Having a poor credit history does not automatically rule you out of getting a car on finance, though it does affect the rates and terms available to you. Here is an honest look at car finance with bad credit in the UK, including realistic options and how to improve your chances.
Is Car Finance Available With Bad Credit?
Yes, several specialist lenders in the UK focus specifically on bad credit car finance, though approval usually comes with a higher APR than a driver with a strong credit history would be offered, reflecting the increased risk to the lender.
Options for Bad Credit Car Finance
- Specialist bad credit lenders: some finance companies focus specifically on applicants with poor or limited credit history, often with more flexible acceptance criteria.
- Guarantor loans: having a guarantor with good credit agree to cover payments if you cannot can improve your approval chances and potentially secure a better rate.
- Larger deposit: putting down a bigger deposit reduces the amount borrowed and the lender’s risk, which can improve your approval odds.
- Secured finance: HP and PCP agreements are already secured against the car itself, which can make approval easier than for an unsecured personal loan.
How to Improve Your Chances of Approval
- Check your credit report: review your report for errors and address any inaccuracies before applying.
- Register on the electoral roll: this is one of the simplest ways to improve your credit profile if you are not already registered.
- Avoid multiple applications: applying to several lenders in a short period can further lower your credit score, so use eligibility checkers that perform a soft search first.
- Be realistic about the vehicle: applying for a car within your genuine budget improves both approval odds and long term affordability.
Frequently Asked Questions
Will bad credit car finance affect my credit score further?
Making payments on time can actually help rebuild your credit score over time, while missed payments will further damage it, so affordability is critical before committing.
Is bad credit car finance more expensive?
Yes, typically the APR offered is higher than standard car finance to reflect the increased risk, so comparing several specialist lenders is worthwhile.
Can I get PCP with bad credit?
It is possible but less common than HP, since many PCP providers have stricter credit requirements due to the balloon payment risk at the end of the agreement.
Related reading: Understanding the basics first? See our guide on how car finance works.
Written by the Apriliapartsbuyer editorial team, covering UK car finance guides. This article is for general information only and is not financial advice.
