Your credit score can be the difference between securing an affordable car finance deal or facing high interest rates and rejections. But even if your score isn’t perfect, there are simple, effective steps you can take to improve it before you apply. The best part? Some of these changes can start showing results in just a few weeks.
In this guide, we’ll break down five key strategies to help boost your credit score, making it easier to get approved for car finance at a better rate.
Why Your Credit Score Matters for Car Finance
Lenders check your credit score to determine how “risky” you are as a borrower. A higher score means:
Better approval chances
Lower interest rates (APR)
More flexible repayment terms
A lower score doesn’t mean you can’t get car finance. It just means your options may be more limited, and you might pay more in interest. That’s why improving your score before you apply can save you money and increase your chances of approval. *Before you start improving your score, it’s important to understand how bad credit car finance works – read our complete guide here.
5 Ways to Improve Your Credit Score Before Applying for Car Finance
1. Make Payments on Time, Every Time
Impact Timeframe: 30 – 60 days
One of the biggest factors affecting your credit score is your payment history. Even one missed payment can negatively impact your score for years.
What to do
Set up direct debits to avoid missing payments on credit cards, loans, or bills.
If you’ve missed a payment recently, catch up ASAP – some lenders won’t report late payments immediately.
Keep making at least the minimum payment on all debts (paying more is even better).
Pro Tip: If you’ve been late in the past, showing three to six months of consistent, on-time payments can help rebuild trust with lenders.
2. Reduce Your Credit Utilisation Ratio
Impact Timeframe: 30 days
Your credit utilisation ratio is the percentage of your credit limit that you’re using. A high utilization rate signals to lenders that you might be financially stretched.
Example: If your credit card limit is £1,000 and you owe £900, your utilization is 90% – which lenders see as risky. Lowering this below 30% can boost your score significantly.
What to do: ✔ Pay down existing balances if possible. ✔ Ask your credit card provider for a credit limit increase (but don’t use the extra credit). ✔ Spread balances across multiple cards instead of maxing out one.
💡 Did You Know? Lowering your utilization can increase your score in as little as one month!
3. Check Your Credit Report for Errors
Impact Timeframe: 1-2 months (depending on corrections)
Around 1 in 5 credit reports contain errors that could hurt your credit score. Even a small mistake – like an old unpaid bill you’ve already cleared – can affect your ability to get car finance.
What to do:
Get a free credit report from Experian, Equifax, or TransUnion. Look for errors such as:
Incorrect missed payments
Accounts that don’t belong to you
Outdated financial associations (like an ex-partner’s credit affecting yours
Dispute errors directly with the credit agency – they must investigate within 28 days.
Fixing even one error could add 50+ points to your score!
4. Be Strategic About New Credit Applications
Impact Timeframe: Immediate (avoiding damage)
Every time you apply for credit (loans, credit cards, store finance), lenders perform a hard search, which can temporarily lower your score. Too many applications in a short time can make you look desperate for credit.
What to do:
Avoid applying for new credit in the 3-6 months before applying for car finance.
Use soft search tools (like Motorly’s eligibility checker) that don’t affect your score.
If you’ve recently been rejected for credit, wait before reapplying. Instead, work on improving your score first.
Tip: Hard searches stay on your credit file for 12 months but have the biggest impact in the first 3-6 months.
5. Build (Or Rebuild) Your Credit History
Impact Timeframe: 3-6 months
If you have no credit history, lenders don’t have enough data to assess you – so they might reject you or charge higher interest rates.
What to do:
Get a credit builder card and use it for small purchases (paying it off in full every month).
Register on the electoral roll – this helps lenders verify your identity.
Put utility bills or a mobile phone contract in your name (and pay them on time).
💡 Fun Fact: Even a small credit card, used responsibly, can increase your score by over 100 points in 6 – 12 months.
How Your Improved Credit Score Helps You Get a Better Car Finance Deal
Making even small improvements in your credit score can help you:
Secure a lower APR (interest rate)
Increase your approval chances with more lenders
Get access to better finance deals
At Motorly, we specialize in helping people with all types of credit histories find car finance deals that work for them. Whether you’re actively improving your credit or need a solution now, we can help.
