“I used to think that car dealerships are all alike.” That’s a sentence we hear quite often. Thankfully, many of our customers follow that up with: “Until I found Concept Car Credit.”

But what makes one car dealership better than another? In an increasingly connected market, can one seller really survive if their prices are higher than those of the competition?

It is true that it has become harder to find real deals anymore.

But there is one part of the industry where finding the right car dealership can make a real difference: Bad credit car finance.

If you’re looking for a car but your credit score is low, you’ll soon find that you’ll get all kinds of offers: From very expensive ones to pretty good ones or none at all.

You’ll also soon enough discover that terms and conditions, service level as well as the dealerships model selection can vary wildly.

In this special, we’ll go through everything you need to know when it comes to bad credit car finance and the best dealer for your needs.

How do I recognise a bad credit car dealership?

That’s a sensible question. After all, very few dealerships in the UK actively advertise themselves as being “bad credit dealerships.” In the US, the term “subprime” was used extensively in the past. After that term was tainted by a major market crash, it has gone out of fashion.

So how to find those open to working with low credit score buyers?

Things may be simpler than you think. When you’re on the web, just search for dealerships by adding “bad credit” to your search terms. With just a single click of your mouse, you’ll instantly get plenty of suggestions.

Also, if you’re scouting for a loan on location, you’ll typically spot deals for those “with low credit ratings” or “bad finance.” Especially now, with so many in the UK experiencing financial difficulties, there are plenty of potential dealerships out there offering their services to you.

The real challenge is to separate the wheat from the chaff.

No bad credit car finance deal will ever be “cheap.”

It is tempting to dream of a car deal that is both suitable for those with a low credit rating and yet cheap. But it would also be unrealistic.

In the past, many banks would outright reject anyone with a low credit rating. To their mind, these deals were neither profitable nor safe enough. For a while, credit unions filled the void, turning them into the de facto standard for all those who could not finance their next car. But even credit unions eventually started rejecting many applicants.

This made it easy for scrupulous lenders to enter the market and lure customers in with promises of easy money. Unfortunately, their terms and conditions were often extremely unfavourable, their service almost non-existent, and their prices extortionate.

In the next two chapters, we’ll briefly go into the many changes “subprime” car finance has undergone since those early days. But even today, your financial situation will determine the cost of your car loan. Meaning: The higher the risk of a default for the lender, and the longer they have to wait to get their money back, the higher interest will be.

There is nothing you can do about that. But, as we’ll show you in a bit, this doesn’t mean you can’t do a lot of other things to improve your choice of lender.

Don’t let them treat you like a second class customer!

The bad credit car finance industry has gone through a lot of changes. Even as recently as a decade ago, it still wasn’t out of the ordinary to be treated like a second class customer.

Often, you would sign the finance agreement prior to seeing the inventory. Deals would generally be bad, with plenty of fine print and extremely high monthly payments.

Once you’d signed the paperwork, you would then be led to the show room. But more often than not, you would only be allowed to choose between three to four different cars. And if you liked none of these, that was your problem, not the dealer’s.

This approach has thankfully all but disappeared. But it still bears reminding that there is no reason why you should accept anything less than a fair and respectful deal.

Changes in bad credit car finance

Without any doubt, many dealerships felt compelled to change on their own accord. Many dealers were appalled at how customers were treated just because they had missed a few payments in the past. And so, they made it a point to welcome those with financial difficulties more warmly.

And yet, as a whole, PCPs (Personal Contract Purchase) were the main driver of change in the UK car finance market, particularly for individuals with a low credit score.

PCPs are a type of car finance agreement that allows consumers to drive a new or used vehicle for a fixed period, typically 2 to 4 years, with lower monthly payments compared to traditional hire purchase (HP) agreements.

Is there legal protection when I’m buying from a bad credit car finance dealer?

Yes, in the UK, car dealerships are regulated by industry standards and guidelines to ensure consumer protection and fair practices.

The main regulatory body that oversees car dealerships and the automotive industry in the UK is the Driver and Vehicle Standards Agency (DVSA).

The DVSA is an executive agency of the Department for Transport and is responsible for enforcing various laws and regulations related to vehicle sales and operations.

Here’s what you can expect

Some of the key industry standards and regulations that car dealerships in the UK are expected to adhere to include:

• Consumer Rights Act 2015: This legislation outlines the rights and protections of consumers when purchasing goods, including vehicles, from car dealerships. It covers issues like faulty goods, misrepresentation, and the right to a refund or replacement.
• Vehicle Sales Regulations: The UK government has specific regulations that apply to vehicle sales, such as the requirement for clear and accurate vehicle descriptions and pricing information.
• Advertising Standards: Car dealerships must comply with advertising standards set by the Advertising Standards Authority (ASA) to ensure that advertisements are not misleading or deceptive.
• Financial Conduct Authority (FCA) Regulations: If a car dealership provides finance options to customers, they must adhere to FCA regulations, which govern the conduct of financial services providers.
• MOT (Ministry of Transport) Testing: Car dealerships that sell used vehicles are required to ensure that the vehicles meet roadworthiness standards and pass the MOT test.
• Consumer Protection from Unfair Trading Regulations: These regulations prohibit unfair commercial practices and protect consumers from deceptive or aggressive selling techniques.

