Thinking about car finance but worried about your bankruptcy history? This guide’s got you covered, explaining everything you need to know about car finance options for those who’ve faced or are facing bankruptcy.
Understanding Bankruptcy
Bankruptcy is a type of insolvency, usually lasting about a year. It’s for those in serious financial distress who can’t pay their debts. It’s a big deal, impacting your financial future, including chances of getting a car finance loan. Bankruptcy not only hits your credit score during the period but also lingers on your credit report for up to six years, or indefinitely if not discharged. It also puts your name on the public Individual Insolvency Register.
Bankruptcy and Car Finance – What Are Your Options?
When you’re declared bankrupt, securing any form of loan, including car finance, is tough. Legal requirements demand disclosing your bankrupt status for loans over £500. Breaking any restrictions set by your receiver can lead to court orders and suspended bankruptcy discharge. It might seem gloomy, but remember, bankruptcy isn’t forever. Once discharged, you can work on rebuilding your credit score and explore suitable car finance options.
Post-Discharge Car Finance
Once your bankruptcy is discharged (typically after a year), you can start looking at car finance options. However, your credit report will still reflect your past bankruptcy for up to six years. This could make lenders see you as a higher-risk borrower, potentially leading to reluctance in approving new loans.
But don’t lose hope! Specialised lenders cater to those with bad credit histories, including past bankruptcies. You might face higher interest rates or borrowing limits, but car finance is still within reach.
Improving Your Credit Score Post-Bankruptcy
Your credit score can be improved through several steps:
- Pay bills on time: Late payments can hurt your score. Set up direct debits to avoid delays.
- Regularly check your credit report: Spot and rectify any errors promptly with credit reference agencies.
- Manage your credit ratio: Use a smaller percentage of your available credit to show responsible borrowing.
- Register on the electoral roll: Ensure your address is always updated to keep your credit profile accurate.
- Limit new credit applications: Too many applications can signal reliance on credit.
- Monitor linked accounts: Joint finances can impact your credit score based on the other person’s financial behaviour.
To find out more about how you can improve your credit score, click here.
Securing Car Finance with Bad Credit
Even with a rocky credit history, companies like Marsh Finance offer hope. We understand that credit scores vary and are willing to consider each application individually. While approval isn’t guaranteed, we’re open to considering applications from those with poor credit, offering a lifeline to those needing a car but facing financial challenges.
Want to see if you’re pre-approved? Apply online today with Marsh Finance by clicking here.
Finance is subject to status
Representative Example
Rates from 12.9%
Representative example: borrowing £10,000 over 60 Months with a representative of 23.0% APR, an annual interest rate of 23.0% (fixed) and a deposit of £0.00, the amount payable would be 59 repayments of £269.58 per month, with one final repayment of £279.58 (which includes the option to purchase fee of £10.00), with a total cost of credit of £6,184.80 and a total amount payable of £16,184.80. Marsh Finance Limited are a lender, not a broker.
Marsh Finance Limited are a lender, not a broker.
This is for illustrative purposes only and is not a quote or an offer of finance.