How to Get Approved For a Car Loan If You Have Bad Credit

How to Get Approved For a Car Loan If You Have Bad Credit

There are a few milestones in our lives, and for some passing their driver’s licence and getting their first car is one such milestone.

Cars represent many things to people, and freedom is one of those things. Freedom to be able to go where you want, when you want.

No waiting for the bus or train, no being dependent on others to drive you around, no now you can do the driving.

For now owning a car is a large responsibility, and something many of us want to do and can do. Things may change in the future as we may use short-term rental cars, or as cars become more autonomous and self-driving, we may not need to own a car.

However, until that day arrives, we will still be driving and wanting to own our own car.

However, buying a car is not a cheap venture, cars can be expensive. Of course you can buy some cars for a reasonable sum, but even the reasonable sum can be thousands of pounds.

And for many of us, we cannot save that kind of money quickly to pay cash for a car, so we seek out financing, we need to take out a loan to buy the car of our dreams.

If we need to take out a loan to buy a car, then we need to show a good credit history, and have a good credit score, and not everyone has a high credit score and good credit.

Some borrowers may have had some past problems in repaying a loan, which has caused their credit scores to drop. Some may not have had credit in the past, which can cause them to have a low credit score.

However, bad credit, or no credit aside, we still want to buy a car, and need a loan to finance the car.

So how can you improve your odds of being approved for a car loan if you have bad credit?

Buy the Right Car

If you are concerned about getting approved for car financing and/or a car loan, buying the right car is important, and we are not talking about getting the car of your dreams or one that has a good track record; although this is important as ell.

We are discussing buying the right car for you in that you can afford the car.

Setting your sights on a £25,000 high-end car when the reality is you can probably only afford a £10,000 car, does no one any good.

You may wish to look into buying a used car as well, one that has already depreciated in value, and is a good bargain.

You want to choose a car that is affordable based on your budget and income. It also will make qualifying for a car loan easier as well.

If your monthly payments are affordable, you are more likely to be approved for the loan.

Don’t forget to take into account the expenses associated with owning a car as well:

* Insurance

* Maintenance and repairs


* Road tax

Secured Loan

If you are seeking a loan to buy a car, most car financing and loans for cars can be secured loans, meaning the loan is secured by the car. Should you fail to make the payments, the car can be repossessed.

Secured loans can be easier to qualify for, and some lenders may approve a loan that is secured, even if the borrower doesn’t have a high credit score. This due to the fact the loan is secured.

Larger Deposit

One way to insure your car loan is approved is to have a large deposit. Most loans for cars, and for properties, lenders require a deposit.

A bank or lender may only allow a borrower to borrow 80% of the value of the car, some lenders may allow a higher percentage, some lower.

An example may be if you wish to buy a car that is being sold for £10,000, a lender may lend £8,000 towards the car, leaving you with having to have a deposit of £2,000.

The larger the deposit you have, the higher the probability your loan will be approved. This is due to the fact the lender’s exposure on the loan is less, in addition, the larger the deposit a borrower has, the less likely they are to default on the loan.

Have a Guarantor

One fail safe option to insure your car loan is approved is to have someone be a guarantor for you.

Guarantor loans are loans that are approved based on affordability, and having a guarantor. Someone who knows you and will pay the payments should you default on the loan.

Having a guarantor is good for someone with bad credit, and also for someone who may have no credit, and are looking to build a credit history.

One thing to do prior to even looking at cars and applying for car loan, get a copy of your credit history and credit score and see where you stand. Knowing this information is vital before you begin the process of buying a car, and seeking out financing.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.