I have a bad credit score – can you get me guaranteed car finance?
Just like any other scenario in life, ‘bad’ credit score also varies from lender to lender. A score below 629 is what is considered a bad credit score, but if you are somewhere close to the limit, a lender might give you some leverage. A bad credit score does not mean you are deprived of the opportunity to get a car on finance, so don’t lose hope and keep trying.
A bad credit score usually results from late loan term payments or if you don’t have enough credit history years. A credit score comprises of student loans, payment history and even amounts owned in the past. However, it can be improved. With a bad score, you can still get a car, but the interest rate is higher. The interest rate can go up to 20 to 30% for a credit score below 580. On the contrary, excellent credit scores can also lead to zero percent interest rate!
Why a credit score matters is because the lender gets to know whether he can trust you to return the money on time. A credit score also gives the lender an idea of your income, work history and other details that might not be known otherwise. Therefore, with a bad credit score, it is hard for lenders to trust you with the money which is why it is more difficult to get a car on finance with a bad score.
If you need a car and you have a bad credit score then try talking to multiple dealers. This might get you a reasonable deal. If you do have to settle for higher interest in the end, then try going for shorter loan term payments because these usually have lesser interest overall as compared to longer loan payment terms.