💡 Check Your Car Finance Eligibility – Without Affecting Your Credit Score!
Here’s a quick recap – tick off each step as you go.
✅ Set up direct debits for bills to avoid late payments ✅ Lower your credit utilisation to below 30% ✅ Check your credit report for errors and dispute them ✅ Avoid applying for new credit in the 3-6 months before car finance ✅ Build your credit history with a credit builder card or utility bills
Even if you can’t fix everything overnight, following these steps will increase your chances of getting approved for car finance on better terms
Improving your credit score doesn’t have to be overwhelming. By making small, consistent changes, you can boost your score, access better finance options, and save money on interest rates.
If you’re ready to explore car finance options, Motorly can help – even if your credit score isn’t perfect.
Get started today with our quick, no-impact eligibility check!
If you’ve been worried about whether your credit score will stop you from getting the car you need, you’re in the right place. Bad credit doesn’t mean you’re out of options. It just means you need the right information, and potentially the right specialist lender. In this guide, we’ll walk you through the essentials of bad credit car finance, explain what it is, how it works, and the steps you can take to improve your chances of approval.
What Is “Bad Credit,” Exactly?
When lenders talk about “bad credit,” they’re typically referring to a lower-than-average credit score. This score is a numerical rating that reflects how reliably you’ve paid back debts in the past. In the UK, credit reference agencies like Experian, Equifax, and TransUnion each use their own scoring systems. A lower score often signals to lenders that you’re at higher risk of missing repayments, which can lead to:
Higher interest rates (APR)
Tighter lending criteria
Requests for a deposit or guarantor
But here’s the good news – Bad credit doesn’t mean you’ll automatically be turned down for a car finance deal. Specialist partners (like Motorly) offer tailored solutions for individuals who may have been declined elsewhere.
Common Myths About Bad Credit Car Finance Debunked
Myth #1: “You Can’t Get Approved If You Have Bad Credit”
Reality: While a low credit score can limit some options, it’s not a blanket decline. Many providers specialize in subprime lending (finance for those with lower credit scores). As long as you meet certain criteria, such as a stable income, proof of address, and manageable debt levels, you can often find a deal.
Myth #2: “You’ll Always Pay Extremely High Interest”
Reality: Interest rates tend to be higher for bad credit loans, but not always “extremely” high. Different lenders have different approaches. Plus, if you show you’re taking steps to improve your credit (e.g., paying bills on time, reducing debts), you might qualify for a more favorable rate than expected.
Myth #3: “It’s Too Complicated to Apply”
Reality: While the process involves paperwork and checks, it’s generally straightforward, especially if you’re working with a reputable broker or specialist like Motorly. Gathering the right documents in advance can simplify the whole process.
Can You Improve Your Credit Score Before Applying?
Yes you can. Even small steps can make a difference over a few months:
Check Your Credit Report – Mistakes happen. Request a copy of your report from the main credit agencies and correct any errors you find.
Pay Bills on Time – Late or missed payments seriously hurt your score. Setting up direct debits or standing orders can help ensure you never miss a due date.
Reduce Existing Debts Where Possible – Lowering your credit utilisation ratio (the amount of credit you use compared to your total limit) can boost your score.
Register on the Electoral Roll – Being on the electoral register helps lenders verify your identity, which can marginally improve your creditworthiness.
Improving your score won’t happen overnight, but consistent effort can pay off in the form of lower interest rates or better loan terms down the line.
What to Expect in the Application Process
Documentation & Verification
Lenders will generally ask for:
Proof of Income: Recent payslips, bank statements, or tax returns if you’re self-employed.
Proof of Address: A utility bill, council tax bill, or bank statement matching your current address.
Valid UK Driver’s Licence: As basic identification and proof you can legally drive.
Lender Criteria
Income & Outgoings: Lenders evaluate your disposable income to gauge if you can handle monthly repayments.
Employment Status: Full-time, part-time, or self-employed. Lenders prefer stability, but that doesn’t always mean you need a 9-to-5 job.
Credit History: While past issues matter, recent positive financial behavior (like consistent on-time payments) can help your case.
