Bad credit van finance: how to buy a van if you have bad credit
If you’re having trouble getting financing for a new van because of your bad credit, bad credit or a subprime van financing solution could help you get the utility vehicle you need. There are specialist lenders who may be able to help, although the deals available may not be as attractive as those offered to buyers with higher credit scores.
A bad credit score can be the result of a number of different factors, including a limited or poor credit history, unpaid debts, county court judgments, or default on payments in the past. A bad credit rating simply means that a lender will take a greater risk by offering you financing for a pickup truck because your credit history suggests you may have difficulty making your payments.
It’s usually much easier to get financing when you have good or excellent credit, but it’s still possible to get financing if your credit rating is poor or bad. When it comes to commercial vehicles, it can feel like a catch-22 where you need a van to work, but you have to work to prove you have the money to pay for the financing. There are ways to get out of this vicious cycle and buy a new van, whether you’re a small business, self-employed, or just have a less than perfect credit score.
Bad credit van finance: things to consider
First, if you’re having trouble getting financing, you can look for ways to improve your credit rating, such as getting on the voter rolls, paying off any outstanding loans, or closing accounts related to someone with bad credit. .
Bad credit van finance is generally a hire purchase agreement (HP) rather than a personal purchase agreement (PCP). While both types of agreements would allow the lender to repossess the vehicle if you fail to make the payments, HP is simpler with a deposit followed by a series of monthly payments after which you own the van. You can also opt for a personal loan.
HP agreements often have a higher monthly payment because the cost of the vehicle is spread evenly over the term of the contract. PCP contracts defer part of the cost of the vehicle to the end of the agreement and for someone with bad credit, it may be more difficult to pay a lump sum, otherwise known as a “lump sum payment”, to the end. With HP, once the contract ends, you own the vehicle.
A significant difference when you get van financing with bad credit is that you may need to put down a larger deposit of around 10% to lower your monthly repayments and get a more favorable interest rate. Another way to cut costs and make the path to a deal easier is to opt for a less expensive van until you can improve your credit rating.
To make it easier to get financing, you could ask someone to be your guarantor, which means they would be responsible for your repayments if you weren’t able to pay. However, you need to make them aware that it would impact their credit rating if they were also unable to pay.
How do you get bad credit van finance?
The actual process for getting approved for bad credit van financing is the same as getting any type of car or van financing. You will need to speak to the dealership or a financing provider and determine what kind of options are available to you in your particular situation.
It probably makes sense to research online what kind of funding deals might be available first. A credit check with one of the major credit checking agencies is free and will give you your credit score Experian, Equifax Where Trans Union and an online car finance calculator like our used car and van calculator will give you an idea of how much you can borrow. Then it’s time to talk to find a vehicle and talk to the experts.
Can I Have Bad Credit Van Finance If I’m Self-Employed?
When it comes to obtaining financing for a van, a bad credit history is one problem and being self-employed is another. If both apply to you, getting financing is more difficult but still possible. If you’re self-employed you’re less likely to have a steady income with evidence you can show a lender, but if you can show regular income at a level that can afford repayments you’ll have a lot more to do. easy. .
Should You Get Bad Credit Van Finance?
If you need a van to run your business but are having trouble getting financing due to poor credit, this type of financing might be a good option for you. In addition to helping you maintain your business, Bad Credit Van Finance can help improve your credit score – as long as you are able to make all your payments on time and fulfill the contract. This would make it easier to get finance for a van in the future, and you’ll also own a van at the end of the deal that you can use to trade some in for a down payment on a better van.
Regardless of the type of financing, it’s always important to determine whether you can afford the monthly repayments you commit to. This is especially important to consider if you have a guarantor, because if you are unable to make the payments, it will fall to them or the lender may repossess your vehicle. Van finance offers with bad credit often have higher deposits and interest rates than other finance offers, but many van buyers who consider them have no other choice.