Finance a Car with CCJs: What You Need to Know

Can You Get Car Finance with CCJs?

Securing car finance when you have a County Court Judgment (CCJ) on your credit file can seem challenging—but it isn’t impossible. With the right information and careful planning, you can still access the vehicle finance you need. Here’s how to approach the process, what to expect, and how to improve your chances.

Who Should Read This Guide?

This guide is for UK residents who have one or more CCJs on their credit record and are seeking car finance. Whether your CCJ is recent or nearly spent, and whether you’ve settled it or not, you’ll find clear answers and practical steps here.

Key Concepts: CCJs, Credit Scores, and Car Finance

A County Court Judgment is a legal order issued when you fail to repay money you owe. It’s recorded on your credit file for six years, potentially making it harder to obtain finance products. Lenders view CCJs as a sign of financial difficulty, which can result in higher interest rates or declined applications.

Types of car finance available:

• Hire Purchase (HP): Spread the cost with monthly payments. The car is yours once the final payment is made.

• Personal Contract Purchase (PCP): Lower monthly payments with a larger balloon payment at the end.

• Personal Loans: An unsecured loan can be used to buy a car outright.

Key terminology:

• Representative APR: The interest rate most applicants receive. With a CCJ, expect this to be higher.

• Deposit: An upfront payment may be required to reduce lender risk.

• Guarantor: Someone who agrees to pay if you default, sometimes requested by lenders.

Car Finance Options with a CCJ

Despite a CCJ, several lenders specialise in ‘bad credit’ finance. Here’s what to consider:

1. Specialist Bad Credit Lenders Some finance providers cater to individuals with CCJs or poor credit. These lenders assess your recent financial behaviour, stability of income, and whether the CCJ is settled.

2. Guarantor Car Finance A guarantor (usually a close relative) agrees to cover repayments if you can’t. This can boost your approval chances but is a significant responsibility for your guarantor.

3. Larger Deposit A substantial deposit reduces the lender’s risk, making approval more likely and possibly securing a better rate.

4. Joint Applications Applying with someone who has a stronger credit profile can help, but both parties are equally responsible for repayment.

5. Mainstream Lenders Most high street banks and mainstream finance companies are unlikely to approve applicants with recent or unsettled CCJs.

Costs, Impacts, and Risks

Having a CCJ typically means higher interest rates and less favourable terms. For example, a car loan that might cost 6% APR for someone with good credit could be 20% or more for someone with a CCJ. This increases your overall repayment and the total cost of borrowing.

Key risks:

• Affordability: Higher repayments may strain your budget.

• Repossession: Missed payments can lead to losing your car.

• Impact on Credit Score: Missed or late payments further damage your credit profile.

Always use a reputable broker or lender regulated by the Financial Conduct Authority (FCA) to avoid unscrupulous practices.

Eligibility, Requirements, and Conditions

While requirements vary, most lenders will consider:

• Age (typically 18+)

• UK residency

• Proof of stable income (employment or benefits)

• Address history

• Details of your CCJ(s): amount, date, and whether settled

Settled CCJs, older judgments, and evidence of regular repayments elsewhere will all strengthen your application.

Step-by-Step: How to Apply for Car Finance with a CCJ

1. Check your credit file for accuracy

2. Set a realistic budget for monthly payments

3. Gather proof of income and address

4. Save for a larger deposit if possible

5. Research specialist lenders or brokers

6. Consider a guarantor or joint applicant

7. Submit your application and await a decision

8. Review finance terms before signing

Pros, Cons, and What to Consider

Pros:

• Access to essential transport

• Opportunity to rebuild your credit score

• Specialist lenders are available

Cons:

• Higher interest rates and costs

• Stricter eligibility criteria

• Risk of repossession if you miss payments

Carefully weigh your need for a car against the true cost of borrowing with a CCJ. Consider whether it’s better to wait until your CCJ is spent or fully settled before applying.

Before You Decide: Things to Watch Out For

• Check your credit file for errors. Mistakes can hurt your chances and should be disputed.

• Avoid multiple applications. Each application leaves a mark and too many can lower your score.

• Watch for upfront fees. Legitimate lenders won’t charge you to apply.

• Calculate the total cost, not just monthly payments. Factor in insurance, maintenance, and other running costs.

If you’re unsure, seek independent financial advice before committing.

Other Options and Alternatives

If car finance isn’t viable, consider:

• Saving up and buying a used car outright.

• Leasing or hire schemes. Some schemes are available for those with poor credit.

• Borrowing from family or friends. This avoids interest but requires trust and clear terms.

• Public transport or car clubs. Depending on your location, this might be a practical interim solution.

Frequently Asked Questions

How long after a CCJ can I apply for car finance? You can apply anytime, but your chances improve if the CCJ is settled or several years old.

Will a CCJ automatically prevent me from getting car finance? No, but it limits your options and may result in higher costs.

Can I get car finance if my CCJ is unpaid? Some lenders may consider you, but settling the CCJ first improves your chances.

Do I need a guarantor with a CCJ? Not always, but it can help if your income or credit profile is weak.

Will car finance help rebuild my credit score? Yes, if you keep up with repayments, it can gradually improve your credit file.

Are there any government schemes for car finance with bad credit? No specific schemes, but some charities or local authorities may offer assistance in special cases.

Next Steps

If you’re considering car finance with a CCJ, start by checking your credit file and reviewing your budget. Research specialist lenders, compare offers, and read all terms carefully. Kandoo can help you explore your options and connect you with FCA-regulated lenders tailored to your circumstances.

Disclaimer

This article is for informational purposes only and does not constitute financial advice. Always consult a qualified professional before making significant financial decisions. Kandoo is authorised and regulated by the Financial Conduct Authority (FCA).