Timeline & Decision
Some applications are processed within hours, especially if documentation is submitted promptly. Others may take a few days if the lender needs extra information.
How Motorly Helps Drivers with Bad Credit
At Motorly, we understand that everyone’s financial situation is unique. We specialise in connecting drivers with lenders who cater to a range of credit profiles, including bad credit or even those on IVAs (Individual Voluntary Arrangements).
Our Approach
Multiple Lenders, More Options: We work with a network of lenders that understand subprime finance, increasing your chances of finding a suitable deal.
Transparent Terms: We believe in clarity. You’ll know about the interest rates, fees, and any other details before you commit.
Final Thoughts & Next Steps
Having a bad credit score doesn’t mean you’re locked out of car finance forever. By understanding how your credit score affects your loan terms, taking steps to improve your creditworthiness, and choosing a trusted specialist provider, you can secure a finance deal that fits both your budget and your lifestyle.
Ready to Explore Your Options?
Whether you’re just curious about your eligibility or you’re ready to apply, Motorly is here to help.
All finance applications are subject to status, terms, and conditions. This article is intended for general informational purposes and does not constitute financial advice. If you require guidance specific to your situation, consult an independent financial advisor.
Navigating car finance can be challenging, especially if you’re currently in an Individual Voluntary Arrangement (IVA). Many people assume that being in an IVA automatically disqualifies them from obtaining car finance, but the reality is more nuanced. We’ll explore your rights regarding car finance during an IVA and offer practical advice to help increase your chances of approval.
What Is an IVA and How Does It Affect Your Finances?
An IVA, or Individual Voluntary Arrangement, is a legally binding agreement between you and your creditors to pay off your debts over a fixed period, typically five to six years. It’s a popular solution for those struggling with unmanageable debt, as it allows you to make affordable monthly payments based on your financial situation. However, being in an IVA does impact your credit score, making it harder to access credit, including car finance.
When you’re in an IVA, your finances are closely monitored by an insolvency practitioner (IP). This professional is responsible for managing your IVA, ensuring that you stick to the agreed payment plan, and that any new financial commitments are affordable. While an IVA does restrict your access to credit, it doesn’t completely close the door on obtaining car finance.
Can You Legally Apply for Car Finance During an IVA?
The short answer is yes, you can legally apply for car finance while in an IVA. However, there are conditions you must meet. The most crucial step is obtaining approval from your insolvency practitioner (IP) before you apply. Your IP needs to confirm that the new finance agreement is affordable and will not jeopardize your ability to make your IVA payments.
Legally, nothing prevents you from seeking car finance during an IVA, but it’s essential to proceed with caution. The new finance agreement must be sustainable within your current budget. If your IP approves and the lender is willing, you can proceed with your application.
Your Rights When Seeking Car Finance in an IVA
It’s important to understand that you have rights when applying for car finance during an IVA. Knowing these rights can empower you to make informed decisions and protect yourself from unfair practices.
Right to Apply – You have the right to apply for car finance, provided you can afford the repayments and have obtained approval from your IP.
Right to Transparent Terms – Any lender you approach must provide clear and transparent terms. You should fully understand the interest rates, fees, and repayment schedule before signing any agreement.
Right to Protection – As a consumer, you are protected from unfair or predatory lending practices. This means that lenders cannot take advantage of your financial situation by offering unfavourable or exploitative terms.
Right to Informed Consent – You have the right to be fully informed about how taking out car finance might impact your IVA and overall financial health. Your IP should provide guidance on this.
How to Increase Your Chances of Approval
Getting car finance during an IVA can be challenging, but it’s not impossible. Here are some practical tips to help you increase your chances of approval.
Choose the Right Lender – Not all lenders are willing to work with individuals in an IVA. Focus on lenders who specialize in bad credit or IVA car finance. They are more likely to understand your situation and offer suitable terms.
Demonstrate Financial Responsibility – Lenders will want to see that you’re managing your finances responsibly. This means keeping up with your IVA payments, maintaining a budget, and avoiding any new debts.
Consider a Co-Signer – If possible, having a co-signer with a stronger credit history can improve your chances of approval. This person agrees to take responsibility for the loan if you’re unable to make payments.
