Getting a PCP car finance deal with poor credit

It’s almost impossible, right? Getting a worthwhile PCP car finance deal with poor credit is unachievable as lenders will pump the costs up and price you out – or perhaps this isn’t the case after all.

With a bad credit car finance deal you can still get the car of your dreams, on a PCP deal that suits you and your budget.

PCP car finance dealPCP car finance explained

With a Personal Contract Purchase (PCP) agreement, you have an option to pay a deposit and then you will pay a fixed monthly amount after that, over a set period of time. This is typically between 2 and 4 years.

At the end of this, you can:

  • Give the car back to the lender.
  • Use the equity as a deposit for another car.
  • Obtain ownership of the car by paying a balloon payment.

Most PCP finance agreements will have a clause that states the maximum annual mileage on the car. If you exceed this maximum mileage there may be charges issued by the lender.

Benefits of PCP car finance

  1. Provides flexibility to keep the car or hand it back at the end of the agreement.
  2. The lump sum due at the end of the agreement (if you keep the car) usually makes the monthly payments lower in comparison to other finance options.
  3. Fixed costs over a set period of time allow you to budget more effectively.
  4. With finance agreed upfront, you are in a position to negotiate on the cost of your car.

How to get a PCP car finance deal with poor credit

Obtaining a fair PCP car finance deal when you have poor credit may seem like a far cry without being ripped off or paying over the odds. However, bad credit car finance may be able to help, especially those with poor credit ratings. Simply put, this type of finance deal is one that a lender agrees to offer someone with bad credit.

This allows you to spread the total amount of buying a car over a fixed term, without shelling out for a deposit or an upfront payment at the beginning of the deal. Although you must be able to prove that you can afford to keep up with your monthly payments, the initial check into your suitability and options will be a ‘soft’ search that will not impact your credit report.

This will give the lender a clear indication on whether or not they can source credit for you and the type of credit that they can get. If you are happy with what they find on your behalf, proceedings will then be progressed onto a full credit check and application. This will show on your credit report. The initial soft search will determine whether or not you are suitable for credit and if it is worth the risk of a hard credit check against your credit report. This option can help you find finance, even if you have CCJs, IVAs, arrears, or a debt management plan.