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What types of finance can I get with a bad credit score?

There’s more than one type of credit available to finance your car purchase. Types could be available to suit a customer’s personal circumstances, the length of time they’d like to repay over, and the amount they can commit to repaying.

Three typical types of car financing are:

  • Personal contract purchase: A personal contract purchase (PCP) finance deal offers low monthly repayments at a percentage value of the car, based on the premise that you never fully own the car. At the end of the deal, you return the car, and theoretically look to take another car out on a PCP payment.
  • Hire purchase: A hire purchase loan is similar to a personal contract purchase in that you pay in monthly instalments to ‘hire’ the car from the lender. However, at the end of the loan, you are usually expected to pay a lump sum in order to buy the car outright. A hire purchase loan is usually over a longer term than a personal contract purchase, and is usually for the full amount of the car’s value, plus interest.
  • Personal loan: Less common for car purchase but still an option for some customers, a personal loan is usually taken out from a bank, and is unsecured against your car or home. A personal loan offers more options in terms of fixed interest rates, terms of repayment, and amount, but usually can only be used for amounts over £1,000.

How assessment works

When you apply for finance for a car purchase with The Car People, our broker will assess more than just your credit score; they’ll also conduct an affordability assessment, which considers your employment history and monthly income.

The best type of finance for anyone is an individual choice, and you should seek independent advice before you make any decision.

It’s important to remember that secured loans are against the vehicle you’re paying for, so if you miss repayments, the lender can repossess your car.

If you’re worried about being eligible for finance, ours guides cover all of the most frequently asked questions, or you can visit a showroom to speak to one of our trained specialists.