Prepare Your Documentation – Before applying, gather all necessary documents, including the approval letter from your IP. This shows the lender that your application is serious and that your IP has approved the finance.
How Motorly Can Help You Navigate IVA Car Finance
At Motorly, we understand the challenges of securing car finance during an IVA. That’s why we’ve partnered with a large panel of lenders who specialize in IVA car finance. Our team is experienced in finding finance solutions tailored to your needs, even if you’re currently in an IVA. We’ll guide you through the process, from obtaining the necessary approvals to finding the right car finance deal.
Getting car finance during an IVA may seem daunting, but with the right approach and understanding of your rights, it’s entirely possible. By working with specialized lenders and maintaining open communication with your insolvency practitioner, you can secure the car finance you need without jeopardizing your financial recovery. If you’re ready to explore your options, contact Motorly today. Our team is here to help you every step of the way.
Black Box Car Finance is rapidly gaining popularity as an alternative way to finance a car. It’s particularly useful for those who might struggle with traditional loans. But what exactly is it, and how does it work? Here’s everything you need to know about this innovative finance option.
Car Finance
What is Black Box Car Finance?
Black Box Car Finance, also known as Pay-As-You-Go (PAYG) car finance, offers a unique approach to vehicle financing. Unlike conventional car loans, it involves fitting a small device—often referred to as a “black box”—in your car. This device connects to your lender’s system and tracks your payments. If you’re late on a payment, the black box will notify you and, in some cases, may even disable your vehicle until the payment is made. It’s a modern solution designed to make car finance more accessible.
How Does It Work?
The process is straightforward but highly effective. Once you’ve secured financing through a provider like Motorly, a black box is installed discreetly in your vehicle. This device monitors your payments and ensures that you’re keeping up with your financial obligations. If you miss a payment, the black box will alert you—either with a flashing light or a text message. Typically, you have a grace period to make the payment before the black box disables your car, rendering it undriveable until the debt is settled.
Who is Black Box Car Finance For?
This type of car finance is ideal for people with a poor or limited credit history. Traditional car loans often require a strong credit score, but Black Box Car Finance offers a more accessible route. The black box provides additional security for lenders, making them more willing to approve applications from high-risk borrowers. So, if you’ve had trouble securing finance in the past, this could be the perfect solution for you.
What Are the Benefits?
Easier Approval: The black box reduces the lender’s risk, which means you’re more likely to be approved for a car loan, even if your credit isn’t perfect.
Payment Reminders: The black box acts as a built-in reminder to help you make your payments on time, protecting your credit score and avoiding late fees.
Budget-Friendly: It’s a pay-as-you-go system, so you only pay for what you use, making it easier to manage your monthly expenses.
Are There Any Drawbacks?
While Black Box Car Finance offers several advantages, it’s not without its challenges. Missing a payment could result in your car being disabled by the black box, potentially leaving you stranded until you clear the outstanding balance.
How Can Motorly Help?
Motorly is a leader in providing car finance solutions tailored to your needs, including Black Box Car Finance. Whether you’re new to car finance or have struggled to secure a loan in the past, our team is here to help. We work with trusted UK dealers and a range of lenders to offer reliable cars and flexible finance options that fit your budget.
Ready to Get Started?
If you’re considering Black Box Car Finance, don’t hesitate to get in touch with Motorly. We’re ready to answer all your questions and guide you through the process. Contact us today to find out how Black Box Car Finance could help you get behind the wheel of your next car.
How Black Box Car Finance could be the key to getting behind the wheel of your dream car. Whether your credit score isn’t ideal or you’re simply looking for a more flexible way to finance your car, Black Box Car Finance offers an innovative approach that could be your ticket to driving the car you’ve always wanted.
If you’re looking for a way to finance a car but are worried about your credit history, Black Box Car Finance, also known as Pay-As-You-Go (PAYG) car finance, could be the answer. This modern financing method allows you to pay for your car as you use it, offering a flexible and manageable option for many Brits. But what exactly is Black Box Car Finance, and how can it benefit you?
How Does Black Box Car Finance Work?
