When it comes to car finance, there are several factors which can impact the viability of a deal. And one of those, or at least one that is perceived to be amongst these points, is your credit score. Indeed, the prevailing fear is that, for a driver who might have poor credit score for whatever reason, this could significantly impact car finance, whether it be higher costs for their preferred plan or even a restriction on what finance plans they can go for. Let’s look into this subject in further depth.
Ultimately, it will depend on a number of factors. Firstly, it hinges on just how low your credit rating really is. If it is deemed to be negative but it is relatively minimal, then it should not prove to be too much of a deterrent, especially if you have evidence of it having been positive previously. However, if the credit score is extremely low, then it will raise serious questions for the finance provider, not only in terms of your current situation, but also when it comes to how you would be able to turn things around in a sufficient period of time. That being said, this would not prevent you entering a deal per se, though it would limit your options for higher-priced vehicles.
Secondly, the company would look to understand why you are in poor credit, because sometimes the circumstances are not what they first appear to be to an outsider. There are times when a business goes under or an economic crash happens or another similar unforeseen event goes down, and it affects wide range of people beyond those at the centre of the matter, meaning that the likes of yourself and your credit score end up becoming collateral damage. If you can prove that this was the case for yourself, then the finance company might be able to find a way of working with you to reach a compromise as it pertains to car finance. But if your situation was the result of reckless spending or questionable investment decisions, then the conversation might end up being a bit different.
Finally, your credit score would only really come into play if you were thinking about a finance plan that was of a particularly high value. After all, if you were hoping to buy the cheapest car possible, then it is likely that credit would not really make much of an impact, since the weekly or monthly payments would be so low. However, if you were planning to spend top dollar on the newest, flashiest and most expensive model in the showroom, that is when your bad credit rating would begin to trigger some alarm bells. If you manage your budget in line with your credit, then there should not be an awkward conversation with the finance company, but if you are aiming to buy a vehicle that is temporarily outside of your recommended threshold, that is when there could be a stumbling block.
On the whole, though, we want to emphasise that poor credit does not mean that you cannot be accepted for car finance, but depending on how low your rating is, it could potentially restrict your choices to an extent, and it is only natural that the finance company would want to look into your situation in more depth before agreeing to a deal that, based on your bank balance, could be tricky for you to complete. We will be discussing in more details factors on your credit report that give you a plus or a negative in another blog post.
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