Have you ever bought a car after knowing it could be expensive and hard to maintain?
Yes, most of us have. Because a car does not only amplify the lifestyle, it adds to the convenience of traveling anywhere you want and at any hour. It eliminates the hassles of booking cabs at night, especially when you have an urgent moment like catching a flight.
Individuals plan for good years before purchasing their first car. However, amid the existing economic scenario, saving for the car deposit and liabilities stands impossible. And if you have other hefty loans in your credit profile, it becomes more challenging.
Car finance is one option to get a car instantly. However, you would have to pay 10% of the cost as a deposit. A 14-day cooling-off period allows you to back off from the application.
You will get your deposit back either the same day or within 2 business days. However, not every dealer provides a cooling-off period, check the loan terms and conditions before applying and sending your consent.
Can Anyone Get a no-deposit car finance?
No, not everyone applying for no-deposit car finance gets it. To claim it, you must host a good credit score and disciplined past loan payments.
It is an important factor for lenders because the risk prevails. Without a deposit, how can the lender be sure of the repayment ability? It is the reason you may spot competitive loan terms.
You may encounter long credit and other affordability checks to get the loan. The lender would not want to take any chance or make you borrow something that could impact your finances later. It is the reason individuals with bad credit profiles seeking no-deposit car finance struggle to qualify.
Are there any chances to get car finance on bad credit?
Yes, you can get guaranteed car finance. It is possible only with car loans. Because, unlike car finance, it does not ask for a deposit.
Under this, you can choose a car repayment tenure and interest rates according to your income and monthly affordability.
The car loan term usually lasts up to 4-7 years. You can close it early if you want to. Many lenders do not charge early repayment fees, but others do. Identify the same while seeking a car loan.
How to get a car loan with no deposit and low credit?
While it may seem tricky to qualify for car loans at bad credit without a deposit, you can still rationalise your car purchase dream. Check the strategies below to get car finance with no deposit and bad credit:
a) Get a guarantor on the board
It is a good idea to get your spouse on the board as a guarantor if buying a car as a couple. If she earns too and shares a good credit score, then things can work in your favour. You can qualify for a car loan and fetch affordable loan terms and interest rates.
What else can you demand? Apart from the spouse, you can get any member in blood relation to finance the car like mother, brother, and father sharing sable income and credit score.
b) Co-sign a car loan
If you have someone beside you like your life partner, co-sign the loan agreement. It is different from being a guarantor.
As a guarantor, the person is only responsible for the payment if the borrower cannot. But here, both co-signers would be equally responsible for the loan repayments.
It would help you split up the loan cost and make the loan affordable. The good financial status of the co-signer can help you get a loan.
c) Refinance loans
If you have too many loans on your credit report, it is high time to either consolidate them or refinance the one sharing the highest liability. For example, if you have a home improvement loan, check the possibility of refinancing it at a lower interest rate.
It could help you save interest rates and lower the monthly payment. You can use the saved money as a deposit for car finance. Paying a deposit on the loan work great for bad credit individuals. It could help them lower the overall loan costs.
d) Explore car loan quotes for used cars
A good car lasts for about 12 years if maintained well. If you currently lack a deposit and cannot get a loan on bad credit without one, check out a used car loan. By doing so, you can crack affordable car finance without impacting the budget’s bottom line.
Identify your car driving requirements, the persons in the family, income, and utility of the car before applying for the feasible car loan option.
Avoid picking a car older than 2 years and ask for the documents of the previous owner. Analyse the repairs that need to be done. It would help you decide on the right car. Used car loan quotes are far more affordable than new car loans. Decide best as per your circumstances.
If you have the car and repairs do not exceed the repayments, you can go for that too. If you cannot afford a deposit, it does not imply you cannot go for repairs/ part replacement. You can tackle a little financial slump with very bad credit loans with no guarantor from a direct lender at better rates with consistent income proof. The option always exists. You just need to be conscious of your needs and lifestyle. Used car finance may be a good option if you want to update your car within your means.
Bottom line
Yes, getting no-deposit car finance is possible if you go for car loans. The above-mentioned ways would help you qualify for the same despite the bad credit. In place of a deposit, you have to ensure regular loan payments as per the agreement. Pick a car suitable for your finances and does not hurt your credit score or other liabilities in the process.
Anna Johnson has more than 11 years of experience in direct lending industry of the UK. She is the Senior Content Editor at 24cashflow where she is leading a large team of loan experts. During her career, she has helped the loan aspirants to use the particular loans in the best way and improve their financial lives and status.
Anna Johnson is known for her in-depth research of the UK loan marketplace, as she has worked with many major lending firms in her career. During her educational phase, she has done a research on ‘Finance Fundamentals for Growing Business’.