Bad credit car finance

Our bad credit car finance options are tailored towards people with credit challenges, making vehicle loans more accessible to a wider range of customers. We understand the unique circumstances faced by those with bad credit. That's why we try to offer solutions that meet your needs.

Choosing car finance for bad credit allows you to own a vehicle. At the end of the Hire Purchase agreement, the car will be yours to keep. This counts as a financial asset and could be used in part-exchange as a deposit on future vehicle purchases.

By securing bad credit car finance and consistently making your repayments, you can actively work towards boosting your credit score. By paying in full and on time each month, you show that you can be responsible with credit. These positive signals can lead to improved creditworthiness over time.

Being approved for a bad credit car loan can give you confidence if you've faced previous financial setbacks. It allows you to feel empowered, knowing you've taken a significant step towards rebuilding your financial stability. This renewed confidence can positively impact other aspects of your life, perhaps encouraging you to pursue further financial goals.

We understand the challenges you face if you have bad credit, and we're willing to adapt to your circumstances. This may include offering deposit requirements, extended loan terms, and manageable interest rates, providing you with greater financial flexibility.

Your credit is measured and displayed in the form of a numerical score. In the UK, there are three major credit reference agencies: Equifax, Experian, and TransUnion. They all use a slightly different scoring method, so there is no precise number we can pinpoint that represents a 'good' or 'bad' score. But, generally speaking, if your score ranges from 300-580, you will likely be considered to have poor credit. 

There can be lots of reasons for having bad credit. For example, you may have taken out a large loan in the past and struggled to repay it. Or you might have a shared finance agreement with someone else who has bad credit, and it's now reflecting poorly on your credit file. It could even be that you've never taken out any form of loan or agreement and you have no credit history to speak of.

When you apply for car finance, lenders look at lots of different factors before they decide whether they can approve you or not. One of the things they consider is your credit score. They use this to get an idea as to how likely it is that you will be able to repay the loan in full and on time each month.

So, if you have bad credit, a car finance provider may see you as a higher-risk borrower and therefore be less willing to lend to you. It might be that they decline your application, which can feel disheartening, or they may still approve you for a loan but charge a higher interest rate, which could make the finance agreement unaffordable for you.

Hire Purchase (HP): you put down a deposit and borrow the rest of the money from your lender. Once you've paid back the loan, plus interest, and you reach the end of the agreement, you own the car. If you take out bad credit car finance with us, it will be via a Hire Purchase agreement. 

Personal Contract Purchase (PCP): similar to HP in that you make a down payment and then pay fixed instalments over an agreed period. The difference between PCP and HP is that with PCP the repayments tend to be lower. That's because at the end of the agreement, you have the option to hand the car back or make a 'balloon payment'. This is a lump sum you pay to take ownership of the car. We do not offer PCP.

There are plenty of options open to you that might offer a feasible route to securing the finance you need:

Specialist lenders: like First Response Finance! While we look at your credit score when reviewing your application, it's not the only thing that will determine our decision. We try to be flexible and approve as many bad credit car finance applications as we can.

A guarantor: this is someone who agrees to take on responsibility for repaying the finance if you can't, which reduces the risk for the lender. A guarantor will typically be a close friend or family member with a stronger credit rating.

Joint finance: when you apply jointly with someone else, both of your circumstances - and your incomes - will be taken into account. This can improve your chances of approval, especially if they have a more positive credit score.

If you think bad credit could stop you from getting the car finance you need, there are things you can do to help boost your score: 

Check your credit report for errors: any inaccuracies on your file may give a false impression of your history, which could be negatively impacting your score. Make sure to contact the credit reference agencies to amend any mistakes. 

Register on the electoral roll: by registering to vote, you prove that the details of your address are accurate. And it doesn't matter if you own the property or are renting, or whether you live alone, with your parents or in shared accommodation. 

Pay on time: make sure bills, credit cards, loans and any other regular payments are made in full and on time every month. This helps show lenders that you can be responsible with credit. 

Reduce your existing debt: if your credit utilisation ratio is high, it may be having a detrimental impact on your score. Settling any outstanding loans, especially high-interest ones, will improve your situation.

In a word, yes. If you get approved for bad credit car finance, paying off the agreement can actually help you improve your score. By meeting your instalments in full and on time every month, you'll demonstrate to lenders that you can be trusted to handle credit. 

If you're in a position to do so, making over-payments can help you too. It shows that you're committed to repaying the loan ahead of schedule. Not only that, but repaying early also means you'll owe less in interest, which reduces the overall cost of the finance to you. As you pay off the agreement, you'll lower your credit utilisation ratio, which can also improve your score.