From our own experience, we know many clients start out assuming that they won’t get vehicle financing due to their poor credit history.
Let’s be clear – that is typically incorrect. However, there are some issues here that need to be understood.
In today’s interconnected world, details of our financial lives and related transactions are often recorded in central ‘credit history’ databases.
That may sound sinister but it’s actually a system designed to help everyone, including companies and private individuals. It does so by allowing them to understand and quantify the risks they’re taking when considering lending money to a third party.
If that third party’s records on those central databases indicate that they have, for example, struggled previously to repay loans, then that’s called having a ‘poor credit history’.
That information will be taken into account by potential lenders when constructing loan offers. It might influence how much they’re prepared to lend, at what interest rates and over what period of time etc.
Of course, any lender will ultimately reserve the right to decline an application for finance. In our experience that only happens in a relatively small number of cases — assuming that the application was correctly constructed and targeted at appropriate lenders to begin with.
It’s important to realise:
Having a poor credit history is therefore simply a routine fact of life that needs to be acknowledged and managed when you’re applying for something like car financing.
There are several different ways of financing the purchase of a car including:
Some of these typically may not be viable routes for you if you have a poor or very poor credit history. Others may be but we cannot stress strongly enough that it’s important to understand the relative pros and cons of these options as they apply in your individual circumstances.
Some potential car finance providers also offer more attractive interest rates for applicants with credit history challenges than others. You may still have to accept the reality that your bad credit car finance is going to cost more than it would if you had a blemish-free financial background but there is no need to pay more than necessary.
The message is clear — don’t give up simply because you have CCJs or other financial glitches behind you.