Black Box Car Finance operates on a simple principle – You make an initial payment, followed by scheduled monthly repayments, just like a typical Hire Purchase (HP) agreement. The key difference? Your vehicle comes fitted with a small device – often referred to as a “black box” – that tracks your payments.
The black box is installed discreetly in your car and connects to your lender. If you fail to make the payment within the grace period provided by your lender, the black box can disable your car, preventing it from being driven until the payment is made.
Why Choose Black Box Car Finance?
Black Box Car Finance offers several benefits, especially for those with less-than-perfect credit scores.
Easier Approval for High-Risk Applicants: Traditional car loans often require a good credit score. Black Box Car Finance is designed to be more accessible. Lenders are more likely to approve applications from individuals with low or no credit history because the black box provides them with added security.
Budget-Friendly Payments: With Black Box Car Finance, you only pay as you go, making it easier to manage your budget. The system helps ensure you never miss a payment by reminding you when one is due.
Peace of Mind for Lenders: The black box acts as a safeguard for lenders. This reduces their risk and makes them more willing to offer you finance. This means you have a better chance of getting the car you want, even if your credit isn’t perfect.
Who Should Consider Black Box Car Finance?
Black Box Car Finance is ideal for those who have struggled with credit in the past or who need a more flexible financing option. If you’re concerned about managing your payments, the black box provides a simple and effective way to stay on top of your finances.
Even if you have bad credit, this type of financing can help you get approved and start rebuilding your credit score. By consistently making your payments on time, you’ll demonstrate financial responsibility, which can improve your credit score over time.
How Motorly Can Help
As a leading provider of car finance in the UK, Motorly offers tailored solutions like Black Box Car Finance to help you get behind the wheel of your next car. Our expert team will help you find the best deal that fits your needs and budget. We work with a range of lenders to provide you with reliable cars and flexible financing options.
Take Action Today
Contact Motorly today to learn more about how we can help you secure the car finance deal that’s perfect for your needs.
Owning a car in the UK offers unparalleled freedom, giving you the ability to manoeuvre as you please. But what if a blemished credit score casts a shadow on this freedom? Let’s take a closer look at how Motorly can help you get car finance with a less-than-perfect credit score.
Exploring Car Finance
Car finance refers to any financial product that allows you to purchase a car without having to pay the entire cost upfront. Common variants in the UK include Personal Contract Purchase (PCP), Hire Purchase (HP), and personal car loans. Now, let’s understand the role your credit score plays.
Unravelling Credit Score
Simply put, your credit score is a numerical reflection of your financial trustworthiness, drawn from your past fiscal conduct. Depending on the credit agency you use, it’s often marked as a score out of either 700 or 1000, with a higher score auguring well for credit approval at favourable terms. Conversely, a lower score could muddle your financing prospects.
Impact of Credit Score on Car Finance
When seeking car finance, lenders scrutinise your credit score to quantify the risk associated with lending you funds. This three-digit figure enables them to gauge your repayment capacity and propensity.
How a Poor Credit Score can Affect You
A less-than-perfect credit score may lead to a denied car finance application. Even if approved, you might face heightened interest rates, hefty down payments, or truncated repayment periods.
Securing Car Finance with Bad Credit: A Possibility?
Indeed, securing car finance with a poor credit score is challenging yet possible. Motorly are experts in Bad Credit Car Finance and can help you obtain the finance you need. Let’s delve deeper into this prospect.
Beyond Credit Score: Lenders’ Considerations
While your credit score is a key determinant, it’s not the be-all and end-all for lenders. They also weigh your income, employment tenure, and debt-to-income ratio. Despite a dented credit score, these favourable factors could still swing the approval in your favour.
Strategies to Secure Car Finance Despite Bad Credit
Even with an adverse credit score, there are tactics you can employ to enhance your car finance prospects.
The Co-Signer Route
Enlisting a co-signer with a robust credit score could amplify your chances of approval. Essentially, the co-signer pledges to shoulder the loan burden if you default on repayments.
Bolstering Your Credit Score
Elevating your credit score could significantly improve your car financing terms. Timely bill payments, reduced debt, and refraining from new credit enquiries are proven tactics to uplift your score.
