Top car loan companies for bad credit
If you have a lower than average credit score, you may have worried in the past about securing car finance. However, we are here to reassure you that there are plenty of options and providers online who are willing to help those with poor credit. In this guide, we are going to tell you how you can find the top companies for bad credit car loans and what to spot when you are searching. That way, you will be able to browse safely without further affecting your score and potentially finding a solution that works for you.
What is a bad credit car loan?
Lenders that offer bad credit car loans typically review your affordability, rather than your credit history. This means that they could assess your monthly income, essential outgoings, and other financial commitments to determine whether you will be able to afford the monthly repayments. Restrictions vary by lender, but many are willing to review applications even if you have past defaults, arrears or CCJs.
Before applying to any bad credit car loan companies, it is essential that you check their eligibility criteria. If you do not meet their requirements, it might be best not to apply until you can to avoid being rejected and damaging your credit score. Instead, compare your circumstances to their criteria, and ensure you fit the bill before applying.
How to find top bad credit car loan companies
With so many lenders available, it can be difficult to know where to start. Thankfully, we have a few pointers to help you find the best option for your situation.
- Look for accreditation – trustworthy companies will be registered with and authorised by the FCA. They should display on their website that they hold FCA authorisation. If you find a provider that does not mention any accreditation or display any approvals, they should be approached with caution.
- Read reviews – it is no surprise that the best bad credit car loan companies should have glowing reviews that they proudly display on their websites. If you cannot find any reviews or third party mentions of a provider, they may not be a legitimate company. You might want to find out more about them, it is usually best to ensure they have answered all of your questions before going through a full application.
- Avoid guaranteed car loans – while the word ‘guaranteed’ may be attractive, especially if you have a poor credit rating, this type of loan is often unachievable. These types of loans might advertise that you can secure a loan without any form of checks, but this is not the case, as no lender can guarantee approval. If they could this may leave you in further financial difficulties if you are unable to make repayments etc. All lenders should offer checks, either for affordability or credit, before making a lending decision.
- Avoid pushy lenders – if during your search, you come across a lender who you find pushy and pressuring you to apply with them, remember that the ball is in your court, and you can shop elsewhere or ask to speak to another representative. These types of lenders could be using predatory tactics to encourage you to take out a loan that you cannot afford. Any type of aggressive behaviour is usually a bad sign, so you should seek lenders who take the time to understand your situation and listen to any concerns you may have.
- Make inquiries widely, but apply sparingly – there is no harm in emailing a few lenders to find out more about them, but you should not process a full application with them straight away. Compare the lenders you have spoken to in order to find out which could be best for you, then apply with them. If your application is turned down, it can be best to leave some time between your next application. Never apply for the first lender you come across – shop around first, make inquiries widely, and apply sparingly.
If you need any more support with your finances or finding the best bad credit car loan for your needs, please speak to the Money Advice Service for free and impartial help.
