credit car finance. Our experts are therefore able to not only give you a personal deal and expert advice, but also offer you a wide range of great and reliable cars, all of which have been tested extensively for safety. So don’t be shy and come visit us at our showroom – or contact us by giving us a call.