Car Loans and the credit crunch

The credit crunch in UK has affected several different areas of life that may affect you in several ways. One of the biggest changes can be seen in the financial industry which was the one that has been affected the most.

Loan companies, financial institutions, banks have all suffered due to the credit crunch in the last few years. All of these changes may seem to be insignificant but they do have an impact on your chances of getting a car loan today.

Credit crunch and bad credit loans

One of the biggest areas to be affected because of credit crunch is bad credit loans. Most banks and financial companies that earlier offered bad credit car loans or even personal loans have had to suffer quite a lot over the last five years.

Bad credit loans have always been hugely popular and they had been easily offered to almost every applicant in the last few years. Even those with very low income levels, bankruptcy or other serious credit problems in their history had managed to get away with car loans without any problems.

During the economic crisis, several people lost their jobs and had been unable to repay the car loans. As a result, many of these companies had to suffer huge losses, resulting into shutting down of businesses and even the withdrawal of car loan products from the market.

How will these changes affect you?

Applicants with bad credit history would be the ones who would be the ones to get affected the most. There are fewer lenders today that offer bad credit car loans and even these try to make up for their risks with very high interest rates.

Today, applicants with bad credit history would find it quite difficult to find an appropriate and an affordable car loan. Getting a shiny new car would be difficult for these borrowers.

Self employed borrowers would also have to face several problems since they are considered to be a high risk category. Though there had been several lenders that provided approvals for car loans without any income documents, this is very rare today.

Applicants with a decent credit history would not really be affected by the credit crunch as long as they maintain their good record and make regular payments each month for their car loan and any other obligation that they may have.