How to get a car with bad credit

How to get a car with bad credit

Have you recently had an application for credit rejected? If so, it’s possible that you’re wondering if this will affect your credit file.

Just being rejected for a credit application will not affect your file. However, when you apply, creditors may review your credit report and this hard inquiry does have the potential to negatively impact your file.

When you have been rejected for credit, it can leave you with questions about whether it’s still possible to fund the thing you needed the credit for. If you were trying to buy a new motor, but you have bad credit and you’ve been refused car finance, we could help.

Here at Go Car Credit, we could get you on the road. To do this, in most instances we look at more than just your credit file, instead thinking about the bigger picture.

If you do have bad credit, car finance could still be within reach. Here, we’ll help you understand why your initial application might have been rejected, as well as how you may be able to get a new car even if your credit file isn’t as healthy as you’d like it to be.

Why has my application been rejected?

You might already know you have bad credit from past finance applications, or maybe the rejection has come as a surprise. Either way, knowing why this decision was made can be useful in the future. That’s because it helps you to think about any changes or checks you might need to make before you rush into applying for another type of credit or finance.

If you don’t find out why you’ve been turned down, you could end up being repeatedly rejected for other credit products in the future and damage your credit score in the process. It may be that there are one or two reasons. Here are some of the most common causes of credit requests being dismissed.

The application wasn’t completed properly

Even the most basic mistakes can cause an application for credit or car finance to be rejected. Maybe you ticked the wrong box, or you missed a section without realising.

These tend to be issues that are easy to fix if you know about them. Carefully check through your copy of the application, if you have it. This might reveal things that were missed or written incorrectly. Running these checks might not help with that particular application, but it could help for anything you apply for in the future.

Details on your credit report

A potential lender might have spotted something on your credit file that they aren’t happy with. For example, you might have had issues with keeping up with repayments in the past. Other issues with your report could include mistakes, such as a loan listed as being unpaid when you finished paying it off a while ago. Alternatively, things you’ve never applied for could be showing up. Even things like the report containing your old address can make a difference.

People who have since moved in might have missed mortgage repayments, for instance, and this could inadvertently reflect badly on you. If you spot mistakes, you can speak to the credit referencing agency – either TransUnion, Equifax or Experian – to tell them things aren’t right, or you can try adding a note to your credit report.

No credit history

Are you able to keep up with repayments? Have you ever had to defer? Have you had a bad credit score that’s affected car loans or other types of finance you’ve taken out? These are key questions that your credit history should provide the answers to.

The people who you need credit from want to get an idea of what type of borrower you are. If your credit file is on the thin side, it could be off-putting to potential lenders. Without this documented borrowing past, you might find your application is rejected.

Applying for too many credit products

When you apply for lots of loans, finance or credit in a short space of time, this could have a negative impact on your credit file. It’s not just credit cards and finance that this applies to; it’s also applications for mobile phone contracts and digital TV packages, so it can be easy to have a lot of applications at once without realising it.

To avoid this, try staggering applying for credit and keeping track of any applications you put forward. Once you know the reason for the rejection, you can take any steps you need to help your case for being accepted next time.

Does denied credit show up on my credit file?

As we’ve already mentioned, being rejected for a loan or credit won’t affect your credit file on its own. Better still, your credit file doesn’t reveal whether you were accepted or denied credit. But your credit file does show where there have been hard inquiries, which can have a negative impact on your score and could mean that your application for car finance fails.

Hard inquiries are a record of where potential lenders have looked at your report when you apply for credit. These show up whether you’ve been approved or not. For instance, if you’ve applied for a loan and been approved, but you’ve decided not to accept the lender’s offer, there would be a hard inquiry there.

Likewise, you might have been researching and applying for lenders that offer affordable car payments, but your bad credit history meant that you’ve struggled to get approved. Here, there might be a few hard inquiries. If potential lenders can see a lot of hard inquiries, it might put them off accepting your application as it could look like you’ve been applying for lots of different types of credit, which some lenders will view as higher risk. It could also show you’ve been turned down for credit, even if you haven’t.

How long does a hard inquiry stay on my credit file?

Hard inquiries can stay on your credit file for up to two years but usually they will stop having a major impact on your score after a few months. While hard inquiries are likely to show up, potential lenders also understand that if there are a few related hard inquiries around the same time, it’s clear you’ve been researching the best deal, and this will be taken into account.

Plus, it also comes down to the credit referencing agency the lender looks at. It might be that these inquiries show up on your Experian report but not on your TransUnion one.

How can I get a car after being rejected?

Don’t let being rejected and your worries about your credit file put you off applying for car finance. Even if you know why you were rejected and you have a poor credit file, it’s still possible for you to speak to us about your options.

At Go Car Credit, we look at more than just your credit file and the hard inquiries. We want to get you behind the wheel and will work with you to make that happen. We’ll consider your application even if you have a poor credit file or you’ve been rejected elsewhere.

Think beyond your bad credit and use our car financing calculator to work out what sort of repayments would be affordable for you.

How does Go Car Credit decide?

We’ll build a picture by looking at your credit history, income and how much you can afford to pay. Then we’ll discuss what type of repayment plan could work for you so that we all know it’s a manageable amount.

We can’t guarantee you’ll be accepted for car finance, but we do as much as we can to approve you. One way we do this is by offering hire purchase. This can be a good option if you’re trying to work out the best car finance for bad credit or a credit file filled with hard inquiries.

What’s hire purchase car finance?

If you choose hire purchase, you’ll be buying your car without paying in full before you can drive it, and your purchase is secured against the vehicle itself. You’ll put down an initial deposit and then pay off the rest via monthly instalments.

So, until you pay off the amount that we’ll agree with you as part of your repayment plan, the car is legally owned by Go Car Credit, although you’ll be the named owner during that time. Once you’ve paid the full balance, which is the car’s value plus an amount of interest, the motor is legally yours.

What if I can’t pay?

If you can’t make the repayments, let us know as soon as possible. We’ll work with you try to come up with a solution. As a last resort, we can repossess the car. This is a very last resort for us though, and there may be different options before we get to that point.

Will I pay more because I have a poor credit file?

It’s true that a poor credit file can sometimes mean you are charged higher interest rates. If you are approved, other factors that will affect the amount you pay are the vehicle you choose, the deposit you put down and the length of your repayment period, together with the added interest on top.

We treat every application on its merits because you’re an individual with your own financial story. Your circumstances will be different to someone else who’s trying to work out how to get a car with bad credit.

This means that your car finance agreement with us will depend on your unique situation. If approved, we’ll then create your personalised payment plan. This will be tailored to suit your income and outgoings, so you’ll be repaying an amount you can afford.