With bad credit, car finance might or might not be for you…

Should the past be a barrier to your future? No, absolutely not. Why? Because the past has gone. And there’s nothing you can do about whatever went before now. But what if there’s something in your background that others won’t let you forget? Something that create hurdles – obstacles that feel insurmountable now?

Having been in prison a couple of times since leaving school, I don’t exactly have an impressive employment record!” jokes Elaine in Radlett, Hertfordshire. Or maybe she’s only half-joking.

My past haunts me all the time, to be honest. It’s staggering how something that happened in the past can suddenly be brought up – when trying to get a visa to travel abroad, or to rent a flat or a house, or when looking to buy certain goods or services…”  There are plenty of reasons people end up having a poor credit rating; it doesn’t mean you’re stuck forever, and if it’s a car you’re looking for, car finance is still worth looking at even if your credit score is a little low.

lady at the steering wheel

Elaine is typical example.  Trying to buy a car on finance, she realised that her problem wasn’t exactly her criminal record, but that fact that she’s surviving on State Benefits. It makes her someone many lenders feel nervous about, usually resulting in them turning down her application for a car loan. The good news for her is that she can in fact get a car on finance, despite being unemployed and having a low credit score. But can she realistically make the payments? Would applying (and having her application approved) actually only add to her problems? This is something that all unemployed people seeking a car loan should consider.

“I told myself a lie”

I was desperate to get a set of wheels earlier in the year,” explains Paul in Wembley. “I thought it would be great – a way to diversify, both socially and in the realm of seeking employment opportunities. But I got my sums wrong – or rather, I told myself a lie. When I got a pad, pen and calculator out, and worked out how much money I needed for things like rent, utility bills, food, phone credit, TV licence and other things that I pay by direct debit each month, taking on a car loan was the last thing I should have done. But I made the mistake of convincing myself I could afford the monthly payments.” The fact he found a lender who specialised in car finance for people in Paul’s position wasn’t really the problem – it was simply that his budget wouldn’t stretch.

Nothing to show

After Paul’s application was approved he kept up payments for just two months before defaulting, meaning that the car he had driven away on finance eight weeks earlier had to be seized. This left him with no transport, nothing to show for the payments made, and a stain on his credit report.

Can you REALLY afford to do this?

“Whether they have bad credit or not, I would urge anyone thinking of applying for car finance to only do so if they’re one hundred per cent sure that they can make the payments,” continues Paul. “They need to be fair to themselves as well as the lender. It’s all very well thinking that having a car will lead to a job, more money, more stability, but that might not materialise ‘overnight’. And other factors can come into play, such as illness, for example. So only take on a car loan if you’re sure.”