Getting Approved for car finance with a poor credit score
Poor credit - You may have 4 or more CCJ's, Defaults, Missed Payments or arrears recorded on your credit file in the last 6 Years, however to be considered poor credit not bad credit their maybe some good aspects like on the Voters Roll, A Paid or Settled Accounts. The good news is because Hire Purchase Car Finance is secured against the vehicle the risk to the lender is minimised. We have a large panel of lenders that will look to offer a credit option even it you have a Poor credit rating.
Benefits of Hire Purchase Car Finance With Poor Credit Rating
Once a finance lender has given you an AIP (Approval In Principle) they will require some documentation in order to confirm some of the details on your application once you've chosen your car. The amount of documentation depends on your Credit rating, Employment status and Electoral roll Status . However with todays technology it is possible to check most information Electronically without documentation
Proof of ID (Driving Licence or Passport)
Proof of Driving Licence (Online Share Code, DVLA Check)
Proof of Income (Payslips, Bank Statements, Awards letters, Confirmed electronically, ETC)
Proof of Address (Utility bill, Bank statement, Confirmed electronically, ETC)
Poor Credit Finance Eligibility
To obtain car finance you must meet the following criteria.
Age Limit
The applicant should be min 18 years & max. 70 years.
Income
Minimum £1000 Wage or Benefits
Driving Licence
Main or Joint hirer must have a Full Driving Licence
Joint-applicants
Must be living at the same address
Bank Account
Must be able to accept Direct Debts
Income & Expenses
Credit Limits maybe set by affordability
Address History
Lived in the UK for 3 years
Benefits of Hire Purchase Car Finance With Poor Credit Rating
As the title suggests, you hire the car from the finance company, taking responsibility for it and making monthly payments until you have paid the total amount owed. You are the registered keeper of the vehicle throughout the payment plan and then at the end of the repayment period, you have the option to take ownership of the car.
As you've paid off the cost of the car by this point, all you pay is a small admin fee. This could be anything from £1 - £299+.
HP is good if:
You want fixed monthly repayments.
You might like to own the vehicle long term.
The choice to buy or return the car at the end.
There are no mileage restrictions imposed.
You don't need to find the money to pay a large lump sum payment at the end of the agreement.
Payments are fixed over the entire period – which enables you to budget more easily
When you've paid back half of the full total repayable amount, you're free to opt for Voluntary Termination (VT) – meaning you're free to hand the car back if you need to.
HP is not good if:
Monthly payments are usually higher than for hire purchase agreements in comparison with other finance options.
The loan is secured against the car. This means that if you fail to meet your monthly repayments, the vehicle can be repossessed.
Failure to make regular repayments could also negatively impact your credit score.
With over 14 years+ experience in car finance and car buying, we may be able to help people who have had county court judgements, individual voluntary arrangements or people who have been made bankrupt and recently discharged.
No matter what your financial situation, you will help boost your current credit score if you are registered on the electoral role and that any current credit in your name, e.g., credit cards, are registered at your home address. Whenever you move address, be diligent to update details with lenders and re-register to vote. You can do this here
Another thing to do is set up direct debits for your household bills, to ensure you don’t miss any payments. Over a few months, this will indicate to a potential lender that you are up-to-date with your on-going monthly overheads. In addition, you could get what is known as a rebuilder credit card. These offer you a smaller credit limit that other credit cards so you are more likely to have your application accepted and, by using it to pay for small cost items that you can pay off easily, you again show lenders you can manage your money wisely. These cards have specifically been designed to help people improve their credit score but most card issuers state you must not have had any bankruptcies in the last 12-18 months to be eligible.
If you have a default recorded against you, it may help your chances of approval, when applying for new credit, by adding a ‘notice of correction’, to your credit file. This is a statement of up to 200 words in which you can offer an explanation as to why this happened. Lenders will review this in determining whether to accept your credit application.
With a default recorded we also recommend making contact with the lender in question and make the effort to pay them off, no matter how small a contribution you can make per month. By reducing or satisfying your default balances you will be viewed more favourably by a potential lender.
If you’re worried about your current credit score, we’d recommend gaining access to your report. Clear Score offers access to your score and report for free
If you have a default recorded against you, it may help your chances of approval, when applying for new credit, by adding a ‘notice of correction’, to your credit file. This is a statement of up to 200 words in which you can offer an explanation as to why this happened. Lenders will review this in determining whether to accept your credit application.
With a default recorded we also recommend making contact with the lender in question and make the effort to pay them off, no matter how small a contribution you can make per month. By reducing or satisfying your default balances you will be viewed more favourably by a potential lender.
If you’re worried about your current credit score, we’d recommend gaining access to your report. Clear Score offers access to your score and report for free.
You may still be able to secure finance through us if you have incurred a CCJ. If you paid the full amount of a CCJ within a month you can get the judgment removed from the register. Meanwhile, if you paid after a month, you can get the record marked as ‘satisfied’ in the register. You need to contact the court to and prove payment to get the record changed and an administration fee will apply, typically £15.
The longer ago you had the CCJ was, the less likely lenders are to take account of it. We’d recommend you look at any judgments against you on the register of judgments. This will cost £4. If the information on the register is wrong, you can contact Trust Online, who will check the details with the court.
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