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bad credit car finance

Bad Credit Car Finance

Bad Credit Car Finance

Bad credit car finance is a type of financing option that is available to individuals who have a low credit score or a limited credit history. If you have bad credit, it may be more difficult to qualify for a traditional car loan, as lenders may view you as a higher risk borrower.

However, there are still options available for individuals with bad credit who need to finance a car. Here are a few things to consider when looking for bad credit car finance:

  • Shop around: Compare rates and terms from multiple lenders to find the best deal. Keep in mind that you may need to pay a higher interest rate due to your bad credit.
  • Consider a joint-signer: If you have a partner, friend or relative with good credit who is willing to co-sign on your loan, you may be able to qualify for a better rate.
  • Look for a lender that specialises in bad credit financing: Some lenders specialise in working with borrowers with bad credit and may be more willing to offer financing options to these individuals.
  • Consider a secured HP loan: A secured loan is one that is backed by collateral, such as a car. With a HP (Hire Puchase Loan Agreement) using the car as collateral, you may be able to qualify for a secured loan with a lower interest rate.
  • Improve your credit score: If possible, try to improve your credit score before applying for a car loan. This may involve paying off any outstanding debts, making timely payments, and reducing your overall debt burden.

Car Loans with a bad credit history

We have been specialising in providing credit solutions for Bad Credit Car Finance customers who have a history of bad credit for over 20 years. Hundreds of customers who have doubted their credit files or have previously upheld poor credit have been able to benefit from our simple application and realistic repayments for a car loan.

Getting a vehicle financed when you have previously been classed as a ‘bad credit’ customer can be difficult and frustrating. It can be hard for lenders to trust you, as your credit history only displays the last 6 years of how you have managed your credit – meaning bad credit from years ago could overshadow how you are in a better financial situation now in order to keep up repayments.

When it comes to our Bad Credit Car Finance loans, it is good to know that we aim to deal with each application individually as we try our hardest to minimise these difficulties and frustrations.

bad credit car finance

Here at The Motor Place, we think having past credit issues should not always stop you getting a car loan, or at least being given a chance to prove yourself as a loyal and good customer. We give customers this opportunity. given the correct information is provided on your application. Read why we are one of the best car finance providers and how we could find a solution for you.

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There are several reasons that you may have previously been classed as ‘bad credit’ such as:

  • Have never taken out a loan before or always paid in cash, meaning you have no credit history
  • Shared credit with another person who had/has credit issues, and now your file is associated
  • Making some bad financial decisions, such as taking out large credit agreements and being overwhelmed with repayments you cannot pay
  • A build-up of missed payments. which led to your account defaulting or then escalating to CCJ’s
  • Not having a history

Not having a history of loans gives you a negative rating as there is no history of your spending or debt, meaning lenders cannot get an idea of how trustworthy you would be to repay their money. You will likely have to pay a higher APR on any credit you get, including car loans, until you get a good level of credit history.

It is advised that setting up and using a UK current account will help build your credit history if you run it responsibly, as it demonstrates to potential lenders that you have a responsible ongoing relationship with a bank. Setting up some direct debit payments to bills such as your gas and electricity or even home insurance or a mobile phone. Not only will this help you to avoid missing payments but you can sometimes get discounts for paying through this method.

 

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Financial links to other people

Another reason for previously being classed as a ‘bad credit’ customer is through previous difficulties with shared credit files. This often occurs when couples, partners or friends take out credit together. This can harm your credit file if, for example, they fail to make repayments on credit cards or other loans, it could bring your rating down with it.

As a result, building your credit back up could take time but, thanks to bad credit car loans, it does not have to be impossible and we may be able to help you.

 

Lack of knowledge

At The Motor Place, a lot of the applications we see come from customers who have a bad credit history due to a range of reasons; many being that they have made mistakes without realising the financial repercussions which have now affected their options when it comes to getting credit.

