A guide to securing poor credit car loans

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Working for the big purchases of life can be a little difficult when you have a poor credit history. When it comes to getting car financing with bad credit Your credit history can be a stumbling block with many conventional lenders, but that doesn’t always mean securing a loan is completely out of your league.

While you don’t need to be a credit expert and finance yourself, it will definitely help if you know the basics of securing a bad credit car loan.

With that in mind, we’ve put together this helpful guide on how to get bad credit car loans. It could help you figure out the best path to getting a car loan now, as well as offer tips on how to improve poor credit that could benefit you in the future.

Why was my credit denied elsewhere?

When you apply for a loan, your chosen lender will review your credit history for evidence of your financial behaviors and whether you can be considered a strong enough prospect to lend to. It is worth remembering that every decision made on an application is made according to the standards of the individual lender in question and can vary from lender to lender.

This means that there is no set industry-wide pass or fail when it comes to credit history. You can get an indication of how your credit history might be viewed thanks to an app from a credit reference agency (CRA) such as Experian, TransUnion, or Equifax. But it’s important to remember that each lender is likely to have their own criteria on which to base their decisions.

Here are some of the main reasons you might be refused car financing in the past:

Decreases related to poor credit

  • Your credit file is not large enough
  • You have late or missed payments
  • You’ve made multiple credit applications in a short amount of time
  • You have a financial association with someone who has a poor credit record
  • You have an outstanding county court ruling (CCJ)
  • You have an Individual Voluntary Contract (IVA) or debt management plan pending

Decline outside of poor credit

  • You have not met the requirements of a specific lender, such as a low income
  • Administrative problems such as confirmation of identity and address or an error in the application
  • You are not the target customer for their financial products

Check out Experian’s analysis of credit declined for more details.

Tips to improve poor credit

Now you know why you may have been rejected; the next step is figuring out how to try and increase your chances of getting approved next time.

While you may not be able to resolve all your credit concerns right away, taking moves now to help improve your credit file will be beneficial for an easier long-term life when it comes to gaining access to credit. .

The benefits of improving your credit score

The main reason why you should want it improve your credit score is that it may improve your ability to access credit in the future. We have already established that many lenders will only want to work with customers with good credit files. So, improving your score could increase your chances of being accepted for things like a mortgage and car financing, as well as offering additional benefits.

Your four main reasons for improving your credit score are:

  • Greater acceptance possibilities on major financial applications
  • Access to lower interest rates
  • Access to higher credit limits
  • Access to improved offers

What Are The Easiest Ways To Improve Your Credit Score?

We have a whole page discussing how you could improve your low-credit car financing chances.

When it comes to improving your credit score overall, there are a number of things you can do:

  • Make sure your credit file is accurate and if not, request that your credit file be corrected
  • Make repayments on time and clear all outstanding debts
  • Delete all CCJs
  • Register on the electoral roll
  • Avoid links to others with low credit
  • Keep credit usage low
  • Check for any fraudulent activity in your record

MoneyHelper also offers some great tips for improving poor credit, including some more details on topics like the ones mentioned above.

What credit score should you aim for?

Each CRA gets different scores, so there is no fixed answer to this question. Instead, we can look at the “fair” and “good” score bands of the big three CRAs: TransUnion, Equifax and Experian.

  • TransUnion score from 0 to 710. A “good” score is considered 604-627, while a “fair” score is 566-603.
  • Equifax score from 0 to 700. A “good” score is considered 420-465, while a “fair” score is 380-419.
  • Experian score between 0 and 999. A “good” score is considered to be 881-960, while a “fair” score is 721-880.

Remember, your credit score is simply an indicator of how lenders are likely to perceive you, not a defined threshold for whether you will be approved for car financing.

How to guarantee car financing with bad loans

While you are preparing for the future with the above information, what if you need a car now? If you are watching get car loans with bad creditmake sure you have carefully considered the process.

What are my options?

Applying for car loans with less than ideal credit history means you may be rejected by a number of standard lenders. Instead, you’ll want to find a specialized lender who could offer you the help you need.

Typically, to deny the risk associated with the loan to someone with a poor credit record, a specialized car financing the lender can use an installment purchase agreement, in which the loan is guaranteed by the car itself. So, like any other financial deal, you will make the monthly payments on the car along with the interest rate agreed in advance with the lender. Rental purchase offers it means that if you can’t keep up with the refunds, the car could be recovered, but this will be a last resort.

First, you need to find a lender who satisfies those with:

  • Low credit scores
  • Default CCJ
  • Back payment
  • Exceptional VAT
  • Previous bankruptcy

This article was published by: Hayley O’Connor by title: A guide to securing low credit car loans


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