Car loans with bad credit

• Cash flow challenge: Drivers with poor or limited credit history may struggle to secure standard car finance through mainstream lenders.

• Perfect for: UK drivers with missed payments, defaults, CCJs or low credit scores who need structured car finance with clear terms.

Many people search for car loans knowing they have bad credit because they need reliable transport for work, family, or daily life but are concerned their credit history may prevent approval. 

While bad credit can limit options and increase interest rates, finance may still be possible depending on your current income, affordability and overall financial profile.

Boost your cash flow Speak to an expert

Can you get car finance with bad credit?

In many cases, yes however approval depends on more than just your credit score. Lenders typically assess:

• Your income and employment stability

• Your existing financial commitments

• Recent repayment behaviour

• Overall affordability

Some lenders may consider applicants with:

• Missed payments

• Defaults

• County Court Judgements (CCJs)

• Low or thin credit files

How much could it cost?

Understanding the cost is essential.

If you finance £8,000 over 4 years:

• At 7% APR (strong credit example), monthly repayments may be around £191

• Total repayable: approximately £9,168
  

With bad credit, rates are often significantly higher. For example:

• At 24% APR, monthly repayments could be around £254

• Total repayable: approximately £12,192

That’s over £3,000 more in interest.

Some subprime vehicle finance agreements exceed 30% APR, so always check:

• The representative APR

• The total amount repayable

• Any admin or option-to-purchase fees

Monthly payments can look affordable while the overall cost remains high.

Types of car finance available

Hire Purchase (HP)

One of the most common structures for bad credit car finance is hire purchase:

• Deposit usually required

• Fixed monthly repayments

• You own the car at the end of the agreement

Personal Contract Purchase (PCP)

Less common for very poor credit, but sometimes available.

• Lower monthly payments

• Balloon payment at the end

• Option to return or buy

PCP agreements can be more complex, so understanding final payment obligations is essential.

Unsecured personal loan

An unsecured loan allows you to buy the car outright.

• You own the vehicle immediately

• Fixed repayment term

• May require stronger affordability profile

This option can offer flexibility, but approval criteria may be stricter.

Boost your cash flow Speak to an expert

No deposit and “guaranteed approval” claims

Many advertisements promote:

• “No deposit car finance”
• “Guaranteed approval”
• “No credit check”

It’s important to understand that responsible lenders:

• Cannot guarantee approval
• Must carry out credit and affordability checks
• Are regulated to ensure lending is appropriate

Be cautious of offers that appear too easy or lack transparency.

Improving your chances of approval

To strengthen your application:

• Check your credit report for errors
• Avoid multiple applications in a short period
• Reduce outstanding unsecured debt where possible
• Consider a larger deposit
• Ensure your income details are accurate
  

Some lenders offer soft eligibility checks that do not impact your credit score.

Should you borrow for a car with bad credit?

A car can be essential especially for commuting or family commitments. However, borrowing at high interest rates can increase financial pressure.

Before proceeding, consider:

• Whether repayments comfortably fit your budget
• The total cost over the full agreement
• Whether a lower-value vehicle would reduce borrowing
• Whether waiting to improve your credit score is viable

Responsible borrowing protects your long-term financial stability.

How Novuna Business Cash Flow can help

At Novuna, we understand that your credit history does not always reflect your current circumstances. If you’re exploring car loans with bad credit, our focus is on responsible lending and clear, transparent terms.

Get in touch with our experts today and we will find a great fit for your situation.