Getting a car loan with bad credit needs good preparation prior to applying.

Below are my Top 10 Tips for getting a car loan with bad credit and should be considered for at least six months prior to applying for a loan.

  1. Do not spend more than you earn. Bad credit car financiers will want to see your bank statements and will assess your application based on your spending habits.
  2. Try and stay away from “payday lenders” which are used for short term finance. Although you may believe that if you can get a small loan first this may help, the lender will see this as you are struggling living off what you earn now.
  3. Make sure your employment is stable and secure. The financier is going to want to know that you will be able to earn income to repay your vehicle finance.
  4. Pay your bills, on time, every time. This includes all utilities, telephone and most importantly your rent if you have any. The lender may call your agent or landlord to check whether you pay on time and this can assist in a loan approval.
  5. Try not to change address too often. The more you move, the harder you will be to find and this can be deemed as risky for the lender and your residential stability can affect the outcome of your application.
  6. If you are able, try and save from your income the amount that will be close to your repayments for six months prior. It will show that you can afford to save this amount and that you would be able to afford to repay the loan.
  7. If you have any direct debits, make sure you have sufficient funds when the provider requires withdrawing this amount from your account. Direct Debit dishonours are a bad look when they assess your bank statements.
  8. Be realistic with what car you want. I know we would all like to drive our dream car, but a bad credit car loan would attract a higher interest rate and starting smaller to prove yourself is going to be a better way to present your application first time, and of course it would be less risk for the lender.
  9. Be 100% truthful about everything on your application. The lender will find out, so there is no use trying to hide anything, as this will result in the worst outcome possible, as you may never get the opportunity to apply again with that lender if your position improves.
  10. Be patient! If you have bad credit, sometimes it is best to wait to have everything in order first rather than applying and hoping for the best. You will have the most chance of success having all your information ready and in order prior to applying.