credit rating Archives - My Car Credit

What Criteria Poor Credit Car Finance Lenders Look for in an Application

Getting car financing with poor credit can feel like an uphill climb in an old beater. But it’s far from a lost cause. A few financial missteps in the past don’t have to stand between you and your next ride. By understanding the main criteria lenders consider, you can boost your application, present yourself as a trustworthy borrower and put yourself in a strong position to secure the car finance you need.

How to Choose the Right Used Car for Your Budget

It’s important to stay realistic when applying for car financing with poor credit. Yes, we’d all love a flashy sports car or a luxury SUV. But sticking to budget-friendly models can help keep lenders on your side. Why? It shows you’re mindful of your financial limits.

There are lots of great used cars out there that won’t break the bank but will still get you where you need to go. For instance, buy used and you could score a British bestseller like the Nissan Qashqai or Kia Sportage for a fraction of the manufacturer’s suggested retail price (MSRP).

Compact cars can also be a great option if you have your heart set on a new set of wheels but don’t want to break the bank. Models like the Dacia Sandero, Citroen C3 and Renault Clio aren’t just affordable but are great on fuel, cheap to insure and easy to park. These are all huge perks if you live in expensive, traffic-choked cities like London or Birmingham.

Your Credit History – What Can Lenders See?

Your credit history is like a financial CV. It offers lenders a look at the whole picture, warts and all. Some credit histories score an A+ with lenders and others aren’t quite as accomplished.

Hiccups like missed payments, defaults and lots of debt can drag down your score. The road starts to look a bit rougher when terms like ‘bankruptcy’ and ‘County Court Judgements’ (CCJs) start to pop up. CCJs are a formal recognition by the court that you’ve failed to repay a debt, and they can impact your ability to secure car financing with poor credit.

Most lenders will take a good look at your history report before deciding, regardless of your credit score.

Don’t panic if you’ve had a few bumps along the way. Lenders understand that life happens. What they’re really looking for is your current financial behaviour. Making an effort to pay off debt or stay on top of bills recently can go a long way.

Positive changes like reducing your credit card balance or paying off small debts can also work in your favour. Think your credit score could use a leg up? Check out our article on credit score advice for more tried-and-tested tips on how to improve your credit score.

Proof of Your Income

The next thing lenders will want to know is whether you can afford the monthly payments. This is where your personal income comes in. Documents like recent payslips or bank statements are the best way to prove you’ve got a steady cash-flow. Lenders might ask for tax returns as proof of income if you’re self-employed.

The goal is to show that you’ve got enough regular income to cover your loan payments without leaving you struggling to meet other financial commitments, like rent or bills.

Not quite sure if your income is up to snuff? Why not have a chat with a My Car Credit advisor? Our team is always more than happy to go over the income side of car financing with poor credit and help you understand what’s needed.

Gain the Lender’s Confidence With a Down Payment

Don’t underestimate the sway of a healthy down payment for car financing with poor credit. Not only does a nice sum reduce the amount you need to borrow, but it also shows lenders that you’re serious about the deal. By putting some of your own money upfront, you’re taking on some of the risk and showing commitment to the purchase, which lenders really like to see. A bigger down payment also lowers your monthly payments and makes the loan more affordable overall. Who doesn’t want that?

Use our handy car finance calculator to play around with your numbers and help you get a clear picture of what to expect. We also recommend having a chat with your lender to discuss how different down payments will affect your monthly budget, and to make sure a larger sum makes sense for your car finance application.

A Car Finance Affordability Assessment

Lenders factor in a lot of different things when assessing car finance affordability, but ultimately, they’re looking at the bigger picture. This means your income won’t be the only factor under the microscope. Lenders will also want to see if the loan is realistically affordable for you.

This is where an affordability assessment comes in.

Lenders will go over your monthly expenses with a fine-tooth comb, looking at everything from rent or mortgage payments to utility bills. Even your regular spending on groceries and other general living expenses are on the radar. They want to make sure that by adding car finance to the mix, you’re not stretching yourself too thin.

If your financial commitments are already weighing you down, lenders might think twice about offering you a loan. This is why it’s important to review your budget before applying and make sure you’re comfortable with what’s left over after your essential outgoings. Current debts will also be considered. This includes credit card balances, personal loans and overdrafts.

Being upfront about your financial situation during this stage is key.

