Car Finance With a Default
If you have a default on your credit file, you might be worried that it will stop you from getting car finance. But don’t worry, we may be able to help.
A default is added to your credit file when you miss payments on a financial agreement for several months. But although a default does show lenders that you’ve struggled with payments in the past, it doesn’t mean that getting car finance is impossible.
At Car Finance 247, we work with lenders who specialise in helping people with bad credit, including those with defaults. While you may have fewer options or need to pay higher interest rates, we could help you find a deal that works for you.
What is a default?
If you have a default, this means that you’ve missed – or defaulted – on payments in the past and have received a default notice noted on your credit file.
A default notice will typically be issued after missing payments for three to six months. The Consumer Credit Act 1974 says the notice must explain which payments you’ve missed, the deadline to clear the arrears, and the consequences of not doing so by that date. If you’re unable to clear those payments in the time specified, your account will default.
The default will stay on your credit file for six years and may make it more difficult to get approved for credit in the future, including things like car finance.
Can I get car finance with a default?
Yes, you can still get car finance with a default, but it might not be as straightforward as applying with a clean credit history. A default shows that you missed payments on a previous credit agreement, which makes you a higher risk to lenders. But, this doesn’t mean you’re out of options.
When you apply for car finance with a default, lenders will take several things into account, including:
The age of the default (the older it is, the better your chances)
Whether the default has been paid off or is still outstanding
Your current employment and income level
At Car Finance 247, we work with lenders who specialise in bad credit car finance, and consider applications from people with defaults. They’re interested in your overall financial situation, not just your credit history. If a temporary setback caused the default but you’re now in a more stable position, you may be more likely to secure finance.
If the default is recent, lenders may be more cautious, but you could still find a lender willing to offer car finance. With our help, we’ll find the best option available, considering your individual circumstances and helping you navigate the process.
How does a default affect car finance?
A default on your credit file can make it harder to get car finance because it shows lenders that you’ve missed payments in the past. This can mean fewer lenders are willing to offer you a loan, so your options may be more limited. But, there are some lenders who specialise in helping people with defaults, especially if you’ve been good with your money since the default.
Additionally, if you are approved for car finance with a default, you might have to pay higher interest rates. This is because lenders see you as a higher risk. You might also need to put down a bigger deposit to reduce the amount you borrow.
Car finance with CCJs and defaults
If you have both County Court Judgments (CCJs) and defaults on your credit file, you might think it’s impossible to get car finance. But, it’s important to know that there are lenders who specialise in working with people in similar situations. While having both a CCJ and a default can make it more difficult to secure finance, it’s not a dealbreaker.
Lenders will want to know the details behind the CCJs and defaults, and they might ask about:
When the default and CCJ were registered
Whether they’ve been repaid or not
How you’ve handled your finances since
Even if you have multiple defaults or a CCJ, it’s possible to secure a deal. The loan might come with higher interest rates, but we can help you find a lender that’s flexible and willing to work with your unique circumstances.
Tips for getting car finance with a default
Getting car finance with a default on your credit file can be challenging, but it’s not impossible. Here are some helpful tips to improve your chances of securing a deal:
Check your credit report - Before applying for car finance, it’s a good idea to check your credit report to understand your current credit situation. Make sure the default has been accurately recorded and look for any errors that could be affecting your score.
Settle any outstanding defaults - If your default is still unpaid, settling it can improve your chances of getting finance. Lenders may view you more favourably if you’ve repaid the debt, even if the default remains on your credit file.
Save for a larger deposit - Offering a larger deposit can help reduce the lender’s risk, making them more likely to approve your car finance application. A higher deposit also means you’ll need to borrow less, which could result in better loan terms.
Consider a guarantor - Some lenders may be more willing to approve your application if you have a car loan guarantor. A guarantor is someone, usually a family member, who agrees to make the repayments if you can’t.
Apply with a specialist lender - Some lenders specialise in helping people with bad credit, including those with defaults. We can help you find lenders who are more likely to approve your application based on your overall circumstances, not just your credit score.
By following these tips, you can increase your chances of getting car finance, even if you have a default on your credit file.
Whether you’re looking for car finance with defaults or wondering how a car loan with a default on your credit file works, we’re here to guide you through the process and increase your chances of approval.
Get in touch with us today to start your application and find out what options are available to you.