Car Finance for People with Bad Credit

Bad credit car finance in plain English

If your credit history has a few bumps, getting a car can feel out of reach. The truth is different. UK drivers secure finance with imperfect credit every day by applying smartly, targeting the right lenders and setting realistic expectations. Lenders price risk, so poor credit often means higher APRs compared with prime borrowers. That does not mean extreme costs are unavoidable or that you should accept the first offer you see.

A helpful benchmark: in the UK, subprime typically refers to Experian scores around 501-600. Recent market data shows average APRs for these bands can sit around 11.33% for new cars and about 17.78% for used. Competitive APRs for strong credit often range between 6-11% in today’s market. Your actual rate depends on the lender, the vehicle, deposit size, employment stability and how your recent payments look. Mainstream banks may decline complex cases, but specialist lenders assess your wider circumstances and can be more flexible.

Bad credit raises rates - it does not close doors.

What you can control matters most. Checking your credit file first helps you understand any late payments, defaults or CCJs that may be dragging your score and how to correct errors. A larger deposit, a shorter term and choosing a sensible used car can all improve approval odds and reduce interest paid over time. The average UK car payment recently landed around £244 per month over 48 months, roughly 11% of income for typical customers. Your figure may be higher with bad credit, but careful choices can keep payments manageable.

If you are unsure where to start, a regulated broker can match your profile to lenders that genuinely understand credit rebuilders. That saves time, reduces the risk of unnecessary rejections and protects you from high-cost, no-check offers that can cause long-term harm.

Key idea: aim for affordability first, then rate. A fair, sustainable deal beats a fast yes with painful terms.

Who will find this helpful

This guide is for UK drivers who need a reliable car but worry that missed payments, defaults, CCJs or limited history will block finance. If mainstream lenders have declined you, or you are rebuilding credit after a tough period, you will find practical, UK-specific steps here. It also suits first-time buyers with thin files who want to understand deposits, terms and realistic APRs before applying. Whether you need a sensible used runabout for work or a family car, the focus is on safe, regulated routes that fit your budget.

Your practical choices

1. Hire Purchase (HP) - fixed monthly payments, you own the car after the final instalment.

2. Personal Contract Purchase (PCP) - lower monthly payments, large optional final payment if you want to own it.

3. Guarantor-backed finance - a trusted person supports your application to improve approval odds.

4. Larger deposit approach - put down more upfront to reduce risk and rate.

5. Shorter term strategy - pay off faster to cut total interest.

6. Specialist bad credit lenders via broker - tailored criteria for complex histories.

7. Choose a modest used car - lower price means smaller loan and easier approval.

What it could cost you - and why it matters

Can you qualify - and what lenders look for

Approval with bad credit is possible in the UK when your recent finances show stability. Lenders pay close attention to affordability, so your income, essential outgoings and existing debts carry as much weight as your score. A history of missed payments or defaults will not automatically stop you, but you may be offered a higher APR or asked for a bigger deposit. If your credit file shows CCJs, evidence that they are settled and your last 6-12 months are clean can significantly help. Choosing a realistic car within budget also builds confidence.

Checking your Experian report first is a smart, no-cost step. You will quickly see if your score sits in a poorer band and what is driving it. Correcting errors and setting up direct debits for bills can nudge your score up before you apply. Using a UK broker like Kandoo connects you with specialist lenders who consider your full picture - for example, stable employment, proof of address and a sensible deposit - rather than relying on a score alone. That alignment often means fewer declines and more suitable terms.

Simple steps to get started

1. Check your credit report and correct any errors.

2. Set a realistic monthly budget that you can sustain.

3. Choose a sensible car and decide deposit size.

4. Use a broker to pre-check eligibility with soft searches.

5. Submit documents - ID, income, address and bank statements.

6. Review the APR, term and total cost before accepting.

7. Sign, collect the car and set up direct debits.

Advantages and trade-offs

Read this before you apply

Be wary of dealerships promising approvals with no checks. These offers often hide very high APRs, costly add-ons and unfavourable terms. A regulated broker will run soft searches first, explain the total cost including fees and ensure the repayment fits your budget. Aim for a deposit you can truly afford, keep the term as short as your budget allows and choose a car that meets your needs without stretching. If you are offered multiple options, compare total payable, not just the monthly number. Finally, avoid applying in too many places directly. Multiple hard searches in a short period can reduce your score and make approvals harder.

Sensible alternatives to consider

1. Save for a larger deposit to secure better terms later.

2. Consider a cheaper used car to reduce the loan size.

3. Explore a guarantor only if they fully understand the risk.

4. Improve your score for a few months before applying.

5. Look at short-term public transport while building affordability.

Common questions, clear answers

Q: Is car finance possible with poor credit in the UK? A: Yes. Specialist lenders approve bad credit cases every day by assessing affordability, recent payment stability and deposit size, not just a score.

Q: What APR should I expect with bad credit? A: It varies. Subprime benchmarks show around 11.33% for new cars and 17.78% for used. Strong credit may see 6-11%. Your rate depends on the lender and your profile.

Q: Will a bigger deposit help me get approved? A: Often, yes. A larger deposit lowers risk for the lender, can improve approval odds and may reduce the APR or monthly payment.

Q: Should I apply to lots of lenders directly? A: No. Multiple hard checks can dent your score. Using a broker to run soft checks first can protect your credit while comparing offers.

Q: Are no-credit-check deals safe? A: Be cautious. They often come with extremely high costs and poor terms. Always verify the lender and read the agreement in full.

Q: What is a realistic monthly payment in the UK? A: A recent UK average sits around £244 over 48 months. Your payment will vary by APR, term, deposit and vehicle price.

How Kandoo can help

Kandoo is a UK-based retail finance broker that connects you with specialist car finance lenders who are comfortable assessing real-life credit histories. We use soft searches where possible, focus on affordability and aim to match you with terms that fit your budget. Ready to move forward? Start your eligibility check today and let us handle the legwork.

Important information

This guide is for general information only and is not personal financial advice. Eligibility and rates depend on your circumstances and lender criteria. Always review the full agreement, including fees and total cost, before committing.