Lenders are detail oriented but they’re not running a vendetta to catch you out. They want to help you secure a car financing with a poor credit loan that you can comfortably afford.

And that’s exactly what we aim to do here at My Car Credit.

Knowledge Is Power: Know What Lenders Look For

The bottom line? It helps to know what’s on a lender’s checklist when aiming to put your best foot forward in a finance application. Use this quick summary of the key areas they’ll focus on to strengthen your application:

Credit history – Basically your financial track record. Lenders will look through your credit report and check for things like payment history, any defaults or County Court Judgements (CCJs). Recent positive actions (like paying down debt or consistently meeting payments) can make a good impression.
Proof of income – Lenders need to see that your income can comfortably cover your monthly payments. Payslips, bank statements or tax returns (if you’re self-employed) help show that your finances are steady.
Down payment amount – A solid down payment can be a big confidence boost for lenders. By putting more down upfront, you reduce the total amount borrowed, lower monthly payments and show you’re serious about the loan.
Current financial commitments – Car finance application lenders want to understand your current financial commitments to be sure a new loan won’t push you over the edge. They’ll also look at other debts, like credit card balances, personal loans and overdrafts, to make sure everything adds up.
Affordability assessment – Be ready to disclose the details of your monthly budget. Lenders will consider your debt-to-income ratio and essential expenses, like rent, utilities and general living costs. The goal is to make sure you can comfortably add a car payment without overstretching your finances.

We get it. These checks might seem thorough and maybe even a bit invasive at times. But they’re designed to help both you and the lender feel confident about your loan.

Secure Poor Credit Car Finance With My Car Credit

Understanding what auto finance lenders look for in an application is half the battle won. By focusing on your credit history, proof of income, offering a down payment and making sure you can comfortably afford repayments, you’ll give yourself the best shot at approval.

This checklist applies to all car finance applications but is especially important for car financing with poor credit, as lenders are that little bit more cautious.

Teamwork Makes the Dream Work

Everyone knows challenges are easier to overcome with teamwork. This is where My Car Credit rides shotgun. We pride ourselves on making car finance as easy as possible, no matter what your credit score.

Whether your credit score has had a few knocks over the years, or your standing is low because you’re new to the borrowing game, we’re here to help. Our team offers personalised finance options and expert guidance, tailored to your individual circumstances.

Apply now to get your car finance application rolling! It takes just a few minutes and won’t affect your credit score as we use a ‘soft search’ for initial applications. When you’re ready to advance to the next stage some lenders might perform a hard search on your credit file, but that’s just part of making sure you’re set up with the right finance plan.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

How Long Does It Take to Get Your Credit Score Up?

Your credit score and credit report are important. The higher your overall score and better your credit report, the better your chances are for finance acceptance. That’s true no matter what type of loan you’re applying for, whether it’s a pay monthly mobile phone or a mortgage.

How long does it take to improve your credit score?

There’s no hard and fast answer for how long it takes to get your credit score up.

It can take anywhere from a few months to several years.

The length of time it takes will depend on your credit history.

Other factors like moving home often, bankruptcy, county court judgements (CCJs), and defaulting on accounts can all negatively impact your credit score.

There’s no quick way to repair your credit score. That said, there are ways that you can improve it over time, which will then improve your future loan eligibility.

How to improve your credit score

Young people or those who’ve newly relocated can struggle with lower credit scores. However, there are ways to build your credit history and make you a more favourable loan candidate.

Prove your residency

Register on the electoral roll of your current address to prove where you live. Every time you move address, update this registration.

You should do the same with any banks and utility providers.

Ensure that there’s consistency in how you spell your address. Though seemingly small, inconsistencies have the potential to impact your overall score.

If possible, avoid regularly moving. Lenders look for stability, and moving home frequently can indicate that you’re having trouble paying rent.

Pay your bills on time

Pay regular payments on time and in full each month. This shows lenders you’re a responsible and reliable borrower.

Pay off your debts

As well as ensuring you make regular repayments, pay off all debt in full.

Keep credit utilisation low

Your credit utilisation is the percentage of your credit limit that you use.

A lower percentage is more favourable – try and keep it below 30% if you can. You can help to do this by paying off any outstanding balances or debts.

Minimise new credit applications

Hard credit checks leave a mark on your credit report. If your credit report shows multiple marks over a period of six months, this will negatively impact your credit score.

