Can You Still Obtain Car Finance with Bad Credit?
As much as we’d like to feel that life always goes to plan for everybody, sadly this is not often the case. Often times, situations beyond our control can get the better of us, and our credit history can take a hit as a result. In situations like these, many people wonder, ‘Will I still be able to get car finance now that I have missed some debt repayments?’. Let’s try and answer that question.
When your credit rating takes a hit due to circumstances beyond your control, there is no denying that it will more than likely affect your ability to obtain credit in some way. You may find that you can no longer obtain a car loan from a mainstream lender for example, and because of this, you may also find that you have to pay a higher interest rate when you do try to obtain bad credit car finance. However you look at it, lenders may be wary of you at first, at least until you prove that you can begin to manage credit properly again.
So how can you rebuild your credit, so that you can once again obtain the best car loan interest rates available? The good news is that it is not impossible to rebuild your credit, but it may require a little patience on your part.
Pay On Time
This may seem obvious, but the best way for you to prove to future lenders that you are a good credit prospect is if you do a good job of maintaining your current credit commitments. So, if you do take out some kind of credit builder credit card or loan to rebuild your credit score, be sure to make all of the repayments on time and to stay well within your credit limit. This will show potential car finance lenders that you have learnt from your financial mistakes and that you will take your credit commitments more seriously going forward. Of course, if you have run into quite serious problems with your finances, then it may take you longer to rebuild this trust than it would for someone who has had some minor hiccups, but it can certainly be done over time, so don’t give up.
Don’t Take on Too Much
Another tip is that you should avoid taking on higher car loan credit, and avoid making too many applications for bad credit car loans if you are rejected initially. If you take on too much credit all at one time, then lenders may view this as a red flag that you are in some kind of financial trouble, and this could hurt your credit rating as a result. Also, if you are rejected for credit at the outset and you keep on applying to different lenders with the same result, then this might also look bad on your credit history. This is firstly true because it may scream to a lender that other lenders are reluctant to lend to you, but secondly, there may also be a possibility that you could be accepted for every line of credit which you have applied for, which could in turn mean that you end up being a potential credit risk in the eyes of a lender.
We can see then that while it is certainly possible to obtain car finance even if you have a bad credit score, you may find that you pay a higher interest rate for the privilege, at least until you can prove that you are able manage your credit properly going forward.