Can you get car finance with bad credit?

Bad credit car finance

Applying for finance with poor credit history can mean that some lenders won’t offer you the money for your car as they’ll view you as more likely to miss payments.

Poor or incomplete credit history might also mean you have to pay a higher interest rate, if you do get offered the car finance.

Not all lenders offer car finance for bad credit. If you're applying for car finance with cinch or any other lender, your credit history will usually be assessed before you're accepted for the loan.

It’s also important to only apply for car finance you're confident you can repay, as you can actually improve your credit score over time by paying off the finance on time and in full.

To increase the chance of getting accepted for a better finance deal in the future, you can improve your credit score by checking the information the credit companies hold is correct, staying at an address for three years, building up a history of paying back loans, and settling any debts.

In the short term, there are a few ways that will still let you get behind the wheel, so don’t let a bad credit score get you down.

Can I get car finance with bad credit?

It’s possible to get car finance with bad credit, as long as you’re reasonable with your needs.

If you're applying for finance on a vehicle that’s out of your budget or a bit unusual (think imported classic cars), you’re less likely to get accepted.

Look at your budget and decide what a sensible choice is for your next car and make sure you’ll be able to keep on top of the payments.

All of the cars you’ll find on the cinch website are available for car finance, and our lenders will take you through your options if you’re struggling with your credit score.

Can I get car finance with no credit history?

Maybe you’ve just turned 18, or you’re new to the UK and haven't been able to build up some credit history yet – this might mean you have a ‘thin’ or ‘no’ credit history.

You should still be able to get car finance, but you might find that interest rates are higher, or you need to pick a lender who specialises in these situations.

The good news is that if you keep on top of your payments, car finance will help you build a good credit report.

What’s the best way to get car finance with bad credit?

Getting car finance with poor credit history is possible – with a few adjustments. You might find that your monthly payments are higher as interest levels might be raised, but there are ways you can make it work.

Car finance for bad credit:

Offer a larger deposit

You might be able to get lenders to agree to car finance if you offer a larger deposit, as this gives the lender some added security.

The higher the deposit, the less your finance company will need to lend you – it’ll see this as a lower-risk deal.

See if you can add a guarantor to your finance agreement

Adding a guarantor to your finance agreement is a good way to minimise more of the risk for your lender as they’ll know they have someone else there for security.

If you don’t keep on top of your payments, your guarantor will be responsible for them. This way, the lender knows it has some added security for getting its money back and can show that somebody close to you has enough faith in your finances to have your back.

Guarantor loans are less common now, so you might need to shop around to find a finance provider that has this option.

Here at cinch, our providers don’t offer guarantor loans, so you’ll need to explore other options with us.

Find lenders who work with bad credit

There are lenders out there who specialise in working with people who have poor credit, so it might be worth checking these out.

How to improve your credit score for car finance

Improving your credit score can be a long process, but it doesn’t need to be a difficult one. There are a few easy steps you can take to build up credit over time, so getting car finance in the future will be an easier process.

Check for errors on your credit report

Small things on your credit report can have a big impact. Spelling errors can often go unnoticed – have you spelt your address correctly? These quick fixes could improve your credit score without much effort at all.

You’ll need to visit one of the three main credit reference agencies to check for (and fix) any errors – these are Experian, Equifax and TransUnion.

Register to vote

Finance companies will be taking a good look at your details and will be thrown off if you aren't registered at your chosen address. Getting on the electoral roll is an easy way to make sure all of your details line up.

Keep hard credit checks to the minimum – choose soft checks where you can

There are two types of credit checks – hard and soft. Soft credit checks won't leave behind any evidence on your credit report, but hard checks will show up when other lenders take a look.

If a lender notices that you’ve had lots of hard checks for loans and have maybe been turned down, it could see this as a sign of bad money management. Try and stay soft where you can, until you’re ready to go ahead with an application.

You’ll always need a hard check eventually – and some lenders can’t even do soft checks – but try and only go ahead with hard checks when you’re 100% sure about the finance.

Does someone you’re financially linked with have bad credit?

If you are linked financially with someone who has poor credit, this could be hurting your own credit score.

Do you have a mortgage with someone else, or a joint bank account? Check with them how their credit score is looking and think about how that could be affecting you.

You can apply for a ‘notice of disassociation’ with each credit reference agency if you don’t need to be linked to the person anymore.

Pay off your debts

This is a simple one, and we know it isn't always as straightforward as it sounds, but paying off money owed is the best way to improve your credit. If you can keep on top of your payments, lenders will be happier to offer finance.

Consider a credit card

Sensibly using a credit card can help build your credit score. You can put regular purchases on your credit card that you know you can pay off, and use this as a way to show you’re capable of borrowing money and paying it back.

It’s important not to take advantage of your credit card, as getting into more debt and struggling to pay will negatively affect your credit score.

Learn more about car finance:

• What happens if I don't pay my car finance?

• What credit score is needed for car finance

• What happens if my car is written off and it's on finance?