Plus, prospective lenders will see this as a sign that you’re a risky borrower, or that you’re in financial trouble. You’re therefore less likely to secure a loan.

Improve your credit score by minimising new credit applications requiring hard credit checks.

Dispute errors on your credit report

Check your credit report regularly. If you notice even small mistakes, such as misspelt addresses, raise this with your provider immediately. It could be the difference between being accepted or rejected for a loan.

Monitor your credit file for fraudulent activity, too. Scammers could take out credit in your name without you realising it. If you see an application in your report that you didn’t initiate, seek out a specialist fraud support team to report it immediately.

Consider applying for a credit builder card

A credit builder card can help rebuild your credit score. You’ll typically face low spending limits and high interest rates, and the initial application will cause your credit score to drop. This initial drop will disappear after a few months, and through responsible use of your card, you’ll actually build your overall score.

Avoid bankruptcy and CCJs

CCJs are County Court Judgements. Lenders can issue CCJs if they think that you won’t be able to pay back what you owe them.

Declaring bankruptcy or having a CCJ against you will lower your credit score for a number of years, ranging from six to ten depending on the severity of the problem.

How long does negative information remain on a credit report?

After around 12 months, hard credit checks will move off your credit report.

However, serious issues like debt foreclosures and collections, delinquency, or bankruptcy can remain on your report for anywhere from six to up to ten years.

Secure speedy car finance with My Car Credit

If you’re looking for quick car finance that won’t take months to secure, My Car Credit can help. Our initial soft credit check takes mere minutes to perform, putting you in the driver’s seat as quickly as possible. Be aware however that should you progress, some lenders may perform a hard search on your credit file.

Begin your car finance journey today by trying our car finance calculator.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Understanding How Far Back Lenders Look into Your Credit History

Tips for Car Finance Recovery After a CCJ

How to Strengthen Your Eligibility for Car Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car financing credit rating credit score Jan24

What Checks Are Done for Car Finance?

Car finance is a way of making the process of purchasing a new or nearly-new vehicle easier, allowing you to spread the cost of your car over a series of affordable repayments.

In order to secure car finance, you may need to provide important personal information, so it’s useful to have certain documents and information to hand. Read on as we outline the checks that are usually done for car finance.

What checks are done for car finance?

The most important checks for car finance tend to be a financial assessment, where lenders will ascertain your employment history and income status, including a credit check. But there are other pieces of information that car finance providers will often ask for in order to gauge whether you’re a responsible borrower or not.

Driving licence

It’s essential that you have a valid driver’s licence when applying for car finance. Without this, you will most likely be rejected.

The car finance provider may contact the DVLA in order to check the authenticity of the driver’s licence. They will also contact the DVLA if you have lost your driving licence, and will usually ask for other proof of identity at the same time.

Proof of identity

For some car finance providers, your driver’s licence will qualify as enough proof of identity. They can cross-reference it with the personal details you’ve provided, as it shows your name, address and date of birth. Others may require alternative documentation. Typically, this may be a passport. If you haven’t entered it as part of your car finance application already, supplementary information like your full name, date of birth, residential and marriage status may also be requested.

Other personal details you may be asked include your current job title and employment details, like whether you’re employed or self-employed. Marital status is another box you may have to fill, though it isn’t going to be a deal breaker in any lender’s criteria.

Address and history of address

Your car finance provider needs to ensure that you’re not making a fraudulent application, and that you’re unlikely to attempt to evade repayment. Asking for your proof of address is one step in the process of confirming this, as it makes you traceable.

You’ll usually be asked for your proof of address history for a minimum of the past three years. This can be in the form of utility bills, council tax and bank statements. You’ll also need to demonstrate your current address, too.

Employment history and proof of income

Expect to be asked about your employment and provide details of your salary and job title. A bank statement will usually be asked for, but payslips and the details of your employment may suffice. If you’re self-employed, you’ll need to provide further documentation.

If your lender feels that you may miss repayments, then your application will likely be rejected.

Credit report

If you have a history of making repayments in a timely fashion, then you’ll have a better credit history and a higher score. Your application is, therefore, more likely to be greenlit.

That said, there are ways of getting car finance even with a poor credit score – you just need to determine whether your finance provider will do so.

What is your finance company checking for?

We’ve covered what checks are done for car finance. But why are they being done? In short, car finance companies need to make sure your car finance application meets their own criteria.

