Bad Credit Car Leasing

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Do you have a bad credit score but looking for car finance on a new or used car? There are plenty of options still open to you.

Let’s look at the three main types of car finance and then answer some common questions about the industry.

Types of Car Finance

There are three core types of car finance:

PCP – Personal Contract Purchase

This is where you usually pay a deposit, with monthly payments attached. At the end of the period, you do not own the car. The larger the deposit, the lower the repayments and vice versa. You may be able to get a PCP deal without a deposit.
At the end of the agreement, you can either return the car, use the car as a deposit against a different car from the same dealer, or pay a lump sum to own the car.

Use Case: You only need the car for a few years or a short term

Pro
You can change your car regularly

Flexible budget options and can be cheaper than a personal loan / HP

You’re not tied into a deal, and often you can get servicing or other services included

Cons
Expensive 0% deals

You never own the car

Limits on yearly mileage with penalties for exceeding.

There’s risk of extra charges if there’s more than wear tear issues at the end of the period.

HP – Hire Purchase Agreement

A hire purchase agreement lets you place an initial deposit, with the cost / value of the car spread out across the length of the agreement, resulting in you owning it at the end.

APR rates are usually between 4 and 8% though dealers may run deals.

Use Case: You find a good offer with a dealer and want to own the car at the end.

Pro
You can change your car regularly

Flexible budget options and can be cheaper than a personal loan / HP

You’re not tied into a deal, and often you can get servicing or other services included

Cons
Expensive 0% deals

You never own the car

Limits on yearly mileage with penalties for exceeding.

There’s risk of extra charges if there’s more than wear tear issues at the end of the period.

Personal Loan

If you take out a personal loan you can sometimes achieve lower interest rates, and spread the cost over a time frame that suits you. You own the car from day 0.

Use Case: You’re keeping the car for a long time but perhaps want a higher quality / newer car to avoid maintenance costs, making it cheaper in the long run.

Pro
Can be cheapest way to own a new car, as rates are lower than HP / PCP

Can be as low as 3%, very simple and flexible

You own the car,

Cons
Not ideal for those with bad credit ratings as it can be expensive or difficult to get a loan offer

You’re responsible for repairs,

Will You Get Car Finance with Bad Credit Ratings?

No matter your credit rating, many lenders offer different levels of package. Some even display their criteria on their website so you can check before applying.

However, the rates you are offered will be worse than if you had excellent ratings, due to the higher risk to lenders. Some firms offer 0% deposit schemes but these can result in higher monthly repayments, so check you can afford them first!

How many payslips for car finance?

Usually it’s best to have between 3 and 6 months of pay slips ready to provide proof of income to the lender. The amount required will be at the discretion of provider.

If you are self employed, then have bank statements ready to prove income information.

Equally having all of the address history and proof of identity (passport, driving license) ready before you start any application will help speed things along.

Guaranteed Car Finance

Sadly there is no such thing as car finance that is guaranteed. Any loan or finance application is exactly that – an application for credit and the provider will take into account many factors about you and your situation. Each lender will have their own risk profiles and so you are best to do a lot of research before applying.

FairSquare offer finance to a wide range of risk profiles and are worth a look.

Any advert or promise of a guaranteed deal is misleading at best – only lenders have the final say over any application and most companies you deal with are brokers or dealers. A company promising this will potentially be declining a large amount of applications, no matter what their marketing says!

Car Finance with No Deposit

Many companies are able to offer finance without a deposit. This may increase the repayment percentage or term, so always check the calculators first!

It may be worth checking with leading manufacturers directly too, as seasonal offers come around with deals such as £99 a month with no deposit which Vauxhall recently ran.

Looking for no deposit options is a great way to avoid a hefty up front chunk of cash against a new or used car – especially if you’ve just got rid of a car due to high running and maintenance costs. It’s worth calculating the benefits of this compared to a higher upfront cost with lower repayments though, as you may save money in the long run.

Bad Credit Car leasing

Leasing a car when you’ve already been turned down for a car is perfectly possible. Your options may be slightly limited, however used car leasing is available

You can lease a car if you have bad credit, and your credit score requirements will vary based on lender so it’s best to shop around and look at different options available. Some display criteria on their website or have a wider risk profile, such as Fair Square.

Even with bad credit ratings you should be able to buy a new car, but it will be more expensive than if you had a good credit rating. There are a lot of helpful calculators out there which should help!

Car on Finance With No Credit Check

Some marketplaces will let you do a “soft search” for credit deals which don’t impact credit checks.

However – any application will need to go through a credit check at some point! Learn some ways about how to improve your credit rating here.

How many car finance can you have?

There are several car loan /companies that can offer same day approval on car loans, offering instant finance.

Some companies even allow you to browse online for new and used cars, with free delivery to your door and a 14 day return period. Car finance in this case may take more than a day but it’s pretty quick.

FairSquare

Fairsquare offer a range of finance options for your next car, on both new and used cars. By using multiple lenders they search the market for the most competitive rates. Thousands of cars are available from dealers all over the UK. Their soft-credit search lets you browse without going through a credit check on every potential vehicle. Rates offered are always the best available to them thanks to their zero-preferred lender policy.

Find out more from Fairsquare today.

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