You aspire for buying a car through a loan. But your bad credit history may prove to be a stumbling block in the way of the loan. You may be refused a loan with a bad credit tag as you are a major risk for lenders. However, still there are plenty of lenders who are providing car finance to bad credit people having one or multiple credit problems.
Bad Credit Car Finance is especially made to people against whose names credit problems like late payments, arrears, payment default, CCJs and IVAs are mentioned in their credit report. In providing car finance the lendersâ focus is mainly on bad credit borrowerâs ability to repay the loan in timely manner. If the lender is convinced then car finance approval comes with relative ease. So, prior to applying for car finance, you should be ready with an assuring repayment plan that includes your income and the amount you can easily spare for paying off the loan installments.
To offset bad credit factor, provide any property as collateral to the lender. Home or even the car you are going to buy can be pledged as collateral. Such secured car finance for bad credit people is of fewer risks to the lender and hence the approval comes fast. Also, you are given the finance at lower rate of interest against an asset. You can borrow greater amount of loan depending on collateral value. But the lenders usually do not approve loan of greater than price of car.
If smaller loan is the requirement, then go for unsecured bad credit car finance which is approved without collateral. You would be approved up to Â£25000. Interest on unsecured car finance for bad credit people goes higher with every fall in the credit score. The repayment duration for secured or unsecured car finance usually ranges up to 5-7 years.
You are also required to make down payment to the lender for availing car finance. The more down payments you make the easier it becomes to avail the loan. Also note that higher down payment also may enable you to take car finance at comparatively lower rate interest seeing your bad credit history.
Take a copy of your credit report and check it for inaccuracies so that your credit score is not unfairly lower. Know your credit score also. This way you can search a suitable deal as per your circumstances. Online lenders have competitive rate car finance for bad credit people. Compare the lenders for a suitable deal.