Checking your identity

First and foremost, there are basic checks to ensure nobody is committing fraud. Car finance companies want to know you are who you say you are, for obvious reasons. That’s why they’ll ask for your driving licence and other proof of identity. You’ll also need to provide your address and typically prove that with bank statements or utility bills.

Assessing your reliablity

Other checks are done to assess your reliability for car finance. In other words, how likely are you to keep up with monthly car finance payments? This is primarily done through your credit report, which assesses your credit history.

A car finance company can complete a soft credit check or hard credit check to do so. Soft credit checks provide an overview of your credit report, such as a poor credit score. On the other hand, hard credit searches provide a more in-depth look at your credit history, such as missed payments.

Reliability is also assessed through employment history and address history. If a car finance company sees that you’ve been in and out of jobs, it indicates an unstable financial history. Similarly, looking at the past few years’ address history make raise some flags if you’re constantly moving home, as some people do this to avoid debt.

Looking into affordability

Your credit report isn’t the only thing finance companies use to decide whether you’re accepted for car finance. Another key factor is affordability. Put simply, can you afford the loan repayments on your finance application?

Naturally, an important check here is employment. Your finance company will want to see stable income to ensure you can make monthly payments over the course of your agreement. Additionally, they’ll look at other financial commitments you have. Somebody could be earning a great wage, for example, but already paying out big sums for their mortgage, phone contract, and an existing personal loan.

Checks completed for over a large panel of lenders

There are a number of checks that need to be done when processing car finance. But they don’t have to be a hassle. At My Car Credit, we aim to make the process as simple as possible, with fast and easy online applications.

As a trusted car finance broker, we compare car finance deals from a large network of lenders. That gives you the best of both worlds – the ability to compare deals for your new car without having to provide proof of identity and complete various checks with different lenders.

Additionally, we’ll only perform a soft credit check initially. That means you don’t have to worry about a hard credit check leaving a mark on your credit file, only to be rejected when you apply for car finance. We only use hard credit checks when applications reach the later stages, so you’re much less likely to be rejected.

If you have any questions about the application process and documentation required for car finance, visit My Car Credit and check out our handy online finance calculator to begin your car buying journey.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Understanding How Far Back Lenders Look into Your Credit History

Tips for Car Finance Recovery After a CCJ

How to Strengthen Your Eligibility for Car Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

apr calculator car finance calculator car financing car loan credit rating credit score finance checks identity interest rate Jan24

Try Our Classic Car Financing Calculator

Are you dreaming of a James Bond moment in a gleaming Aston Martin DB5? Maybe you love the boxy silhouettes of Series Land Rovers, or the retro feel of first-generation Volkswagen Beetles. Whatever makes you tick, classic car finance can help you secure the keys to your very own piece of motoring heritage.

Like standard auto loans, budget is front and centre when financing a classic car. This is where the classic car financing calculator from My Car Credit steps up. Designed to make the budgeting process simple and straightforward, our purpose-built calculator takes the headache out of number crunching. Use it to finetune your budget, estimate monthly payments and explore financing options tailored to you.

Want to know more? Read on for a closer look at our car financing calculator and how it can help you secure a loan for a vehicle as unique as you.

How the classic car financing calculator works

Using our classic car financing calculator is easy. Simply input a few pieces of information to generate an instant estimate of your monthly payments. This includes:

Loan amount

The total amount you wish to borrow to fund your classic car purchase.

Repayment terms

Select the repayment term that best suits your financial situation, typically three to five years.

Personal credit rating score

Provide your personal credit rating to help us calculate what financing options you may be eligible for.

Once you’ve entered this information, our calculator will use a representative APR to calculate an estimate of your monthly payments. It’s a quick, easy and transparent way to find out what to expect in terms of classic car financing.

Crunch your numbers with My Car Credit

In the market for a classic car? Use our classic car financing calculator to crunch your numbers and gain valuable insight into your auto loan options. Play around with loan amounts, explore repayment terms and generate instant estimates for different APRs. Whatever your goals, our classic car financing calculator can help you find the right balance for your budget.

Why use the classic car financing calculator?

Quick and easy

Our calculator is fast, easy to use and generates instant estimates.

Customised solutions

Generate personalised financing options to match your individual circumstances.

Transparent pricing

We use representative APR to provide you with clear and transparent estimates of classic car financing costs.

