Bad Credit Car Finance in the UK Explained

What bad credit really means for car buyers

Securing car finance with a poor credit score in the UK is possible. If your score sits below roughly 600, many mainstream lenders may hesitate, but a meaningful share of the market will still consider you. Specialist lenders routinely weigh more than the headline number. Around two in five look at your recent behaviour, income stability and overall affordability before deciding. That shift matters, because it opens doors without relying solely on a score you cannot change overnight.

Where costs differ is interest. Bad credit usually attracts higher APRs, often in the 24% to 39.9% representative range, and riskier profiles can see offers stretching from 20% into the 40% bracket. The spread reflects lender policy, the car you choose, deposit size, and whether you opt for PCP or HP. PCP remains especially popular, chosen by roughly a quarter of UK buyers, because you finance the car’s depreciation rather than its full value, which keeps monthly payments lower. Mileage limits and a final balloon payment are the trade-offs.

As a budgeting marker, the average UK monthly car finance sits near £244 on a 48-month term, typically around 11% of household income. If your credit is damaged, expect to pay more each month or to stretch the term, but do not assume the outcome is binary. In a market where overall new business volumes have dipped across 2024 and into 2025, lenders are sensitive to risk yet still lending billions. The message is simple: approvals are about affordability first, then price.

Understanding APR is not just about a percentage. It is about the pounds you repay across the term and whether that fits your budget without strain.

A broker can be pivotal. Brokers connect applicants to lenders comfortable with missed payments or CCJs, often using soft searches first to protect your file. If your goal is a reliable, affordable car at a fair total cost, targeted applications through a broker could shorten the path to yes.

Who should read this

This guide is for UK drivers with imperfect credit who need a dependable car without overpaying. If you have missed payments, a thin credit file, or past defaults and worry that finance is off the table, you will find practical routes here. It is equally useful if you are weighing PCP against HP, wondering how a deposit changes your APR, or want to avoid unnecessary credit searches. If you would like a realistic sense of monthly costs, benchmarks for a good APR in 2026, and how lenders assess income and outgoings, you are in the right place.

Your finance routes

1. PCP - lower monthly payments, mileage limits, optional balloon.

2. HP - higher monthly payments, own the car after term.

3. Personal loan - unsecured loan, flexible usage, fixed repayments.

4. Guarantor finance - backed by a stronger-credit supporter.

5. Specialist bad credit lender - tailored underwriting, wider tolerance.

6. Joint application - combined income can improve affordability.

7. Leasing (PCH) - fixed term use, you never own the car.

What it could cost

Figures are illustrative. Your actual APR and payment depend on deposit, term, vehicle, and credit profile.

Can you qualify?

Approval rests largely on affordability, not just your score. Lenders will review income, regular outgoings, existing credit commitments and how comfortably a car payment fits once essentials are covered. A recent pattern of on-time payments and stable employment can weigh more heavily than an older default. A deposit reduces the lender’s risk, which may unlock a lower APR or a longer term at the same rate. If you have CCJs or missed payments, specialist lenders may still consider you, particularly if your recent behaviour has improved and your budget is realistic.

Kandoo operates as a UK broker, which means you make one application and we search a panel of lenders that accept a range of credit profiles. Many begin with a soft search to avoid an unnecessary mark on your file. Expect to provide proof of identity, address and income. Lenders may also ask about the vehicle type, age and mileage. While typical approvals are possible below a 600 score, you are more likely to succeed with a clear, evidenced budget and no recent arrears. If your application falls short, we can suggest alternatives, from a guarantor to a smaller loan with a higher deposit.

From application to keys

1. Check your credit file and correct any errors.

2. Set a realistic monthly budget and deposit.

3. Submit a broker application with soft search.

4. Upload payslips, ID and bank statements securely.

5. Compare lender offers, APRs and total payable.

6. Choose vehicle and agree valuation and checks.

7. Sign documents digitally and arrange collection.

8. Set up direct debit and monitor repayments.

Balancing the upsides and downsides

Check these before you commit

Scrutinise the total payable, not just the monthly figure, and test your budget against a rate a few points higher to see if it still works. Watch for fees such as arrangement, option to purchase, and early settlement charges. With PCP, be realistic on mileage and condition to avoid end-of-term costs. Ask whether the lender runs a soft or hard search at the quote stage, and how many searches a broker will perform. Market volumes fell across 2024 and into 2025, so underwriting may feel tighter. That does not mean approval is unlikely, but documentation standards are firmer. Keep an eye on ongoing regulatory developments, including the motor finance redress discussions. Average payments have hovered around £244 per month for the broader market, but with bad credit you should budget above that benchmark and consider a larger deposit where possible.

Plan B ideas

1. Choose a cheaper car or older model to lower the loan.

2. Increase deposit to reduce APR and monthly cost.

3. Add a guarantor with strong credit for better terms.

4. Shorten the term to cut total interest paid.

5. Improve credit for 3 months before applying.

6. Consider leasing if ownership is not essential.

FAQs

Q: Can I get car finance with bad credit in the UK? A: Yes. Many specialist lenders assess affordability and recent behaviour, not just the score. A deposit, stable income and a broker can improve your odds.

Q: What APR is considered good, typical or high in 2026? A: Good is under 10%. Typical sits around 10% to 20%. With poor credit, expect roughly 20% to 50%, depending on profile, vehicle and term.

Q: Is PCP better than HP for bad credit? A: PCP usually offers lower monthly payments because you finance depreciation, but there is a balloon payment and mileage limits. HP costs more monthly but you own the car at the end.

Q: How much will I pay each month? A: The UK average is about £244, but with bad credit you may pay more. Use the lender’s representative APR and total payable to gauge affordability accurately.

Q: Will multiple applications harm my credit score? A: Several hard searches in a short period can. Apply via a broker using soft searches first, then proceed with one selected lender.

Q: Can FCA motor finance redress help me? A: Proposed redress for misselling averages around £700. Any payout could reduce other debts or build a deposit, indirectly improving your affordability.

Q: Do I need a guarantor? A: Not always. A guarantor can help if approvals are borderline, but strong recent conduct and a deposit may be enough with a specialist lender.

How Kandoo helps

Kandoo is a UK-based broker that connects you with lenders who regularly approve applicants with imperfect credit. One application, multiple options. We prioritise soft searches where possible, clarify total payable before you commit, and match you to terms that align with your budget. If approval is not immediate, we will outline practical next steps to get you road ready.

• Next steps: check your credit file, set a budget, start a soft-search quote with Kandoo today.

Important information

Rates and approvals are subject to status, affordability and lender criteria. Representative examples in this guide are for illustration only and not offers. Terms, APRs and eligibility can change without notice. Always consider independent advice if you are unsure.