At Concept Car Credit, we always have a wide range of used cars for sale. If you have a bad credit rating and are looking for the best deals, you’ve come to the right place. You can start your search for the perfect vehicle for you right here, in our digital car showroom.
To help you take the right decision, we have put together an overview of everything you need to know. We’ll cover how to select the best used car model, where and when to get best deals and how a bad credit rating factors into all of this.
The very first decision you need to take is whether to choose a used or new car.
Used is still king
Obviously, new cars have a few advantages. They tend to be safer, more economical and more ecological. They also tend to come equipped with the latest (entertainment) technology. What’s more, you can customise them just the way you like them.
That said, with the exception of manufacturers like Dacia, new cars are horribly expensive. And they’re continually becoming less affordable. Which is ironic. Because although new cars are objectively more advanced, older model generations have proven their value over time. This can actually make them a safer choice.
If your credit rating is bad, of course, these are moot points anyway.
In that case, it’s either second hand or nothing at all. This is why, as the UK’s Car Dealer Magazine has pointed out, they have remained incredibly popular:
“The UK’s used car market was stable in the first quarter – down just 0.6 per cent, according to new figures released today by the Society of Motor Manufacturers and Traders. A total of 2,020,144 transactions took place, with segment and powertrain trends seen at the end of last year continuing into 2019 and March the busiest month of activity.”
What to look for
Once you’ve decided that you want to opt for a second hand vehicle, there are a few aspects you need to look for. A good used car deal is only a good deal if the car is in good shape.
We have an extensive post on the best vehicle inspection check lists here on the blog. But you don’t necessarily need to go through 100 points before choosing your car. Instead, Money Saving Expert (MSE) has compiled a few of the most important aspects. These include:
- Mileage: MSE stresses that the yearly average should not exceed 10,000 miles.
- Make sure the car’s not been written off or still has outstanding finance on it. You can do this by getting an HPI check.
- The overall condition should be good.
- MSE advises to check if there are signs of badly performed repairs.
These points are obviously just the beginning. But at least they’re a start and can prevent you from making costly mistakes.
The Car Loan: Where to get credit
Obviously, these days, finding a suitable car is the smallest of your concerns. There are myriads of websites, dealers and private sellers out there. Realistically, there has never been more choice.
The actual challenge is finding the financing to pay for one of these cars. This is where things get tricky.
It seems as though there are more places than ever where to apply for credit. But only few of them will give you a real chance. Banks have become weary of extending credit. Credit unions can not work miracles. Crowdfunding and peer2peer are for a few select individuals only. Borrowing from friends and family risks ruining valuable relationships.
This often leaves you stuck with dealers. But aren’t they far more expensive than traditional finance institutions?
In fact, car dealers have vastly improved when it comes to their financial clout. They may be able to get you a better deal from banks than you could on your own. Also, they are far more likely to set up deals for those with a bad credit rating. If you could not get a loan from a bank, this may well be your best shot.
So if you’re looking for used cars for sale, the dealership may not be the worst place to turn towards.
Slow or cheap?
However, you need to take an important decision: Are you looking for the cheapest or the most affordable loan out there? This may sound like a trick question, but it really isn’t:
- The faster you pay off your loan, the cheaper it will be. But at the same time, your monthly payments will be higher.
- The longer you take to pay off your loan, the more expensive things become. On the upside, your monthly payments will be lower.
Experts routinely warn against loan terms gradually creeping up. But you need to stay realistic: The best payment schedule is obviously one you can actually keep up.
Carefully estimate how much you can spend for your car each month. Then, use our online car loan calculator to find the best term for you.
Deals for bad credit
How does a cad credit rating factor into all of this? Simple: Your credit rating puts a number to your risk of defaulting on a loan. It is based on a variety of factors, mostly on your past ability to pay back what you owed and how much debt you hold.
A bad credit score can significantly reduce your chances of getting a loan at all. At the very least, it will make any loan arrangement far more expensive.
But even with a very low credit score, you can still get a car.
Many dealerships, ours included, aren’t too much concerned with your credit rating. It’s far more important to us, for example, to see what you’re currently earning and how much you can set aside each month.
Interest rates will still be higher compared to someone who has a perfectly clean slate. But they days when a bad credit rating automatically meant the end of hope are long gone.
The only thing you should definitely avoid are payday loans and quick credits from non-bank financial institutions. As useful as these may be to fill short term financial gaps, they’re not suitable for larger investments like a car.
Used cars for sale: How to get the best deals
Let’s now turn towards the various options at your disposal to get the best possible deals out there. Not all of them may be applicable to you. But by going through these points and selecting what appears to be suitable for you, you can create an effective strategy for getting the best deals even with bad credit.
Find the right model
It goes without saying that limited financial resources obviously limit your choice of cars. However, just because you need to watch your money, doesn’t mean you can’t get a great car.
First of all, be honest and decide what kind of car you really need. Not everyone has to drive an SUV. Not everyone needs a sports car. Practical considerations should take centre stage: How many people are going to use the car? How much baggage space do you require? What kind of distances will you be covering?