The next step: a soft search

What’s the next step after using our classic car financing calculator? We’ll take your information and use it to run a soft search. Unlike a hard search, it doesn’t leave a mark on your credit file and isn’t visible to other lenders. It’s a risk-free way to find out if you’re eligible for car finance without compromising your credit score. Please note that should you progress, some lenders may perform a hard search on your credit file.

Don’t let financing stand in the way of classic car ownership. Head to the My Car Credit website to check out the classic car financing calculator to find out more and explore your classic car financing options.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Understanding How Far Back Lenders Look into Your Credit History

Tips for Car Finance Recovery After a CCJ

How to Strengthen Your Eligibility for Car Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

apr calculator car finance calculator car financing car loan classic car credit rating credit score Jan24

What is the Average Car Loan Interest Rate?

Flexible and affordable, auto finance is one of the most popular ways to purchase a car in the UK. A good understanding of the average car loan interest rate is one of the best ways to make smart and informed decisions when choosing a lender.

In this article, we’ll take a closer look at benchmark car loan interest rates in the UK, as well as exploring the difference between the Bank of England rate, cash interest rate and APR (annual percentage rate).

Britain’s relationship with car loans

Brits love to borrow. According to the Finance and Leasing Association (FLA), over 90% of all cars are bought on finance in the UK, and in the twelve months leading to May 2024, over two million cars were purchased on finance.

With so many benefits on the table, it’s no surprise auto finance is such a popular option in the UK.

What is the average car loan interest rate in the UK?

Different lenders will offer different interest rates for car loans – you can compare between the lenders My Car Credit works with to find the right rate for you.

Bank of England interest rate

The Bank of England interest rate – also known as the Bank Rate – affects the industry rates that lenders charge for different types of credit, including car finance.

It’s reviewed eight times a year to reflect the UK economy. As of February 2025, the Bank of England interest rate is 4.5%.

Most lenders take this base rate, then add to it based on a variety of factors. It’s rare to find any type of loan, whether it’s a home mortgage, cash loan or auto finance agreement, that uses the base interest rate stated by the Bank of England.

Cash interest rate

This is the interest rate the lender chooses to use on the principal loan amount. For example, if you borrow £10,000 at an interest rate of 6%, you’ll be paying an additional £600 in the first year. It describes the cost of borrowing the money itself and doesn’t include any fees or charges added by the lender. Using a car finance calculator is a quick and easy way to crunch the numbers.

Annual percentage rate (APR)

APR offers a more comprehensive view of the total cost of your loan. As well as the cash interest rate it also includes extra fees and charges. For example, if you’re offered a car loan with a cash interest rate of 7%, but the APR is 12%, you’ll be paying 5% in fees.

APR is designed to provide transparency to borrowers and make it as easy as possible to calculate the total cost of your loan. Comparing APRs offered by different lenders is one of the best ways to secure a good deal on car finance.

What is a good APR rate for a car?

APR varies significantly between lenders. That said, it must be disclosed prior to signing any paperwork, so you can shop around and compare these rates when you’re looking for car finance.

Remember that there’s a difference between representative APR and exact APR.

In the UK, borrowers with excellent credit scores should aim for an APR of 10.9%. This is considered a good average car loan interest rate, allowing you to enjoy the benefits of auto finance without absorbing too many extra fees or charges.

That said, this rate will be determined by your individual circumstances, especially your credit score. The lower your credit score, the higher your APR is likely to be. There are other ways to reduce the APR on a car loan too, including applying with a guarantor and choosing a shorter repayment term.

If your credit score is less than ideal, don’t forget that My Car Credit helps with poor credit car finance.

Fixed vs variable interest rates: What’s the difference?

A fixed interest rate remains constant for the entire term of a loan, meaning your monthly payments stay the same. Most auto loans in the UK come with a fixed APR.

A variable interest rate means your monthly interest payments can change, so they’re less predictable.

Choose an auto loan with a fixed interest rate if you want to know how much you’ll pay each month and don’t want to be affected by fluctuating interest rates. Be aware that fixed rates tend to be a bit higher than variable interest rates.

A variable interest rate makes it easier to switch deals or providers early compared to a fixed interest rate. However, your payments will be less predictable, making it harder to budget.

Is a low APR always the best deal?

Low APR means you’ll pay lower average percentage rates compared to the rates on standard auto loans. It’s ideal for buyers with higher credit scores.