Making a Substantial Down Payment
A substantial down payment shrinks the loan amount, thereby reducing the lender’s risk. Consequently, lenders might be more inclined to approve your application.
Opting for a Budget-Friendly Vehicle
Choosing a more economical car could minimise the loan amount, making approval more likely.
Selecting the Right Lender
All lenders don’t have identical criteria for car finance approval. Some specialise in catering to applicants with poor credit. It’s worth conducting thorough research to identify a lender that suits your situation. Motorly can help you find the right finance partner depending on you current circumstances.
So can I get a car on finance if I have a bad credit score?
To address the titular question: Yes, you can secure car finance despite a poor credit score. The journey might be a tad more challenging, with the terms not as favourable, but actionable steps can enhance your chances. Understand your credit score, strive to improve it, and carefully weigh your options.
Frequently Asked Questions
1. Is car finance feasible with a poor credit score?
Yes, it’s feasible but could involve more hurdles and less favourable terms.
2. What factors do lenders consider apart from credit score?
Lenders may also consider your income, job stability, and debt-to-income ratio.
3. How can I increase my chances of securing car finance with poor credit?
Consider employing a co-signer, improving your credit score, making a larger down payment, opting for an economical car, or identifying the right lender.
4. Can improving my credit score help me secure better car finance terms?
Indeed, an improved credit score can bolster your chances of securing car finance at favourable terms.
5. Are there lenders who specialise in car finance for individuals with poor credit?
Yes, certain lenders specialise in serving those with less-than-stellar credit. Conducting diligent research can help you find these lenders.
6. How long does it take to improve a bad credit score?
Improving a bad credit score takes time and consistent effort. It depends on various factors, such as the severity of your credit issues and your ability to address them. With responsible financial habits, you can gradually improve your credit score over time.
Ready to take the next step? Visit the Motorly Bad Credit Car Finance Page to find out more
What is Car Refinance?
Car refinancing involves taking out a new finance agreement to settle the remaining balance of your current loan under revised terms. This option becomes particularly beneficial when your financial situation has undergone changes since your initial loan application. In this article, we will explore the possibility of refinancing your car and explain the reasons that may prompt you to consider car refinance.
What are the benefits of refinancing?
When you initially entered into a car loan, you agreed upon the monthly payments specified in the contract. However, circumstances may have changed, and the current interest rate might be straining your budget. Refinancing your loan, on the other hand, could potentially enable you to secure a lower rate and therefore reduce your monthly payments.
It is also possible that your credit score has improved since the time you obtained the car loan, opening up opportunities for offers with more favourable interest rates.
While there are certain factors to contemplate when refinancing a car loan, there are also notable benefits to consider:
Reduced monthly payments: By refinancing your car at improved interest rates or extending the loan duration, you could lower your monthly payments. This can be advantageous if you require extra cash flow.
Shorter repayment term: If you are comfortable with potentially higher monthly payments, you can opt to refinance with a shorter term, enabling you to pay off your loan sooner. This may result in paying less interest overall. Additionally, you have the flexibility to make overpayments on your car loan at any time if you prefer not to fully refinance.
Quicker ownership of the car: In PCP and HP finance arrangements, legal ownership of the vehicle is not obtained until the final payment is made. Some drivers choose to refinance using an unsecured personal loan, which grants them legal ownership as soon as the funds are transferred to their current car finance provider.
Are there any issues with refinancing?
Changes in economic climate: It is important to take into account that as of 2023, interest rates have been on the rise. Consequently, finding a better car loan through refinancing may not be feasible. Before proceeding, it is advisable to thoroughly assess the prevailing interest rates.
Early settlement fees: When opting to pay off car finance ahead of schedule, it is crucial to consider potential compensation payments for early settlement. These payments could amount to up to two months’ worth of interest. Lenders are obligated to adhere to the regulations outlined in the Consumer Credit Act (CCA), ensuring that you will not encounter any unexpected charges.
Increased overall interest: If the duration of your new loan exceeds that of your current one, there is a possibility of accruing more interest over the entire contract period. It is essential to carefully weigh the trade-off between lower monthly payments and the potential increase in total payments.
