A car finance plan can prove to be extremely beneficial for motorists wishing to purchase a vehicle, but what if you are in bad credit, and thus it is far easier said than done to be accepted for a finance plan? Some see this as a brick wall that would prevent any sort of deal being accepted, but that is not the case as we will explain, beginning with a breakdown of what Bad Credit Car Finance really is by definition.
What Is Bad Credit Car Finance?
At first glance, it is easy to make a mistake in understanding what Bad Credit Car Finance actually is, so we should begin by explaining what the term actually means. Bad Credit Car Finance is the agreement of a finance plan where the driver in question has a negative credit score. Poor credit can be seen as detrimental to a planned car purchase going ahead on finance, especially if the motorist has a history of being in negative credit. Some providers will not deal with any drivers who have low credit, thus slamming the door on their chances of buying a vehicle on finance at any point. Fortunately, here at Accept Car Finance, we always strive to help drivers find the best possible car based on their own situation, and they include financial circumstances. There will always be a vehicle suitable for any driver, even those who are presently in or have for a long time been in low credit. The key is to identify a deal that is affordable for those who have bad credit so that they will still be able to complete the plan, ideally as they are able to rebuild their financial situation to open the door for a stronger finance plan on another vehicle in the future. However, because the terminology of Bad Credit Car Finance can be somewhat misleading, it might cause some people to misunderstand that it is not necessarily a bad thing, but merely the description of a finance provider offering the best vehicle possible under the circumstances for a driver who does not have a good credit score.
What Is A Credit Score?
A credit score is essentially the overview of a person’s financial situation based on their most notable spendings in recent years, their income levels, their existing bank balance, their ongoing expenses and their projected income and expenses in the years to come. If what they are making comfortably covers what they are spending and what they are likely to spend, then they will be classed as having a good credit score as they will be deemed as being in control of their finances. If, however, their spendings and expenses easily outnumber what they are making, and are likely to place severe pressure on their bank balance in the near future, then they will be classed as being in poor credit. There may be anomalous instances where, for one or two months, a major purchase might outnumber income, or perhaps an unexpected change in circumstances such as a sudden redundancy might place the client in a position where it appears like they are in debt when that is not necessarily the case, but for the most part, a credit score is an accurate reflection of their ability to keep up with any financial deals.
Why Do Those With Bad Credit Struggle To Find A Car Finance Plan?
So, for those who do have a low credit score, this will ultimately call into question their chances of successfully maintaining long-term payments. The evidence would suggest that they might find it hard to cope with paying three- or even four-figure regular payments based on what other outgoings they have and what they are making from their place of employment. This becomes more of an issue when the likes of a deposit amount and additional interest are thrown in, and it raises even more eyebrows should the evidence suggest that the applicant has struggled to keep up payments on a past car finance plan. For these reasons, some of the dealerships will outright reject the prospect of arranging a finance plan for a driver who is in poor credit; in their mind, they will wonder why they should set up a long-term payment plan for a car if they are not in a strong position to be able to afford the vehicle, which then places the provider in an awkward spot should the time come that the company has to terminate the deal early and lose out on a significant amount of money that the motorist should owe on their agreement. The resistance may also come from the driver themselves, who may realise that they would struggle to keep up with payments and would rather not place themselves in a position where they are inevitably going to have to seek an early exit from their agreement, which can then make it even harder for them to find a new vehicle in the years to come.
Options For Bad Credit Car Finance Plans
As we mentioned, though, we wish to work with those that do have bad credit in order to find a finance plan that they will still be capable of completing without placing any increased financial pressure on them, and thus allowing them to end up with a car that will do everything they want at an affordable amount. Hire Purchase is an ideal option because it reduces the costs of the monthly payments, and while it is designed for them to buy the car at the end of the agreement, they will be able to return the vehicle if they felt that they were still in a position of not being able to afford a full purchase of the motor. A loan might provide a short-term boost to allow a driver to make a car purchase; in this scenario, either a Personal Loan or a Guarantor Loan (which involves a third party acting as a back-up if need be) would be the most advisable path to go down, though the customer would want to avoid having even more to pay out over the long term on top of their already troublesome financial position. A non-status lease is another option worth considering as it disregards credit scores entirely, making this something to think about for those whose credit ratings are at a particularly worrying level.
How Bad Credit Car Finance Helps In The Long Run
A client does not always have to be in a state of poor credit, as their situation can improve so long as sensible financial decisions are taken to greatly reduce unnecessary spendings and expenses while focusing on making the most of the income they are receiving, but this does not mean that a car finance plan should be deemed a non-factor. As a matter of fact, entering into a suitable finance plan for a vehicle can actually help the driver because it covers one of their major expenses at a manageable and feasible level, allowing them to identify and trim the less vital regular outlays that they will have. Combined with the increased confidence and ability to get to and from their required locations that having a new vehicle would provide, this places the customer in a better position to remedy their credit situation. And because a car finance plan generally lasts for several years, there is plenty of time to put things right. All of which means that, by the time the finance plan based on a motorist’s poor credit comes to an end, the hope is that they will either have an improved or even a positive credit score, allowing them to start considering a finance plan for a new vehicle that more closely matches what they would truly be looking for from their car. In short, a finance plan tailored towards somebody with bad credit is better than having none at all, doing without a vehicle for a long time and reaching a stage where purchasing a car becomes an even more mountainous task in the future.
The underlying theme here is that while having poor credit can certainly place restraints upon a driver’s options when it comes to buying a car, it does not make such a decision an impossibility. The motorist simply has to be sensible and think about their current and long-term financial position. They can still buy a car, but only one that does not further hinder their monthly expenditure, thus giving them a chance to get on the road while moving their credit score back into a positive direction. Accept Car Finance will always help driver to find a vehicle that would be sufficient based on their credit rating, as well as offering first-class guidance on how they can boost their credit score and eventually reach a stage where their finances are back where they should be, and will then be for years to come.
If you want further advice about a Bad Credit Car Finance plan, read our blog section on how to improve your score or call us on 01925 599079.
As part of our services, we deliver the car to your premises of choice within the UK. Lately we have delivered cars in most major towns including the Southern cities & midlands: (London, Birmingham, Leicester), Northern cities (Manchester, Liverpool, Sheffield, Leeds, Newcastle), and Scottish cities (Edinburgh, Glasgow).
** As with all financing option, bad credit car finance comes with risks. If you cannot keep up with repayments your car is at risk of being repossessed and this will affect your file and lower your credit score.