If you have already started taking steps to regain control of your credit such as getting on top of current bills and paying contracts on time we will see that as your attempt to get things back on track. A bad credit car loan could help you repair your credit rating and prove that you are a good customer providing you pay on time; however, due to your history and current ‘risk’ rating you may have to pay a higher APR.

 

Confused about APR or ‘flat rate’?

Whilst shopping around for cars, you may become familiar with the terms ‘flat rate’ and ‘APR’ – they are quite different. On the surface, a flat rate may seem cheaper as the percentage is lower, but unlike APR interest will be charged at the initial loan amount throughout your agreement, meaning over time you will potentially pay more.

Flat Rate – interest is charged on the original amount of money you borrowed, not taking into account what has been repaid over time.

APR – combines all extra fees such as administration charges and interest involved in the loan, and is calculated so you only pay interest on the remaining balance of your finance.

When it comes to APR, a general rule with a loan is that the more you borrow, the lower the APR will be. Rates can vary from lender to lender depending on the customers they would prefer to lend money to. The rate you are offered usually depends on the quality of your credit file, and it’s important to remember this rate does not include late payment fees.

 

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Our Experience

The Motor Place are the number one car loan broker in Grimsby for Bad Credit Car Finance. Being recognised for this shows how we take the time to understand your application as a customer and want to learn more about the reasons behind your credit file to come to a financial agreement which is right for you.

We understand that some financial situations may not be entirely your fault, or due to unforeseen reasons – that is why we will try our best to understand your situation by speaking to you directly where needed. We like to do this with the majority of our customers to assess their bad credit situation in the past and the affordability of paying back a loan of this kind in manageable monthly instalments.

This process of talking to customers means you are likely to have the best chance of being understood and accepted for Bad Credit Car Finance.

Please note: some customers will be automatically refused and will be notified upon submission of an application.

 

Calculator

We have a really handy bad credit car loan calculator where you can input an indication of your current credit rating, desired loan amount and length of the loan to give you an instant monthly repayment estimate including any APR charges you will incur on top.

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Hire Purchase Pros & Cons

Pros

  • Simple to arrange
  • Fixed monthly payments
  • Fixed interest rates
  • Flexible term lengths 24-60 months
  • The vehicle belongs to you after the final payment
  • Deposits not required
  • No annual mileage restrictions
  • Protected by the Consumer Rights Act 2015

Cons

  • The vehicle is at risk of repossession if you do not keep up repayments
  • You do not own the vehicle until your final payment
  • Hire Purchase is not suitable if you plan on paying off your loan within 6 months
  • Commitment to pay each month regardless of personal financial changes
  • Loans are subject to status and not guaranteed
  • Learn more about our Hire Purchase loan or view the full detailed process of our loan application.

 

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If you have any questions regarding Bad Credit Car Finance, loan products, debt or budgeting you can source independent advice from either of the below sites.

ClearScore

Money Helper

Citizen Advice Bureau

Data taken from the Review Centre and correct as of 01/12/2022

References –

ClearScore – Your credit score and report. For free, forever.

Money Helper – Money troubles

Citizens Advice – Help With Debt

Experian Consumer Guides 2019 – Annual Percentage Rate: How does it work?

 

ClearScore

Get your credit score report and monitoring for free, forever. ClearScore is a free service and on the homepage of its website it promises to be “free, forever”. It states that its aim is to empower people to take control of their finances by having complimentary access to their financial data, which has helped it attract a large number of customers. Check out your Score!

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Bad Credit Car Finance

© 2023 The Motor Place Limited. Registered in England No. 08869793.
VAT Registered GB137 9130 10.
Registered Office: Heneage Road, Grimsby, DN32 9JE.
We are authorised and regulated by the Financial Conduct Authority, FRN: 709303. We act as a credit broker, not a lender. We work with several carefully selected credit providers who may be able to offer you finance for your purchase.
All finance is subject to status and no application is guaranteed.

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