However, always do your diligence and read the fine print before jumping for low APR auto finance. Sometimes these offers can come with hidden fees like a minimum deposit requirement, or even vehicle usage restrictions.

You should also understand your total loan cost and ensure your lender is totally trustworthy before agreeing to a low APR deal.

If you have questions about whether a low APR deal is right for you, you can always contact our friendly team of Car Credit Specialists with your questions and concerns.

Get a great car loan deal with My Car Credit

Why settle for an average car loan interest rate when you could unlock an even better deal?

At My Car Credit, we’re committed to helping Brits secure best-in-class APR, with a representative rate of 10.9% – though rates will vary depending on your unique circumstances.

Unsure what kind of APR you might benefit from? Fill out our online form to get a no-obligation quote in minutes and discover the kind of rates and terms you can secure with a car loan from My Car Credit.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Understanding How Far Back Lenders Look into Your Credit History

Tips for Car Finance Recovery After a CCJ

How to Strengthen Your Eligibility for Car Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

apr calculator car finance calculator car financing car loan credit rating credit score interest rate

What is a Good APR for Car Finance in the UK?

Whether you’re in the market for a budget-friendly Kia Sportage or an all-electric Tesla Model Y, Annual Percentage Rate (APR) is one of the most important metrics to consider when buying a car in the UK. So, what’s a good APR for car finance and why does it matter for British motorists?

It doesn’t matter what kind of car you’re looking to purchase on finance – brand new or used, the annual percentage rate (APR) of a car is one of the most important things to consider.

The APR on car finance represents the total cost of borrowing per year. That makes it a useful metric to compare different car finance agreements for affordability.

Still confused? My Car Credit likes to make things as simple as possible when it comes to car finance. Consider this your guide to all things APR – we’ll help you understand what makes a good APR for car finance in the UK and how to achieve it.

What does APR mean in car finance?

The annual percentage rate (APR) is the total cost of borrowing for car finance per year. It’s inclusive of interest and lender fees, and is expressed as an annual percentage. The lower the APR, the less you’ll pay over the lifetime of a car finance agreement.

APR differs from the interest rate of car finance. The interest rate on a car finance agreement will be included in the APR as well as other lender fees and charges. That’s why the APR reflects the total cost of borrowing.

APR is one of the best ways of comparing car finance deals. If you’re looking for the most affordable agreements for your circumstances, you can use the advertised APRs of different lenders as a metric to compare different deals on a like-for-like basis. The higher the rate, the more you’ll pay back over the term of the agreement.

How APR works and an example

Lenders calculate APR by taking the total loan amount, adding any additional fees (such as processing charges), calculating the total interest payable over the loan term and dividing that total sum by the loan amount. The result will be expressed as a percentage, which represents the APR.

Remember, the lower the APR, the lower the overall loan cost. Alternatively, higher APRs mean you’ll pay more over the loan term.

Here’s an example of APR.

If you’re looking for a £10,000 loan over 5 years with a 6% APR, you can expect to pay approximately:

Monthly repayments: £193.33

Total repayment: £11,599.68

Total cost of borrowing: £1,599.68

Alternatively, if you’re borrowing the same amount over the same time with a 12% APR, you can expect to pay approximately:

Monthly repayments: £222.44

Total repayment: £13,346.67

Total cost of borrowing: £3,346.67

Remember, these figures are approximate. However, they’re a clear indication of how a lower APR can significantly reduce your overall payments.

Differences between representative APR and personal APR

A representative APR is the rate advertised by lenders that’s applicable to at least 51% of successful applicants.

In essence, it means that nearly half of customers will be given a higher rate than the representative APR.

An exact or personal APR is the rate tailored to an individual’s financial circumstances. These include credit score, loan term and the lender’s own criteria. The healthier your credit score, the lower your personal APR.

What is considered a good APR for car finance in the UK?

APR varies between lenders, but a good APR for car finance in the UK is around 10.9% for a borrower with an excellent credit score.

My Car Credit offers rates from 9.9% APR and a representative rate of 10.9%. You can establish what kind of rate you might benefit from by using our car finance calculator.

Factors that influence an APR include a lender’s personal credit score, loan terms, loan amounts, type of finance, and lenders themselves.

A ‘good’ APR will therefore depend on your personal circumstances.

What’s an average APR for a first-time car buyer?

First-time car buyers often have limited credit history, which can mean they face higher APRs.

