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Car finance companies must only lend responsibly by ensuring they assess applicant creditworthiness and affordability. As such, a credit check will always be required.
It may be possible to get a logbook loan without a credit check, although these are risky and expensive.
The good news is that plenty of specialist lenders aim to help car buyers with bad or limited credit.
Below, we explore the options for motorists with bad credit who are looking to be approved for a car loan.
Warning: late repayments can cause you serious money problems. See our debt help guides.
Your credit score is a figure based on the activity in your credit report, used by lenders to assess how reliable you’re likely to be as a borrower.
The score is calculated by credit reference agencies. There are three major agencies used by lenders in the UK (Experian, Equifax and TransUnion) and it’s possible each agency will rank you differently. What’s more, each lender has different tiers for “very poor” and “poor”.
The main thing to remember is: the lower your score, the harder it will be to be approved for credit. You can learn more in our guide on dealing with bad credit.
Some lenders may offer an eligibility check service, which will indicate if you’re likely to be approved for a car loan. This requires you to fill in a few basic financial details. It may involve no credit check or a “soft” check, which has no impact on your credit score.
Even if your eligibility check suggests you’re eligible for a car loan, you’ll still have to submit a full application. This application will require more personal and financial details, including a full credit check, and you may be declined a loan based on this extra information.
No matter which of these alternative credit sources you choose, your lender will consider all of these factors as well as your credit score.
If these factors are all in good shape, you’ll be far more likely to be approved for a loan with a bad credit score.
Consider these potential pitfalls before taking out a car loan with poor credit.
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