In keeping with their name, bad credit car loans enjoy a fairly bad reputation. And yet, they are among the most sought-after items in the entire finance industry. At first, this may sound like a paradox. But there is a very good reason for their ongoing popularity: For both private and business reasons, cars have remained exceedingly important for many in the UK. But unfortunately, in a time of growing uncertainty over global economic growth, many banks are loath to offer a loan to anyone with a less than perfect credit score. Which means that bad credit car loans are often the only solution at your disposal.
Recently, there have been a few innovative solutions, such as a device that will automatically turn off your car should you fail to pay your monthly debt and which may be able to reduce interest rates at some point in the future. But they haven’t really caught on yet and are still far from being implemented on a wider scale.
Don’t be let down by the bad news, however. We’ve compiled some valuable advice for successfully getting the bad credit car loans you want and need.
Bad credit: The problem
The problem with bad credit is that so many in the UK are saddled with it. As This is Money reported, household debt is now four times as high as it was in 1990. As a result of many decades of profligate spending and easy credit, households are still trying to get their finances in order again. If you’re applying for car loans, this weighs in even more heavily. After all, a car is one of the most expensive items you’ll ever buy – and not only does a bank have to factor in whether or not you’ll be able to cover the purchase price, but also if you can shoulder ongoing costs such as petrol, insurances, taxes, inspections and repairs. This is why bad credit car loans have become such a big issue with many traditional financial institutions and why an entire industry dedicated exclusively to this type of credit has sprung up.
What you can do about bad credit
It’s important to point out that there are various things you can do before researching the market for bad credit car loans. In a recent article, The Fiscal Times provide some of the most compelling options at your disposal in this regard:
Pay your bills on time: Obviously, this won’t always be possible. The real point, however, is to make sure there are no exceptions in those instances where you can actually pay a bill within the specified deadline. The less outstanding debt and interest payments you have, the better your chances of a bad credit car loan.
Don’t max out your credit cards: Credit cards are useful, but the less debt you have on them, the better. The Financial Times recommend a maximum of 30% of the available credit as a limit.
Don’t apply for too many loans: Two reasons for this: by applying for a loan you don’t really need, you are creating unnecessary costs and loosing track of your real financial capacities. What’s more, you are damaging your credit rating. By keeping your finances clean, you can actively avoid bad credit car loans altogether.
Merely by changing your spending behavior and taking a more sensible approach towards debt, you can take an important step towards a successful bad credit car loan application.
Bad credit car loans: Good reasons
Still, you will not always be able to get a spotless credit rating even after taking all of these points into account. The good news, however, is that you may still be able to get a car. This is because there are a few very good reasons for car dealers to offer bad credit car loans:
Bad credit car loans can constitute an important first contact with customers. Maybe you’re experiencing financial trouble at the moment, but that is not to say that you can’t get back on your feet again at some point. By helping you now, dealers are building the basis for a lasting relationship.
If you’re satisfied with your bad credit car loan, you may recommend the dealer to other friends and to family.
To us at Concept Car Credit, it seems perfectly fair to offer you a loan even if you have a less than perfect credit rating. If you’re interested, talk to us – and apply for a loan today.