Generally, APR rates for first-time buyers range based on varying credit scores from 9% to 20%.

You can check our tips below to learn how to maximise your chances of securing a good APR.

How new and used cars affect APR

New cars often qualify for lower APRs. This is because of higher residual values, reduced lender risk and occasional manufacturer incentives.

Alternatively, used cars typically come with slightly higher APRs. This higher rate reflects lender concerns over depreciation and higher risk.

Factors that influence APR for car finance

Credit score

Your personal credit score can have a significant impact on the APR you’re offered, as lenders use it to assess your credibility as a borrower. Higher credit scores benefit from lower APR, and vice versa.

Loan amount

Generally, larger loans come with lower APRs – but exceptions do apply depending on the lender.

Loan term

Shorter loans generally have lower APRs. Longer terms increase risk for lenders and therefore have higher APRs.

Deposit amount

A larger deposit can reduce your APR – so consider a large down payment.

Lender practices

Different lenders assess and offer different rates, so it’s worth shopping around before committing to a deal.

How to get a good APR for car finance

The APR of car finance must be disclosed prior to the signing of any paperwork.

As such, comparing different lenders’ APRs is a good way of securing the best possible deal for your circumstances.

There are also steps you can take to increase your likelihood of securing a competitive APR:

Check your credit score

The higher your credit score, the more likely you are to benefit from a lower APR. There are plenty of ways to improve your credit score, including registering to vote, paying your bills on time and avoiding too many simultaneous hard credit checks.

Compare lenders

Different lenders offer different rates, and you may even be able to negotiate to lower the APR.

With a broker like My Car Credit on your side, you can benefit from the expertise and knowledge of our team to find the best APR for your circumstances. Our large panel of lenders means we may be able to reduce APR compared to other car finance companies. Use our car finance calculator to establish the kind of APR you could benefit from.

Adjust loan terms

Shorter repayment terms will have lower APRs (although you will end up paying more on your monthly repayments). You can help to reduce these repayments with a higher initial deposit.

Choose the right agreement for you

The kind of car finance you choose can impact your APR. For example, PCP finance generally has lower APRs than HP finance.

Unlocking competitive APRs with My Car Credit

At My Car Credit, we are committed to helping customers find the best rates for their personal circumstances.

As part of the UK’s largest motor finance broker, we’ve established relationships with a wide panel of trusted lenders nationwide. This improves your chances of being accepted for car finance at an APR rate you’re happy with. We may even be able to secure you a lower APR than you’ve been quoted elsewhere.

We can also help drivers with poor credit scores to secure car finance.

Use our form and apply now to get a no-obligation quote in minutes. Alternatively, get in contact with our friendly team to benefit from their professional advice.

FAQs about APR and car finance

Does a low APR guarantee the cheapest deal?

The lower the APR, the less you’ll pay in interest and other charges. Some car finance deals are advertised as 0% APR. You should investigate whether these rates are best for you, as you’ll face higher monthly repayments, and they can be difficult to secure.

What APR can I expect with bad credit?

Individuals with higher credit scores will benefit from better APRs. However, it’s more than possible to secure a rate that works for you even if your credit profile is less than healthy. My Car Credit offers poor credit car finance for individuals of all circumstances.

Can I negotiate a lower APR on car finance?

It’s possible to negotiate a lower APR on car finance, but this will depend on the lender and their criteria. Having a team like My Car Credit on your side can help you find the right deal for your circumstances and may be able to help you find lower overall rates.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Understanding How Far Back Lenders Look into Your Credit History

Tips for Car Finance Recovery After a CCJ

How to Strengthen Your Eligibility for Car Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

apr apr calculator car finance calculator car financing credit rating credit score Jan24

Car Loan APR Explained

Annual Percentage Rate (APR) is one of the most important factors to consider when calculating the total cost of your car loan. Whether you’re shopping for a peppy Volkswagen Golf, an eco-friendly Mini Electric or a luxurious Audi A1, understanding the intricacies of car loan APR is critical when it comes to making smart and informed financial decisions.

In this comprehensive guide, we’ll take a deep dive into APR, explain how it affects your car loan repayments, and provide handy tips on how to unlock the best deals.

Understanding car loan APR

APR stands for Annual Percentage Rate and reflects the total borrowing costs associated with the loan. It includes the interest rate you’ll pay on cash borrowed, as well as additional fees and charges imposed by the lender. The goal is to provide borrowers with a clear idea of the total cost of the loan, including fees. This transparency makes car loan APR one of the most important metrics to consider when crunching your numbers and calculating how much to borrow.

