Experian recently warned against the huge number of Brits who are “credit invisible” and may not qualify for any loan at all.
Unfortunately, even with bad credit, you may still urgently need a car.
Bad credit? We know all about your situation!
Don’t worry. At Concept Car Credit, we’re helping thousands of customers with a low credit score or financial issues each year find a great vehicle.
We understand that bad credit may simply be the result of a bad patch and that a score never tells the full story. We also know from experience that many of those with bad credit are perfectly willing and capable of paying back a loan in full.
That is why we have made car finance for (almost) everyone our mission. In this feature, we’ll explain everything you need to know about bad credit car finance – and how you, too, can get the car you need.
Interested in moving forward? Talk to us now! We look forward to your call at 0800 093 3385. Or get in touch via our contact form.
Bad credit – the problems
A bad credit score may not be the end of the world. It is a serious issue, however.
Once your rating drops below a certain threshold, you may
have to pay a higher rate for your loan,
be required to provide additional insurances,
commit to a bigger down payment,
have to apply with more lenders before finally getting accepted,
be unable to get any car finance at all.
There are ways to compensate for a low credit score, and we’ll cover those a bit further down this article. But all too often, these are not viable for those with financial problems.
And so, bad credit car finance can get complicated, difficult, or outright impossible.
What is bad credit, exactly?
When people speak about “bad credit”, they are usually referring to a low credit score. This score is based on your past financial behaviour and takes into account missed payments, late payments, defaults on a loan or parts of a loan, as well as insolvencies.
The more issues you’ve had with these, the more likely your credit score is going to be low. And the lower it is, the more credit institutions and dealerships are going to ask questions.
Bad credit can also refer to your current financial situation in a broader sense. It then takes into account further factors. These include a low income (potentially combined with high spendings), high debt (potentially at high interest rates) as well as an unstable job situation.
Whenever one or several of these apply, your ability to get credit at an acceptable cost or at all, may be compromised.
Can’t I just take out a PCP if I have bad credit?
This is a question we often hear.
PCPs are a different way of financing a car. They make it possible to drive a brand new car and still only pay a comparatively low monthly rate. Also, many dealers have been known to offer PCPs even to those with a low credit score or a very low income.
So … are they the answer to your prayers?
Unfortunately, PCPs are increasingly coming under fire.
And rightly so.
Yes, your monthly payments are decidedly lower than they would be in case you bought a factory new vehicle outright. They are closer to those of a leasing contract or used car loan rates.
That said, at the end of the term, you don’t have anything to show for it. The car either goes back to the dealer or you buy it, at an often rather high price.
PCPs can work if you’re truly in dire straits. But they’re certainly not the first option you should be looking at.
Can’t you lease instead?
Leasing seems like an extremely attractive proposition. Rather than buying a car outright, you “rent” it for an extended period. Your benefits seem clear:
Only pay for the depreciation, plus a surcharge
Lower monthly payments compared to buying a car
Get a brand new car every 2-4 years
Receive dealer support, which may include free check-ups and repairs and sometimes even a replacement vehicle in case of an emergency
However, not all that glitters is gold. Leasing is typically more expensive even than a PCP on a monthly basis . There is definitely no chance of buying the car, even if you’ve grown very fond of it. Also note that leasing conditions may not include the abovementioned perks if you have bad credit. What’s more, just like any other finance option, leasing becomes more expensive the lower your creditworthiness.
You may find that getting a leasing contract with bad credit is even harder than buying a car!
Can’t you simply make bad credit great again?
Wouldn’t that be something! We are certainly among those who believe you can achieve pretty much anything you set your mind to.
And yes, you can definitely improve your credit score. We’ve actually written about this quite often on our blog.
Steps you can take include
Setting up standing orders to avoid missed payments.
Consolidating your credit cards into one and using that one to make all your payments and re-build your score.
Paying off as much of your debt as possible, starting with your high interest loans.
Increasing your savings by setting small amounts aside each month.
Reducing your spendings wherever you can.
What makes this difficult is that most people with bad credit don’t have any wiggle room. All of these steps, often mentioned on the websites of credit rating agencies and personal finance blogs, look great on paper. But they are very hard to implement.
They also take time. So even if you do go ahead and start working on these points – which we thoroughly encourage – it won’t make your score jump from low to high within a few weeks.
Can you still get credit with bad credit?
It’s no secret that there are dealers out there specialising in bad credit car finance. We’re one of them. So why do we offer what so many other finance institutions won’t?
To us, it’s simple, really.
For one, no case of bad credit is equal. Why should we worry about a missed payment that happened three years ago? Why should we worry about a missed payment if it was an outlier? Why should we worry about a missed payment if it was only about a few Pounds?
Of course, credit scores are usually low for a reason. But as we mentioned, there are other aspects to consider. Quite often, we can make a loan work simply by reducing the monthly payments and making the term just a little longer.
Bad credit is problematic in many respects. To us, however, on its own, it’s hardly ever a reason to reject your application.
Why a car finance calculator is a good idea
Car finance is a numbers game. If your score is high, you don’t need to worry about the numbers quite that much. But you’ll still want to go through all your options.
With bad finance, checking all options becomes a necessity.
With the car finance calculator on our site, you can see how your payments will change depending on the length of the term, your credit rating and the price of the vehicle.
By varying these factors, you can instantly how you can adjust the conditions to meet your needs.
There is only so much you can do to improve a bad credit car loan. But the following three points really can make a difference. Ask yourself:
Do you have a trade-in?
Ever since the end of the pandemic, supply of new and used cars has been problematic.
This is good news if you have a car you can offer to the dealer for a part exchange. Right now, even pretty old and beat-up vehicles can potentially fetch excellent prices.
Can you spare a down payment?
At Concept Car Credit, we welcome down payments. Although they are not always a must, they make setting up a deal considerably more easy. And as an additional benefit for you, they make any deal cheaper.
Just use our car finance calculator to see what shaving £2,000 off the purchase price does to your rare and monthly payments!
Can you improve your credit score?
We’ve given you a few pointers on how to get your credit score up again. As mentioned, these do take time to kick into effect. However, they will definitely have an impact if you are serious about improving your finances. There’s a 17% interest rate difference between a fair and a bad credit rating – it’s not hard to see that this makes a huge difference for the overall cost of your loan …
Your 5 steps towards bad credit car finance
So how should you proceed if you have bad credit to get the car you want? Here’s our plan:
Set a budget. Some experts recommend limiting your overall spending on a car to 35% of your annual gross income, or 10-15% of your annual net income. With bad finance, you may want to bring those numbers down a few notches more.
Calculate what this means in terms of how much you can spend each month.
Determine your monthly car car costs, including insurance, road tax, a reserve for repairs etc.
Before even looking for deals, define exactly what you need. Don’t buy more than this and stick to your initial requirements.
Always keep looking for ways to improve your score or to set aside money for a down payment.
By taking this plan into consideration, you will be able to find car finance even with a low score. And never hesitate to get in touch for assistance – we’re here to help!