These days, owning a car is either a necessity or an option. If you live in a big city in the UK with good public transportation, then a car may not be required to get around. However, having one can still make some things a tad easier. On the other hand, a car may be necessary if you live outside the public transport lines or in a rural area. So, whether a car is required or not, owning one is not a simple venture, and you may particularly have a difficult time getting car finance for bad credit.
Buying a Car if you have Bad Credit
It is quite an experience to buy your first car or even if it is not your first time to do so. The cost of a vehicle varies greatly according to the make and model, whether it is a new or pre-owned car, and some other factors. In any case, no car is cheap. Moreover, a survey shows that the UK is one of the most expensive places to own a car.
Getting a car loan be really difficult, especially for those who have bad credit. There is no assurance that your loan will be approved. The issue may be with the value of the car, whether you can afford the payment or not, or the insurance, which can also be a huge expense.
Car Finance for Bad Credit
One way to get car financing with bad credit is to have a large deposit. For example, if the car you want costs £6,000, and you have saved £1,000, a lender will probably approve the loan. This way, the lender would have a lower risk on the loan.
Here are the steps to take to acquire car financing with bad credit:
Review your credit history Check your credit report because it is probably not that bad. There could also be some errors on the credit report that you have to correct.
Save up for a down payment As mentioned, the higher your deposit, the more likely a lender will grant a car loan.
Get the right car You may not need a fancy sports car that is way above your budget, not to mention its high insurance and maintenance costs. Choose a car that is within your means, and what you can afford to maintain.
Show affordability Create a sheet that shows your income, expense and budget. You can present this to the lender or bank to prove that you can afford the monthly payment and the costs that come with owning it.
Get a guarantor Another option is to have a co-signer or guarantor for the loan. This will also allow you to improve your credit. Guarantor loans do not depend on credit score, but they are approved on how strong the guarantor is.
Shop around Many lenders specialise on financing car loans for those with bad credit. Their interest rate may be higher, but you can still find a company willing to finance your car.
While looking for car finance for bad credit may be difficult, this does not mean you will not be granted a loan. You just need to choose the right car, save, and if necessary, find a guarantor.