Car Finance for Bad Credit

Whenever you apply for a car finance, there is a chance that your credit score is going to be involved. Getting Car finance for bad credit can be hard at times.  But that doesn’t have to kill your dream of getting that car you always wanted. There are a lot of lenders who can provide you with car finance for bad credit. So what it is bad credit exactly and how does it affect your chances of landing a loan?

Bad Credit

Bad Credit is nothing but a score in your credit report.  According to this score, the lenders decide how much of a risk you pose to them. Depending on the score the lenders make their decision whether you are worth giving a car finance or not. If you have a bad credit score it would be difficult for you to borrow a car finance from the lender.  The score gives lenders an overview of your past transaction, how you have missed paying your debts in the past because of which he might hesitate to provide you with a loan. You can also face a problem getting a car finance if you have not borrowed any money in the past. The lenders don’t have enough data to base their decision on and can deny your application just to be safe. When you have a bad credit you should improve your credit score. However, this process takes years, so you can go for car finance for bad credit instead if you just can’t wait to get your hands on that wheel.  

What Options I Have When It Comes to Car Finance for Bad Credit?

There are some options available for you to get a car finance for bad credit. These loans are much likely to be accepted by lenders as there is not much risk involved for them. Secured Loans You can go for a secured loan as the loan is provided to you against an asset. This is not really a car finance plan but it can work for you. However, if you don’t make your repayments for months, the lender can seize your asset. Once you get a secured loan you can go buy the car that you want without much issue.   Guarantor Loans A guarantor loan is a loan that is backed by a co-signer, it can be a relative or any family friend. If you fail to make the repayment of your loan, the co-signer has to pay it for you. This loan can work for you as a car finance plan.   Hire Purchase Agreement In hire purchase agreement, the lender provides you with a car. You have to pay off its monthly instalments until you have met the purchase price of the car. After settling all the payments you become a rightful owner of that car. But remember the lender can take away your car if you miss any repayments You should consider this car finance option compared to the others as here you have a higher chance of getting accepted.  Lenders too, consider this to be less risky than any other form of loans.   Read more: What are Bad Credit Loans?