Bad Credit Car Loans
Compare bad credit car loans
If you have a bad credit history, or no credit history, you may find it harder to access finance for a car loan. Some providers may still be willing to lend to you, but your options are likely to be much more limited than for those with a good credit rating.
If you are deemed to have a poor credit rating, you are likely to have to pay a significantly higher rate of interest in order to get a car loan. This is especially true if you have a County Court Judgement (CCJ) or a bankruptcy on your record.
There are simple measures you can take to help improve your credit score, including making sure your name is on the electoral roll at your current address. Taking out a loan can also help to ultimately rebuild your credit rating, but only if you keep up with the repayments.
If you are considering a car loan with bad credit, there are two main types of borrowing you may be able to access.
Personal unsecured bad credit car loans
For loans between £1,000 and£25,000, a personal unsecured loan may be an option. Many providers offer unsecured loans specifically targeted towards car buyers. The application process is usually fast and straightforward with many lenders offering instant decisions, especially for online applicants.
Customers with a poor credit score are unlikely to qualify for the best rates on an unsecured loan, but you may be able to get an indication of whether you will be eligible and what deal you could receive without a full credit check.
If you do take out an unsecured loan, you must stay on top of the repayments as failing to do so could damage your credit rating more. Repeated failure to make payments could see your account referred to a county court and a bailiff appointed to recover the debt.
Homeowner secured bad credit car loans
If you are a property owner, you may be able to get a more favourable interest rate on a car loan, even with a bad credit history, by securing the loan against your home. Homeowner loans are also a better choice generally if you need to borrow more than £25,000.
The rate you are offered on a secured loan will depend on the total amount of debt that will end up secured against your property, if you take the loan, compared to the market value of that property. The lower your total debt relative to the value of the property, the lower interest rate you are likely to be offered.
Failure to keep on top of repayments on a loan secured against your home could end up with your property being repossessed, so it is vital to be sure you can afford the payments before taking out a secured loan.
Get the best rates on bad credit car loans
Finding which providers are willing to lend to those with bad credit and which are offering the best deals on these loans can be hard work.
Our free loan calculator, found at the top of this page, allows you to quickly and simply filter all the best deals from across the market to see which are likely to be available to you.
This means, even if your options are more limited, you can still get the best possible deal on a car loan to suit you.