How do I Refinance my car?
Once you have carefully considered the advantages and disadvantages and made the decision to proceed, you can initiate the process of refinancing your car loan.
Gather necessary documents: Prepare the required documents, such as proof of income, proof of ownership of the car, and identification documents, as specified by the lender.
Submit application: Apply with Motorly today by clicking here. Ensure that all information provided is accurate and comprehensive.
Vehicle evaluation: The lender may conduct an evaluation of your vehicle to determine its current market value and condition.
Approval and agreement: If your application is approved, carefully review the loan agreement provided by the lender. Pay close attention to interest rates, repayment terms, and any associated fees or charges.
Loan settlement: Upon acceptance of the loan agreement, the new lender will settle your existing car loan with your previous finance provider. Your car will now serve as collateral for the new loan.
What happens if I stop making my payments?
When you decide to refinance your car, it is crucial to maintain regular payments of your loan. The repercussions of not meeting your car finance loan obligations will vary depending on the stage of your agreement and the type of loan you have.
According to the Consumer Credit Act, a lender cannot repossess your vehicle if you have paid more than one-third of the total amount payable unless they obtain a court order.
If you have surpassed this threshold with your current lender, it is important to note that by entering into a new agreement through refinancing, you will lose this protection until you have paid one-third of the new agreement.
Additionally, once you have paid 50% of the total amount payable, you have the right to voluntarily terminate the agreement. This means you can inform your lender of your intention to terminate the agreement, return the car, and have no further financial obligations.
However, when starting a new agreement through refinancing, you will not have the option to voluntarily terminate until you have paid 50% of the total amount payable.
If you find yourself unable to make repayments on your new agreement, it is essential to contact your lender as soon as possible. Lenders are typically willing to work with borrowers to find a suitable solution.
Nevertheless, it is crucial to fully understand any protections you may lose under your current agreement before proceeding with refinancing. Stay informed and be proactive in addressing any financial difficulties that may arise.
Does refinancing a car loan affect your credit rating?
Whenever you apply for a type of finance, your credit score is likely to take an initial hit and may drop. As you start to pay back your loan, this can actually help you improve your credit score.
Any type of on-time finance repayment can help build a positive credit history, so you’ll still be doing this if you’re paying your current finance on time without refinancing.
You might find that your credit score drops after you’ve applied to refinance a car loan, but it’s likely your credit score will build back up if you keep on top of your payments.
What is Black Box Car Finance?
You may already be familiar with black box car insurance, but black box car finance serves a different purpose while sharing a similar installation method. Black box finance involves the installation of a small device in your chosen vehicle, which connects to the car’s internal computer. Discreetly located beneath the dashboard or within the glove box, these devices establish communication with the finance lender via GPRS.
While black boxes in car insurance track various types of data, black boxes in car finance do not monitor your driving style. Instead, their main function is to help you stay updated with your car finance payments. As long as you make your payments on time and in full each month, you don’t need to take any further action. However, if a payment is missed, the lender will reach out to you, and there’s a possibility that the car may be repossessed.
How does Black Box Car Finance Work?
Step 1: Begin your Car Finance Application
At Motorly, we believe in the importance of arranging your finance before selecting your desired car. Rest assured that applying with us will not have any negative impact on your credit score.
Step 2: Discover the Optimal Financing Option
As a specialized car finance provider, Motorly has privileged access to a diverse range of financing providers, including those offering black-box car finance. We are equipped to identify and present you with the most suitable finance packages available.
Step 3: Locate Your Ideal Vehicle
Rest assured the black box device will be installed in your vehicle at no additional cost.
Where is the Black Box usually fitted?
Once you have been approved for used car finance, you will have the opportunity to acquire your desired car within your budget from a reputable dealer in the UK. It’s important to note that your finance agreement cannot be used for a car purchased from a private seller. Upon securing the finance, the finance company will proceed to install the black box in your chosen vehicle. Typically, the box is fitted discreetly under the dashboard or can be positioned within the glove box. Once all the payments have been successfully completed, some lenders may offer the option to remove the box, or alternatively, allow you to purchase the car and utilize the black box as an immobilizer or tracker.
