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When you’re stuck with bad credit, you can feel hamstrung. If you’ve been declined a new credit card, it’s possible to believe that purchasing a car is out of the question now. Not necessarily!
In this article, we discuss whether it’s possible to purchase a replacement car despite having bad credit.
Not All Credit Is the Same
A credit card application is different from borrowing to purchase a car.
For one thing, credit cards are unsecured debt commonly used for consumer purchases. Sometimes, people also use them for spurious purchases rather than necessary ones, racking up needless debt. Therefore, they’re viewed more cautiously. It’s harder for credit card issuers to get their money back too because there’s no collateral.
With bad credit car finance from ChooseMyCar, there isn’t just one lending option. Several exist to make purchasing a second-hand vehicle more affordable. Some of these work fine with bad credit and several are more affordable because the vehicle isn’t always owned by you at the end of the agreement.
Therefore, avoid conflating other debt finance with car finance because they don’t directly relate to one another.
Second-hand Car versus A New Car
Purchasing a new car from a dealership is fine. But when you have bad credit, it’s making life more difficult. The sum needed will be greater, raising the bar on how much you need to borrow compared to your monthly income. As such, it’s an uphill battle from the get-go.
Avoid the steep loss in value that a new car suffers the minute it’s purchased and driven away from the dealership. While that means purchasing second-hand, it opens up finance deals set up expressly for the second-hand car market. Greater affordability makes it easier to secure a loan on bad credit too.
Make Compromises to Lower the Lending Amount
With a second-hand vehicle, many small compromises are available to reduce both the purchase cost and the financing needed. Lower sums borrowed on a higher income increase the chances of a car loan approval even with bad credit in your past. Put luck on your side.
Be a smart car buyer. Consider your real needs for the size of the vehicle, necessary features, and so on. For instance, once you establish how large of a vehicle and the capacity needed, shop around for the lowest priced make and model matching that requirement. Don’t fixate on one model because you prefer how it looks.
Also, decide what extras aren’t required. This way, you can choose the cheaper of two second-hand models that are similar with one costing more because of extras.
Be Open to Different Purchase Agreements
Not all purchase agreements for a UK car are the same.
Some involve finance, repayments, but not owning the vehicle at the end. Others include an optional larger ‘balloon’ payment to own the vehicle, permitting lower payments during the loan until the very end. By working with a lender who offers various methods to obtaining a car on bad credit, it increases the chances of a successful deal being struck.
For car purchases, bad credit isn’t the end of the world. So, if you’ve previously believed that you’re in a bind, disabuse yourself of that notion. It’s simply untrue.