With many options available to car buyers, finding suitable lenders for your circumstances can be more difficult than it seems. Whilst many dealerships will offer their own finance when buying a car, there are many alternative options for those with less than perfect credit histories. To help discover these bad credit options, you’ll need to know what to look for. Here’s our guide to finding the top car finance options for bad credit.
Check eligibility requirements
You may have found a loan lender able to offer the full amount you need, however they may have specific requirements to apply. If you have bad credit, applying for a loan without checking you meet the eligibility requirements can lead to further declines, so it’s best to check fully before proceeding. Specialist lenders who can help those with low credit scores will usually specify this, however, some do require additional requirements such as a certain income threshold or age to apply. Check the eligibility carefully and only apply if you can meet all requirements, looking out for those who welcome bad credit applicants.
Find No Guarantor Options
Some lenders may only help those with bad credit if they provide a guarantor on their application. This is where someone with a good credit history and affordability co-signs the loan, however, this means if repayments are missed or the loan is not maintained, the guarantor would be responsible for paying any outstanding amount. For some people, finding a guarantor isn’t easy, however, there are car finance bad credit no guarantor solutions available instead. This type of loan requires no guarantor to co-sign the agreement, meaning a bad credit applicant can apply solely. This doesn’t mean the loan is guaranteed to be approved, however, as affordability checks will still be required.
Ensure you have Affordability
Having bad credit means you will need to ensure you can afford the car loan you want before applying. If you are in financial difficulty, you will need to consider if taking on further borrowing is in your best interests. It’s advisable to review your current finances and work out how much disposable income you have first. That way, you can work out an exact budget you can comfortably afford to maintain. For many with a bad credit history, this doesn’t reflect their current finances. Being able to show a lender you can afford the loan and your financial issues are in the past will help you find the best options.
Look for trusted lenders
As with any type of loan, whether you have good or bad credit, you should always choose trusted lenders. There are some lenders you may find that do not have your best interests and will not follow responsible lending guidelines designed to protect borrowers. If you are unsure about a lender, check to see if they are Financial Conduct Authority (FCA) approved. If so, they will appear on the FCA register and have their authorisation number published on their website.
By following these tips, you’ll be able to find car finance options for bad credit in no time at all. Always check your affordability and the eligibility requirements before proceeding, and ensure you are not in current financial difficulty.
