What is a bad credit car loans in UK

In UK, a lot of people are currently dealing with bad credit history. With poor credit, it can get quite difficult to arrange for any type of finance or loan.

If you have been thinking about applying for a car loan, then you should know that there are special bad credit car loans that are offered by a few financial companies today where you would have higher chances of getting an approval.

What are bad credit car loans?

Bad credit car loans are loans that are provided to individuals with specific credit problems like arrears, defaults, bankruptcy, IVAs or CCJs. Car loans are generally rejected by the high street banks because of these reasons but there are a few financial companies today that cater specifically to these individuals.

These loans are available in the form of unsecured as well as secured loans. Providing a security would be the best possible way of increasing your chances of getting a loan. However, if you are not a homeowner and do not have any type of security to offer then unsecured car loans are also available.

Terms and conditions for borrowing

Bad credit car loans would generally have a higher interest rate since the risk taken by the lender is also higher. The repayment term for the loan would be decided based on the amount that you borrow and your income. For old car loans, the car must not be over 5 years old. A down payment would also be required in order to get the loan.

There will be a few basic documents that would have to be provided to the lender like residential proof, income proof and identification papers. These loans are normally provided for shorter amounts and shorter repayment terms.

In order to reduce the overall interest that you would be paying for the car loan, it is advisable that you pay a higher down payment. It would also be necessary for you to research well before you apply for a loan.

Some of the finance companies that currently offer bad credit car loans are Credit Plus, ACF Car Finance, Car Finance 247 and Welcome Car.