Having bad credit score can impact your purchases in all walks of life. In many instances, a bad credit score will make you ineligible for certain deals. But fear not if you’re looking for car finance — poor credit doesn’t have to rule you out of getting behind the wheel of a new vehicle. Thankfully, there isn’t a minimum credit score required when it comes to buying a car.
Of course, the terms you’re offered will likely be different to those available to drivers who have built up a good credit score, but don’t let it put you off looking into what’s available. Here at Lookers, with motability dealers, we take a look at what your bad credit score might mean for you when it comes to car finance.
Turning bad credit score around – Opportunity to build a good score
First things first, let’s look at the main positive. Yes, you may have bad credit score at present, but it doesn’t always have to be like that. If you opt for a finance agreement despite your current circumstances, you’ll be able to build your score back up to a healthy amount, which can help with future purchases.
Since the average car finance agreement is usually between 12 to 60 months, it can be a quick-fire way to positively impact your score — as long as you keep up to date with your payments. That means, when done right, this provides a great opportunity to build a better score.
Less attractive terms
Unfortunately, if you have a bad credit score score, it’s very likely that you’ll receive less attractive terms. bad credit score usually comes about due to past failures to keep up with payments on any credit agreements. This makes lenders wary that you’ll defer payments again, which will mean that you should expect a higher annual percentage rate (APR) amount. This, in turn, will push up the overall cost of your purchase depending on how long of a contract you sign into.
The general rule of thumb is that the lower your score, the higher the interest rates. Again, this is normal in all industries and not just when you want to buy a car.
Also, a larger deposit will likely be necessary so that your creditor has received some form of financial security.
A smaller range of cars to choose from
With your costs likely to increase if you have a poor credit score and are looking for car finance, your overall budget may limit you to lesser-priced vehicles. Sadly, that could see your dream car end up out of bounds, but you shouldn’t let that deter you from looking at other models.
The quality of today’s cars means that they often offer cutting-edge technology and many other attractive features as standard practice. The older cars now hold a longer ‘shelf life’ — and don’t decrease in value as quickly as a new purchase. Some car manufacturers, including Volvo and Mercedes-Benz, also now support a high mileage club — a program which rewards those who cover vast distances.
Making sure you can meet all payments is essential when you consider financing a car. It’s important to make sure you can still live within your means and set a budget that will represent this. If you do this, then you may well find an ideal car that will be a great companion for your journeys from A to B.
About the Contributor
The author of this piece was Lee Dover, copywriter at Mediaworks on behalf of Lookers.