Getting a car finance deal with bad credit seems to be an increasing worry for many people not only in the United Kingdom but across the globe. There are several reasons for this rather unfortunate development with people finding themselves with a not too good credit rating for a plethora of reasons in today’s world of finance and easy accessibility to credit cards. Regardless of your reasons for having a less than perfect credit rating, car loans remain a necessity, as having a decent car is the goal of many people.
With lending institutions being in the business of making money usually at any cost, they provide finance for car loans to borrowers regardless of their rating. However, the major factor you should have in mind when looking for car financing for bad credit is to stack the odds in your favour as much as possible to ensure that you get the best possible deal. If you find yourself in a situation of looking for car finance with bad credit, the tips highlighted below should put you on the right track on getting an amazing financing deal that will not require you to break the bank in order to acquire your dream car.
It is no news that your credit score is one of the most important factors considered by lending institutions when you apply for a car loan and getting a great car finance deal is based on this credit score. The first point of call when seeking a car loan regardless of your credit rating is to get a copy of your credit report and check the information contained in it. This is to ensure the accuracy of the information as it is not strange to identify mistakes in the reports. Therefore, it is important to properly check the report and spot out anything that looks incorrect.
It is worth noting that spotting this error and making them known will ensure that they are rectified and this could go a long way in positively affecting your credit rating. It is also important to consider the different ways of improving your credit history going forward. While rebuilding your credit rating might take some time, it is a venture worth undertaking and with simple yet effective tips that can be easily implemented, you can be sure of seeing your rating improving in no time.
Borrowers with bad credit are usually termed as high-risk borrowers, consequently, lending institutions tend to offer higher interest rates to borrowers in this category. The reason for this is not far-fetched, as lenders see such loans as taking a chance on the borrowers particularly as the chances of making repayments as and when due are not guaranteed compared to individuals with good ratings. However, you should note that some lenders quote outrageous rates in a bid to take advantage of the borrower. Therefore, ensure that you are aware of the prevailing rates in the market particularly as it applies to your situation to enable you to get the best possible deal.
Putting down a significant amount as a down payment will significantly affect the relative affordability of the loan, as it shows that you will be less likely to forfeit repayments. It also helps your case with your lending institution as your application will be looked on more favourably, especially with bad credit being involved. Another benefit of putting money down is the reduction in the amount you need to finance, consequently reducing your monthly payments.
Therefore, it is advised that you make a down payment if you can afford one or even borrow some money from a friend or relative to make one.
You should also find out if there are other costs or fees attached with the loan, most of which are usually not stated explicitly. This is so as some lending institutions charge extra for lending you – a high-risk borrower money when other refuse to do same. In most cases, such additional charges are not clearly stated and would require your extra effort to find out if they are incorporated into the total cost of the loan. Be sure to find out all of the costs involved before settling for a lender, particularly as there are several lenders that are ready to provide car loans to you.
This is probably the most important factor to consider when shopping for car finance regardless of your credit rating. It is important to consider the affordability of the loan vis-a-vis your income. This will ensure that you do not get into a contract you cannot see through, which would further damage your credit rating.