Saturday, April 5, 2014


Car finance is all about being restricted if you happen to have a poor credit rating, right? If this is how you're feeling, then you're entirely justified in coming to such a conclusion. It does seem that if your credit history is even slightly negative, your chances of finding car finance or a car loan are seriously depleted.

Either that, or you face restrictions, penalties or limitations, and the idea of somehow combining your bad credit with cheap car finance is simply laughable. If this sounds a little like you, then don't despair. Just because some areas of the car credit finance industry seem dedicated to taking advantage of those who, perhaps through no fault of their own, have a poor credit history, it doesn't mean that all hope is lost. It just means you're probably looking in the wrong places.

That's understandable, because it makes sense that those companies looking to cash in on those who are already facing a limited number of options are going to try very hard to push their names forward.

But there are companies that can still help without taking advantage of an individual's unfortunate circumstances. The reason that some companies can still help is the way in which they approach the whole idea of car finance.

In the first place, your credit history is considered to be precisely that - a history of what you have done, what you have been through and what circumstances you have experienced. But we all have a history, yet we can't be judged solely on that.

Our current circumstances are somewhat different, and it may well be that your credit history doesn't show this. For example, you may have been made redundant six months ago, and fell behind on your mortgage payments for a couple of months. Perhaps you even fell behind on credit card payments or you failed to clear your overdraft quickly enough. You may even have found that the whole thing got as far as having a CCJ recorded against your name.

But the point is that if you were made redundant, it wasn't your fault at all. How you're supposed to pay the bills if you have no income for a couple of months isn't explained to you - you're just somehow supposed to magic money out of the air! If we could do that, we'd all be doing it rather than working, and then we wouldn't need to worry about car finance at all!

But although such circumstances may have lowered your credit rating quite significantly, it doesn't show how your circumstances have changed now. Perhaps you have found new employment, and may even be on a higher salary. Perhaps you sold your home and are in a smaller, cheaper place, or even renting.

Such changes won't be on your credit file, yet they make a very significant difference in terms of how you would be able to take on board the commitment of something like car finance or a car loan. What you need to do is to find a company that will consider who you are right now, rather than who you were several months ago.

If you've already been to your bank or a traditional lending organisation, you may have been declined. That's because banks and other financial institutions tend to rely almost exclusively on a credit history. Any negative entries over the past few months and you're likely to be declined. A few years ago you might have stood a better chance, but the economic disasters of the past year have forced banks to become increasingly cautious, meaning that risks are avoided where possible. This means that trying to obtain car loans or car finance deals is harder than ever.

One of the well known alternatives is what is often advertised as guaranteed car finance. However, in many cases there is a catch. This catch is a fairly big one, and it's worth being aware of before you start building up your hopes.

Many guaranteed car finance deals offer you a guaranteed sum of money, but then restrict you as far as what you can do with it. With one hand they'll hand over a fairly generous sum of money, but with the other they will then take it away from you as payment for one of the very limited number of cars they have available in their own private showroom.

In almost every case these will be older, second hand cars, and frequently over priced, meaning that you end up being limited in choice, paying well over the normal asking price, and probably with an exorbitant interest rate slapped on for good measure. Such an arrangement is unlikely to leave you feeling satisfied, and may even contribute to potential financial problems in future.

Instead, look for a car finance company that offers you choice and flexibility, helping you to obtain a car loan based on your current circumstances rather than your past ones, and which allows you the freedom to choose the car you want, from any dealer, anywhere in the UK. Such companies really do exist, and finding one may well be the best way to get you back on the road.

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