Getting a car loan with a bad credit score


Date: 13 November 2019

A businesswoman happily holds up the keys to her new car, after getting car finance despite a poor credit score.

It's frustrating to have a poor credit rating - it prevents you from doing almost anything that requires loans and financing. Even a credit card application is close to impossible when you have bad credit.

If you plan to buy a car for your business and can't afford to pay for it in cash, you might want to opt for car financing. The problem is that due to your credit score, you’re highly likely to find it difficult. Creditors will see you as a greater risk to lend to and are likely to deny you a standard loan.

Before you give up on your plans, you can still get car finance. You just have to work hard to find the right creditor. Here are our expert tips.

Look for high-interest car finance 

If your goal is to get a car quickly, even if it means paying more, you can choose a company that offers high interest rates in return for a better chance of acceptance. They will approve your loan, but your payments will be higher than with standard financing. 

With no deposit car finance, as well as a high chance of being accepted despite a poor credit score, you can also won’t need to put down any down payment.

The only downside is the higher monthly fees - covering not just the higher interest rate, but the larger amount borrowed. You could end up paying back substantially more than the car is worth.

If you don’t mind the additional cost, and you have a steady guaranteed income that will help you meet your payments, this might be the right option for you. 

Improve your credit score

Just because you have a bad credit score right now, that doesn’t mean it will stay that way. At some point, you will improve your score and have the freedom to decide which loan you want to obtain.

Start by paying off your existing loans - consider consolidating them if you can’t keep up with the payments to different creditors.

You can also negotiate terms with your loan providers, to allow you to reduce your payments, giving you a better chance of making your payments. After some time of servicing your debts and clearing your obligations, check your credit score again to see whether it’s improved.

Keeping your score high

Even after your credit rating has recovered, you have to be careful with future financial transactions. If you take out a car loan, you need to be sure you’re able to meet your repayments; otherwise, your credit score will sink again. You might even lose your car if you fail to pay for several months. 

No one wants a bad credit score. However, if you made poor financial decisions in the past, you have no choice but to face the consequences now.

If you’re planning to undertake another financial commitment, you need to be smart. Understand all the terms first before you sign any document, and make sure that you’re ready to take on the responsibility.

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