Limits are okay
Once you’ve set your sight on a car, be aware of the fact that you can save a lot of money by opting for a car with very limited extras. Choosing the right trim level is one of the best ways of saving costs and as an additional benefit, it allows you to get a great car at a decent price. Generally speaking, it is preferable to buy a high quality car at a low trim level than a lower quality car at a higher one.
Finally, going for a smaller engine size can be a real game changer. As Money Saving Expert point out, this extends beyond the mere purchasing price:
“Smaller engines can be cheaper. The choice of a 1.0-litre or a 2.0-litre engine isn’t just about pure horsepower. A large engine will usually burn more fuel than a smaller one. So engine size is a vital consideration if fuel economy is an important factor in your decision.”
Buy at the right time of year
Did you know that when to buy a car matters as much as what car to buy? It’s true: Car dealers typically get their bonus at the end of each quarter. If they haven’t sold as many cars yet as they would have liked, they will often be willing to compromise on price to improve their bonus.
What’s more, people love to buy their cars just ahead of the Summer vacation. After all, what could be nicer than driving off into the sun with your lovely new car?
What this means is that you find the best deals on used cars with bad credit in the Winter.
We’ve all heard the story: A car starts loosing value the moment you drive it off the lot. This is bad news for buyers of new cars. But it’s quite spectacular news for everyone else. Even if you buy a car which is only a few months old, you will get a sizable discount – even though the car is still as good as new.
If you’re looking for great deals on used cars, depreciation is your friend. This is especially true if you have a bad credit rating.
That said, it can be quite difficult to decide what the best moment for buying a car is.
Some experts recommend a one year old car, if you can get one. It should still be pretty much pristine. In fact, it may even be better than a new one. After all, it’s already been driven for a while and potential flaws should now be clear.
Others find the three year mark to be a good moment. After this, the depreciation curve becomes a bit more even and start levelling out. So if you want to combine the benefits of a still incredible and as good as new model with a hefty discount, this might indeed be a great cut-off point.
If you have a bad credit rating, meanwhile, you should go for the choice which is cheapest.
To this end, start looking for cars which are roughly eight years old. At around this age, depreciation tapers off. Meaning, cars don’t become any cheaper, even though they’re still becoming older. So, you could potentially buy a car, maintain it well and sell it off at the exact same price a few years later.
Eight years is also a great age, because you’ll be able to find plenty of opinions and insights about this particular model and whether or not it’s a good choice. If it were up to us, therefore, this is what we’d go for.
What seemed literally unthinkable a few years ago has now become a reality: Buying cars online, without having inspected them in person. After using online portals for anything from CDs and books to laptops and smartphones, this is the next logical step in the digital revolution.
Writes Automotive Management Online:
“The number of drivers buying cars which they haven’t set eyes on in person now stands at a one in 10 (11%) as more people place their faith in online portals. (…) An AA-Populus poll of 19,350 drivers found that whilst historically the majority of drivers have only paid for vehicles after seeing what they’re buying, millions of UK consumers would change their habits and pay for cars they haven’t already looked at in person if they were more confident of the history and quality of the car.”
Everybody else is doing it, so should you, too? We advise against it. Without looking at a car, you can never really be sure you’re making the right choice. Even a short inspection can make a huge difference. If this is the route you want to take, at least be as cautious as possible.
Obviously, buying from a respected dealership online is a lot safer than buying from a private individual, for example.
Increase down payment
Your bad credit rating can prevent you from finding interesting used cars for sale. Sometimes, this may be for the better. If you really can’t afford a car right now, then you’re better off saving up some money until you can.
More often than not, however, you may be perfectly able to pay off a loan, but are suffering from bad choices you made in the past. If this is the case, you should consider making a bigger down payment.
This serves multiple goals:
- It instills trust in the lender.
- It reduces the overall loan sum, which means you’ll need to pay back less.
- Also, it reduces monthly payments, which reduces your risk of defaulting on the loan.
- Finally, it also allows you to pay back the loan faster, making it less expensive.
A good strategy how to approach this is to put aside some money each month for about a year. A sensible sum would be to use your possible loan payment as a yard stick, so about £200. After half a year, this will allow you to increase your down payment by £1,200. It’s not a huge sum. But it’s nothing to sneeze at either.
Haggling is all about confidence. So can you haggle if you have a bad credit rating?
It is easy to see why your confidence might have taken a plunge. But sales managers still want to sell cars. So as long as they’re willing to talk to you, you should not be afraid to at least ask.
Granted, chances are not particularly high with bad credit. But 64% of those who tried, did succeed, according to the Money Advice Service. It certainly doesn’t hurt to try.
Improve your credit rating
This is an obvious option. Strangely enough, very few people take it into consideration. Which is a shame. As we’ve described several times in our blog, there are plenty of good ways to notch your rating up a few points:
- Gradually pay off all your debt and consolidate all your credit cards into one account.
- Then, ideally use your credit card for all your purchases and make sure to always pay them back in time.
- Check your credit file for mistakes. There may be more than you might think!
All in all, there is absolutely no reason to despair. Finding deals for used cars with bad credit may not be easy. But with the right strategy, you should be successful nonetheless.