If you’re looking to buy a vehicle with support from a lender, you might be worried about your financial history. You may have experienced some problems keeping up with payments in the past or been unable to keep up with a loan you took out. If you’re wondering ‘can you get car finance with a default’, the brief answer is yes, but there are some steps you can take to improve your chances of a successful application.
While it’ll be tougher than obtaining finance if you possessed a good to excellent credit score, securing finance with a default isn’t impossible. There are many lenders who’ll still consider you for a car finance agreement if you’ve got missed or overdue payments showing on your record.
Many of us will miss a payment occasionally or experiences cash flow problems throughout our life but still require finance to buy a car. Some lenders will be sympathetic to your situation but they’ll need a full understanding of it.
Notice of correction
In a short statement of no more than 200 words, you can write down how you missed your payments and why, and add it to your online credit file.
This statement, referred to as a ‘Notice of Correction’, offers car buyers with defaults on record the unique opportunity to explain their situation to lenders in their own words. If the finance company understands your circumstances, it might just swing an application in your favour.
Contact the lender
If you’ve missed or defaulted on a payment in some way, you are advised to always contact the lender with which the debt is registered. This vital communication can have a positive impact on all your future attempts to secure credit.
When at all possible, settle the outstanding debt in full, but if not, make an agreement with the lender to pay it back. No matter how small the amounts may be, arrange a payment plan of monthly instalments with the lender and start your repayments.
Finance companies you apply to will see you’re making good on your debts either in full or in increments, and be more likely to see you as a potential candidate worth lending to.
Checking your credit score
If you have concerns about your credit history and what it might look like, there are ways of checking it online. There are organisations online that specialise in this service, such as Experian and Clearscore, which allow you to see exactly where your credit score rates from poor to excellent
These services are ideal when you’re applying for credit to get an estimation of your chances being accepted for finance and seeing what you look like to lenders. When you’re rebuilding your credit history, you can clearly see when it’s improving and know when and when not to make applications for car finance.
Improving your credit rating
In order to have the best chance of being accepted for finance, especially when you’ve got a default on your credit file, you should always try to bolster credit history. Having a good credit score is not just the difference between being accepted or declined, it can have a serious impact on the interest rates you’re charged. The better your score, the better the deal you are likely to secure when it comes to car finance.
Negating the negative impact of defaults
At Car.co.uk, we are experts in the auto industry, especially when it comes to car finance. If you have concerns about your credit score or a default on your file, you can contact us for advice and support.