People with bad credit may find it difficult or impossible to get no deposit car finance. This is because most banks and lending institutions consider a bad credit rating as an indication that the borrower is high risk, which means there is a good chance they will default on the loan. However, there are lending institutions that don't consider a bad credit rating as an obstacle to providing a car loan. The reason for this is because there are many reasons for a bad credit rating, and they are not always the fault of the borrower.
Reasons for a Bad Credit Rating
Of course, people who don't pay their debts will have a bad credit rating, but there are other reasons the credit rating can go down. For example, if a person doesn't use credit cards, has never borrowed money, has short-term credit that they always repay or are self-employed, they may have a low credit score. It has nothing to do with their ability to repay a car loan.
Businesses and credit reporting agencies make mistakes, which could adversely affect someone's credit rating. This is why it's important for consumers to check their credit report at least once a year and correct any errors.
Bad Credit Car Financing
A car is essential for most people to get to and from work and for other activities, and people with a low credit score are no exception. Some lenders offer packages to buyers who can't get a car loan. Payments may be spread over a longer period to make then affordable.
Many lenders only consider income and expenditure as factors for determining if someone is eligible for a car loan. The borrower may have sufficient disposable income to support a car loan.
Some lenders offer online loans that are approved within minutes. The consumer fills out an online car loan application that is sent to several different lenders. The lender also offers a personal advisor to help the consumer make decisions related to the terms of the financing and their credit limit. The borrower can select the car they want and give the registration, price and mileage to the lender. These online sources take care of all the paperwork and see that the seller receives the money, so the borrower can focus on their new car.
There are also lenders who are willing to consider no deposit car loans for people who have CCJ defaults, are discharged bankrupts, have defaulted and missed multiple payments on other debt. One advantage they offer is that they conduct no credit check when the consumer applies. Multiple credit checks can have an adverse effect on a credit score.
Some Common Questions
Does the Consumer Need to be on the Electoral Roll?
Consumers need not be on the electoral roll. However, if they are, it will greatly improve their chances of getting approval for a car loan if they have bad credit.
What about IVA Consumers?
Consumers who are in an IVA program may also be approved for car loans.
What Is the Rate of Interest?
The rate of interest will depend on the consumers personal circumstances, and the APR will depend on the lenders rates and terms.
What about Age?
Some lenders will consider a car loan for a person 18 - 21 years old. However, if they have no credit history, they may need a guarantor.