Is Black Box Car Finance the right option for me?
Black box car finance operates as a type of hire purchase car finance, making it a favourable option for individuals who have encountered challenges in meeting repayment obligations in the past. With this financing method, a black box is installed in your vehicle, allowing your lender to send you timely reminders a few days prior to your payment due date.
In hire purchase (HP) finance agreements, the loan is secured against the vehicle, meaning that the lender retains ownership of the car throughout the duration of the agreement. However, once the agreement is successfully completed and all repayments have been made, the ownership of the car is transferred to you. This marks the conclusion of the contract, and you become the rightful owner of the vehicle.
What is Black Box Car Finance?
Another term commonly used by lenders to refer to black box car finance is “pay as you go car finance.” Pay as you go car finance follows the same underlying principle, wherein customers make monthly repayments through a hire purchase arrangement until the end of the finance term. Similar to black box car finance, pay as you go car finance requires the installation of a black box in your vehicle, which enables the system to send payment reminders prior to your payment due date.
If you have bad credit or an insufficient credit record, obtaining car finance may appear difficult, but there are choices accessible to you.
Struggling with a poor credit history and worried about getting car finance? However, don’t let this discourage you as there are options available to you. In this blog, we’ll guide you through your options and provide tips on how to improve your credit score to increase your chances of getting accepted for better finance deals.
Poor Credit Car Finance – what you need to Know
Applying for finance with bad credit history can mean that some lenders won’t offer you the money for your car, as they view you as more likely to miss payments. Poor or incomplete credit history might also mean you’ll have to pay a higher interest rate, even if you do get offered car finance.
It’s important to apply only for car finance that you’re confident you can repay because you can improve your credit score over time by paying off the finance on time and in full.
To increase your chances of getting accepted for a better finance deal in the future, you can improve your credit score by checking that the credit companies hold correct information about you, staying at an address for three years, building a history of paying back loans and settling any debts.
In the short term, don’t let a bad credit score get you down – there are still a few ways to get behind the wheel.
Can You Get Car Finance with Bad Credit?
It’s possible to get car finance with bad credit, as long as you’re reasonable with your needs. If you’re applying for finance on a vehicle that’s out of your budget or a bit unusual (think imported classic cars), you’re less likely to get accepted. Look at your budget and decide what a sensible choice is for your next car, and make sure you’ll be able to keep on top of the payments.
At Motorly, our lender partners can take you through your options if you’re struggling with your credit score.
Can You Get Car Finance with No Credit History?
If you’ve just turned 18 or you’re new to the UK and haven’t been able to build up any credit history yet, you might have little to no credit history. You should still be able to get car finance, but you might find that interest rates are higher, or you need to pick a lender who specialises in these situations. The good news is that if you keep on top of your payments, car finance will help you build a good credit report.
The Best Way to Get Car Finance with Bad Credit
Getting car finance with poor credit history is possible with a few adjustments. You might find that your monthly payments are higher, as interest levels might be raised, but there are ways to make it work.
Offer a larger deposit: You might be able to get lenders to agree to car finance if you offer a larger deposit, as this gives the lender added security. The higher the deposit, the less your finance company will need to lend you, and it’ll see this as a lower-risk deal.
See if you can add a guarantor to your finance agreement: Adding a guarantor to your finance agreement is a good way to minimize more of the risk for your lender, as they’ll know they have someone else there for security. If you don’t keep on top of your payments, your guarantor will be responsible for them. This way, the lender knows it has added security for getting its money back and can show that somebody close to you has enough faith in your finances to have your back. Guarantor loans are less common now, so you might need to shop around to find a finance provider that has this option.
Find lenders who work with bad credit: There are lenders out there who specialize in working with people who have poor credit, so it might be worth checking them out. Motorly can help you find the perfect Bad Credit Car Finance partner.
Overall, if you have a poor or no credit history, it may be more challenging to get car finance, but it’s not impossible. By taking steps to improve your credit score and making sensible choices when it comes to choosing a vehicle and lender, you can increase your chances of being accepted for car finance.
Remember to always stay on top of your payments, as this will help you to build a good credit report over time, which will be helpful for any future credit applications.