On top of this, some car dealerships may choose to adopt additional industry-specific codes of conduct to demonstrate their commitment to fair and ethical business practices.

How have PCPs impacted those with a low credit score?

Probably in more ways than we could count.

Here are the three most important ones, though:

• Increased Accessibility: PCPs have made car ownership more accessible for individuals with a low credit score. Unlike traditional bank loans, PCPs often have more lenient credit requirements, allowing people with a less-than-perfect credit history to qualify for financing.
• Lower Monthly Payments: PCPs usually offer lower monthly payments compared to other finance options, making it more manageable for individuals with limited financial means to afford a car.
• Manufacturer Incentives: Many manufacturers offer attractive PCP deals with competitive interest rates, deposit contributions, and other incentives, making car ownership more appealing for those with lower credit scores.

The advantages of PCPs over conventional car finance agreements, especially those for drivers with a lower than average credit rating, were so significant in fact, that they turned into the leading car finance model within just a few years.

As a result, banks were no longer the first point of contact for car loans. And subprime dealers were forced to re-think their strategy.

So, are PCPs my best choice?

No, and this is something we can’t stress enough.

Yes, PCPs were probably a positive impulse for the car finance market. They were innovative and reminded bank managers that hundreds of thousands of viable customers were turned down just because a single number in their credit report wasn’t perfect.

That said, PCPs come with a variety of disadvantages:

• High Balloon Payment: The final balloon payment to own the car can be substantial, making it challenging for some borrowers to pay off at the end of the agreement.
• No Ownership: if you do not become the owner of the car, PCPs are no longer as cheap as they might seem initially.
• Mileage and Condition Limits: PCPs often have mileage and condition limits, and exceeding them may result in additional charges when returning the car.

Most importantly, you can’t make a definitive statement on the cost of PCPs without looking at the second hand market. Sure, they may be quite attractive compared to a traditional car loan for a factory new model. But almost without fail, they will be quite a lot more expensive than a used car loan.

Make no mistake: Buying used is still your best option for bad credit car finance.

What, generally, sets a good dealership apart?

We realise that the following information is going to sound pretty basic. But at the same time, it can be very helpful to start your journey towards finding a great finance partner with the following check list:

• Pricing and Deals: This is the most obvious criterium and we probably don’t have to get into this at all. Some dealerships will simply offer competitive pricing, special promotions, discounts, or financing options that make buying a vehicle more attractive.
• Selection: A good dealership typically has a diverse and well-maintained inventory of vehicles, allowing customers to find the model and features that suit their preferences.
• Service and Maintenance: Dealerships that provide reliable service centers with skilled technicians can be more appealing to customers, as they offer convenience and expertise for vehicle maintenance and repairs. At CCC, for example, we check all cars we sell to give you that coveted “as good as new” feeling.
• Financing and Trade-In Options: Dealerships with flexible financing options and fair trade-in evaluations can make the buying process more manageable for customers. This is something we pride ourselves on at Concept Car Credit. We’ll go into this in more depth in one of the following paragraphs.
• Knowledgeable Sales Team: A well-informed and knowledgeable sales team can provide valuable insights and help customers make informed decisions.

What about online reviews?

Can you trust online reviews? Sometimes it can seem as though positive word of mouth is just a commodity, and excellence can be bought.

It is probably true that you should treat all anonymous reviews with a healthy dose of scepticism – both the positive and the negative ones. But we do feel that things eventually even out over time. Many real customers do leave their opinion on trust-websites and you will usually be able to differentiate them from the fakes ones.

And then, of course, there is nothing wrong whatsoever in asking friends, colleagues, and family for advice.

So, in our opinion, positive reviews and a good reputation within the community can be indicators of a reputable dealership that values customer satisfaction.

What, specifically, sets a good dealership apart?

Let’s now turn towards your actual action plan with specific points to check.

Here’s what you should look for in a car dealer for bad credit loans:

• Fair interest rates: As we mentioned before, if your credit score is low, you can’t expect to get the deal of your life. Neither should you have to suffer even more for your financial problems. Interest rates should be fair and reasonable.
• Personalised payment plans: When it comes to repaying your loan, you’ll often hear the word “flexible.” But payments are hardly ever flexible, not even for picture perfect customers. Instead, what you’re looking for is a plan that considers your personal situation. This could mean a longer repayment term or, conversely, a higher down payment if you can afford it.
• Wide choice of models: Especially with bad credit finance, you want to be able to pick the car that’s right for you. Perhaps a slightly older model generation can save you just the amount you need to make things work. Or maybe you need something in between a luxury car and a purely functional one.
• Cars in excellent condition: Quite often, it’s not so much the car that’s expensive, but the repairs. A great car dealer will take pride in selling you a car that runs smoothly for thousands and thousands of miles.
• Advice and recommendations: At CCC, we think of ourselves not so much as a bank but your financial partner. We want to make the deal work for you and this is why you are always welcome to discuss your options with us.

Interested in finding out more?

Then talk to us now.

CCC is one of the leading UK car finance providers in the Manchester area and our showroom is packed with great models at friendly prices.

We’re looking forward to hearing from you! Contact our team …

… by phone at 0800 093 3385
… or by using our contact form.