How to buy a new car with bad credit

OK, so you need a car. The reasons why are entirely your own business, of course. But, if money’s a bit tight right now, how are you going to pay for it? Hmm… If you’re unable to purchase a vehicle outright you’ll probably be looking to make repayments on a car finance deal on a monthly basis. But what if you’ve got bad credit? Can you still get a car? Well, it depends…

shiny car wheel

Sure, there are plenty of companies claiming online (and in their printed marketing material) to offer “Guaranteed Car Finance with No Deposit Necessary for Anyone with Bad Credit!” But please beware. Think of that old maxim: “If it sounds too good to be true, it probably is.” Although it’s not entirely impossible, it’s highly unlikely that securing the car finance you so desperately need will be guaranteed. But that doesn’t mean you should throw in the towel. No way! Too many people with a low credit score give up on the idea of getting a new set of wheels, or upgrading their current vehicle to a newer model, simply because they’re certain they’ll be turned down for finance.

Don’t do that. Do this…

Perseverance can pay off

If you’re sitting at home right now, having serious doubts about whether you’ll be approved for car finance due to having bad credit, you’re not alone. Countless people across the UK are in a similar position, thinking the same thing. Perhaps they’ve maxed out their credit card, and made a couple of late payments on it. Or a mortgage payment was missed earlier in the year. Or maybe they bought some much-needed white goods after moving home, and then found they couldn’t make the repayments as easily as they’d first thought…

Recognise yourself in all of this? If so, don’t despair. Car finance lenders would be out of business if they turned away everyone with a less than pristine credit record, after all. And don’t be concerned that, even if your application for car finance is approved (yay!), you’ll only have a limited range of used cars to choose from. Even though you’ve got bad credit, you may still be able to get a new car on finance (and a lovely motor chosen from a wide range, at that).

It actually makes sense for a dealership to provide you with a new vehicle. Why? Because:

  • Used cars generally need repairs doing sooner or later. If dealers only gave bad credit customers second-hand motors, the vehicles would be continually being brought back to the garage to get fixed, meaning that the dealership would quickly get a reputation for selling dodgy motors
  • Used cars simply don’t hold the same value as new ones. So, if a borrower runs into financial trouble, meaning that they have problem in making the monthly repayments, when the vehicle is returned to the dealership is at least still worth something (and can be sold outright for a decent price, or re-leased to another borrower, as a good quality used vehicle)
  • Borrowers who drive away new cars from dealership forecourts are much less likely to incur repair costs. That means money set aside for monthly repayments doesn’t get eaten up in garage bills (which all too often happens when a used car is part of the finance agreement, rather than a good quality new one).

Also, and perhaps most importantly, smart car dealers recognise the worth of building up a long-term relationship with customers.

Long-term thinking is where the REAL money is

OK, providing a borrower with bad credit with a new car might not result in the dealership making a financial killing, but that borrower is much more likely to recommend the dealership/motor finance expert to family, friends and work colleagues. As well as turning to the dealership for car finance, they’ll go on to spend money on MOTs, general car maintenance, annual servicing, new tyres, fancy extras and more at the dealership, resulting in a high financial yield overall.