Banks and credit unions in the UK typically avoid offering car finance to those who have bad credit. While they may consider an application from someone with bad credit, the interest rate may be significantly higher. Furthermore, they may require loads of documents and this can be really difficult for the borrower. If you are looking for car finance for bad credit, find a lender who offers this kind of loan at reasonable interest rates.
Decide for the Car to Finance
Usually, these lenders work with car dealerships, but some of them deal directly with clients. If you have bad credit and you are looking for car finance, the first thing you need to do is to decide whether you want a brand new or pre-owned vehicle. Keep in mind that when you have bad credit, the best option is not always obtaining a loan for a new vehicle. Most of the time, it is better to opt with a reliable pre-owned car because aside from being more affordable, you can pay the entire loan in a shorter period of time. If you choose a used car, you will also have higher chances to be qualified for car finance for bad credit. However, if you want to finance a new car, you may opt for a low cost model. You can just get the car you always wanted next time around.
When you have chosen which car to finance, think about the down payment. Remember that it is better to have a bigger down payment because it will help lower the interest payment. If you really have a bad credit score, it is recommended to pay a down payment of 10-15% of the price of the car. You may have this amount of money if you save for a few months before you apply for the car finance plan.
Make sure that you shop around so you can choose the best car finance option for bad credit. You may get several quotes from different companies before choosing a certain lender. Aside from car dealerships, other car financing options are available and they may have better offers.
Another important reminder when applying for car financing with bad credit is that you must only provide accurate information to the lender. Do not inflate your income because this may cause some problems sooner or later if you cannot afford the specified monthly payments. You must also ensure that you go over the finance agreement carefully and ask about anything that is not clear to you.
You must also remember that car finance for bad credit is the same as obtaining personal loans from financial institutions. Therefore, you must meet the terms of paying the monthly dues until you completely pay off your loan balance. Making the necessary payments for your car loan will help rebuild your credit rating and allow you to be eligible for other types of loans in the future. These tips will help you get a dependable car and also improve your credit.