How to Buy a Used Car When You Have Bad Credit

How to buy a car used car when you have bad credit finance

How to buy a car used car when you have bad credit finance

If you have a credit rating that’s anything less than perfect, you might be worried about being eligible for car finance, or you might think that lenders will either decline your application, offer you higher interest rates or poorer lending options. But having bad or non-existent credit doesn’t mean you can’t get car finance.

We understand that for many people, owning a car is a necessity not a luxury. Whether it is for work, childcare, poor health or a multitude of other reasons, being able to drive is vital for many. With that said, we understand that very few of us have the cash on hand to buy a car outright, and there are some of us who will find that car finance can be a struggle to secure.

Here at Fund My Car Scotland, even if your credit file has hit a few speed bumps over the years our team of car finance specialists are here to help and will consider applicants from all financial circumstances. For those with CCJs, IVAs or defaults on their credit files, we can work with you to find the best finance option that suits your individual needs.

Let’s delve into our top tips to buying a used car online, even if you have poor credit, so we can help you get on the road.

Check Your Credit Report

First things first, get a copy of your credit reports. It’s always a good idea to do so before making a major purchase that will require a credit check, as you’ll know exactly what a lender will see when evaluating your credit. Credit reference agency Experian advise that the main things to watch out for include details of all your current and previous financial accounts, any applications for credit in the past, your existing debt and your record of paying off debt.

Go through your credit history with a fine tooth comb and make sure there aren’t any mistakes and it’s all up to date. Incorrect information can have a negative impact on your credit score, but luckily this can be easily fixed. You can get a copy of your credit file from one of the UK’s three credit reference agencies: Experian, Equifax and TransUnion. All three agencies offer a free credit report as well as a more detailed paid option.

Identify Any Ways You Can Improve your Credit Score

Whilst we consider applicants from all financial circumstances, it’s never going to hurt to improve your credit score, both for your used car application and for the future. Here’s some simple tips for improving your credit score:

  • Be in debt. No this isn’t a trick, we’re serious! One of the best ways to enhance your credit score is to use credit cards well. Use it for a one-off expensive purchase like a holiday or a new laptop and pay off the amount in full, and on time. This proves you can handle debt and repayments well. Be careful though, never use a credit card for more than you can afford.
  • Pay your bills on time. Payment history is one of the most important aspects of your credit score and a history of consistent payments on any debt you currently hold shows that you can be trusted to pay back your credit on time each month and therefore, you are more likely to secure a competitive car finance deal.
  • Avoid making multiple applications for accounts such as loans, credit cards or mobile phones in a short period of time as it can give a bad impression and negatively impact your score as a result.
  • Register for the electoral role. This will make it easier for lenders to identify who you are and can often improve your credit score.

Know How Much You Can Afford

When you buy a car, there are two major things you have to consider: how much you’ll need as a down payment, and what the monthly cost of having the car will be. Figuring out your monthly payment, including your insurance, petrol and upkeep costs, is the crucial first step in the car-buying process as you should never take on more debt than you can handle.

If you’re unsure how much you can afford, try our free no-obligation Car Finance Calculator. Simply enter the amount you are looking to borrow, your desired repayment period and your credit rating if you know it. The calculator will then provide an estimated, affordable monthly payment.

In terms of your down payment, it’s a general rule of thumb to put down 10%. If you can put a bit more money down at this point, this reduces risk to your lender, which may help you secure a lower interest rate on your loan and save you money over time. If you can’t put down a large down payment, do not worry! Our team of car finance specialists can work with you to find the best finance option that suits your individual needs.

How We Can Help Our Customers with Bad Credit

We understand that not everyone has the perfect credit record. Perhaps you haven’t had much credit before or have experienced problems in the past.

To help you, our finance specialists will work in partnership with our trusted panel of lenders to carefully consider your application and if successful, determine a finance plan that suits your needs.

After all your new finance agreement needs to be on your terms.

Once you have been approved for finance, we will send you access to an exclusive catalogue with a selection of great value, high quality vehicles. Whether you’re looking for a small car, a medium sized family car or even a SUV, you’ll be sure to find the perfect car to fit your needs. Once you have chosen your car, we will carry out all of the essential checks, giving you complete peace of mind.

Ready to start your car finance journey? Get in touch with your expert team today who will be happy to discuss the best finance option that suits your individual needs and will get you back on the road. Call us now on 0141 212 0036.