Should you avoid car finance if you have bad credit?


It’s completely understandable that if you don’t exactly have the most favourable credit score right now, you might be wondering whether it’s even a wise decision for you to take the ‘risk’ that applying for car finance might represent.

After all, it’s well known that the worse a person’s credit is, the less likely lenders generally are to give them a competitive car finance deal, or even to give them a car finance deal at all.

The logic is sound enough: if you don’t have a history of paying back credit in full and on time, a would-be lender will probably worry that you won’t be very reliable in repaying any new credit they grant to you. This could make it much more difficult for you to obtain a car finance deal on terms that you are happy with, and might leave your desired car out of reach.

So, if you do have bad credit, is it best that you just forget about car finance as an option altogether? Actually, no, not necessarily – and here’s why.

Even a person with bad credit has options!

First of all, it’s important to acknowledge that having bad credit is not a permanent and irreversible state. You’re not blacklisted from ever buying a car on finance in the future, just because your credit history isn’t as good as it perhaps should be.

This means you always have the option of taking the steps to improve your credit score, before applying for a car finance deal – presuming, of course, that you can take the time to do this, and don’t have to get behind the wheel of a car straight away.

We’ve previously written here on the Car Finance Genie blog about how you can find out your current credit score, and begin to improve it, through steps such as paying off existing debts, registering to vote, and minimising your credit usage.

But what if you need access to a car right now?

If you’re scrambling around looking for a car at the moment, we’ll presume you’ve already had that “why can’t you just walk or take the bus?” conversation with your family. The fact is, not everyone’s circumstances lend themselves well to that solution, which may be much more feasible for a single person living in a big city, than it is for a young couple with children living somewhere more isolated.

Well, the good news is that there are companies out there that specialise in presenting motorists like yourself with attractive bad credit car finance options. We are one of those companies here at Car Finance Genie; indeed, we are proud of our track record of helping people to gain acceptance for car finance even if they may have been turned down by lenders in the past.

Indeed, far from being something you should avoid, if you have a bad credit score, car finance may still make more sense for you and your circumstances than some of the alternatives. You might have considered, for example, taking out a secured personal loan from your bank instead of car finance – but given that this would be issued against an asset you own such as your home, you could risk losing that asset if you fail to keep up with repayments.

Naturally, if you find yourself in difficulty when trying to complete your payments on a car finance agreement, there could be serious consequences for your finances as a result of that, too. You could be hit with late payment fees, for instance, and the lender may eventually repossess the car. You might have options for getting out of the deal if you do encounter insurmountable problems midway through, but as What Car? explains, much depends on the terms of your specific agreement.

In summary

So, in short, should you avoid car finance if your credit score is unfavourable? The answer isn’t automatically “yes”, and attractive options for those with bad credit do exist. However, you must be alert and well-informed about the implications of whatever course of action you do ultimately choose.






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