If you’ve previously been declined for car finance due to a low credit score, you may think you’ve came to the end of the road. However, not all hope is lost. With some preparation and a commitment to improving your credit score, you could secure the car loan you’re after. Having a low credit score can still secure you a car finance deal but having a higher credit score when applying is more beneficial so shouldn’t be overlooked.
Save Up For A Deposit
Having a deposit ready for a car loan can be really beneficial. It can also help your chances of getting accepted. Putting in a larger deposit means you don’t have to borrow as much from the lender and makes you more attractive to lenders as it shows good financial responsibility. Having a deposit can lower your monthly payments and interest rate too.
Try A Joint Application
A joint car finance application can help you to get approved for finance if you have a bad credit score. Many couples use a joint car loan to secure an affordable finance deal. A joint car finance application is when two people apply for finance on the same car. Both parties are responsible for meeting the repayments and both credit files can be negatively impacted. A joint application can be used when an applicant has good income but a low credit score. A partner or family member can then support the application with their good credit score and help you to get approved.
Use A Car Finance Broker
Applying for car loans with multiple carf finance lenders in a short period of time can negtively impact your credit core. To avoid multiple applications, you could consider applying for finance using a car finance broker. Car finance brokers put your application on front of a range of finance lenders and match you up with the most suitable finance package for your circumstances. Brokers can help with bad credit too. You can then take your chosen finance deal to any reputable dealership verified by the FCA and get the car you want!
Pay All Your Bills On Time
One of the best ways to increase your credit score is to pay any debts or bills on time and in full each month. This indicates to potential lenders that you can be trusted to pay back your car loan on time and in full. This gives you more of a chance to secure a competitive finance deal and also improve your credit score in the process.
Check Your Credit File Before You Apply
If you know you already have a low credit score you should still check your credit file. You should get into the habit of checking your credit score regularly and making sure all your information is accurate and up to date. Car loan lenders use your credit file to determine whether you can be trusted to pay back your finance and determines your interest rate offered. Having a good credit score can lower your monthly payments and your interest rate which saves you money. Even having the wrong address or incorrect full name can negatively impact your credit score.