Is APR the same as interest rate?

While car loan APR does factor in interest charged on the cash amount borrowed, it also includes other fees and charges associated with the loan. This makes it a different and more comprehensive metric than a traditional cash interest rate.

Why is APR important?

Car loan APR is one of the best ways to compare loan offers quickly, easily and accurately from different lenders. As mentioned above, APR not only factors in the cash interest rate but includes additional fees and charges. It offers borrowers a glance at the total cost of the loan, expressed using an easy-to-interpret percentage rate. A low APR means you’ll pay less in interest and additional fees over the lifetime of the loan. A high APR means you’ll pay more.

What is a typical APR rate?

In the UK, a typical car loan APR rate offered by a reputable lender should sit at around 10.9% for an applicant with excellent credit. It’s important to understand that most reputable brokers and lenders use representative APR as an example. The actual percentage will vary depending on the applicant. We’ll cover representative APR in more detail below.

Fixed vs variable APR

Most auto loans in the UK come with fixed APR. This means the APR remains constant for the lifetime of the loan and monthly payments stay the same. For borrowers, this provides stability and makes it easy to budget and plan ahead. Car loans with variable APR are less common and can be difficult to manage.

Factors that can influence car loan APR

APR can vary significantly depending on the applicant. Here are a few factors that can influence what APR you’re eligible for:

Personal credit score

Your personal credit score can have a big impact on what car loan APR you are offered. Lenders use your score to assess your credibility as a borrower and calculate risk. Borrowers with high credit scores are generally rewarded with lower APR, and vice versa.

Preferred loan term

The total length of your car loan can affect your APR. Lenders typically offer lower APR for shorter loan terms. Longer terms can result in higher overall APR, though monthly payments are lower which appeals to many borrowers.

Loan amount

The total amount borrowed is another factor that can influence APR. To lower your car loan APR, consider putting together as much cash as possible for your down payment.

What is representative APR?

When researching car loans, you’ll see the term representative APR used by brokers and lenders. This is the rate that at least 51% of customers will receive. Of course, some customers will enjoy lower rates while others will receive higher rates.

Representative APR takes this fluctuation into account and offers borrowers a general idea of what to expect. Ultimately, it’s a transparent way to compare rates offered by different brokers or lenders. The bottom line? Use representative APR as a guide, not a guarantee.

How do I find out the exact APR of a car loan?

You’ll need to continue with your application to get an exact car loan APR quote. Also called a ‘real’ or ‘personal’ rate, the figure is tailored to match your unique credit profile, financial history and personal circumstances.

Ideally, brokers should be able to calculate an exact car loan APR using a soft search. This type of search doesn’t leave a permanent mark on your financial history and won’t affect your credit score or future applications.

Tips for lowering your APR

APR can have a big impact on the total cost of your car loan. So, it makes sense to be proactive when it comes to lowering your APR. Here are some strategies to help you secure the best rates:

Boost your credit score

From paying off outstanding debts to registering on the electoral role, there are a few quick and easy ways to boost your credit score.

Increase your down payment

A larger down payment can reduce the amount you need to borrow, which can help bring down your car loan APR.

Choose a shorter repayment term

While it can be tempting to stretch out your loan for as long as possible to bring down your monthly payments, opting for a shorter repayment term typically reduces APR. In the long run, you’ll pay less.

Score the best APR with My Car Credit

One of the best ways to secure a good car loan APR is to work with an experienced broker. At My Car Credit, we specialise in helping Brits secure finance on all kinds of cars, from zippy Ford Fiestas to adventure-ready Range Rovers. Whatever your budget, financial history or credit score, we can help you unlock the best possible APR from trusted lenders.

Use our handy car finance calculator to get the ball rolling, or get in touch with a friendly member of the My Car Credit team today to find out more.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Understanding How Far Back Lenders Look into Your Credit History

Tips for Car Finance Recovery After a CCJ

How to Strengthen Your Eligibility for Car Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

apr apr calculator car finance calculator car financing credit rating credit score Jan24

8 Benefits of an Auto Loan Payment Calculator

From commuting to work to visiting friends and family on weekends, Brits across the country rely on cars to get them from A to B. Up there with buying a house, cars are a major purchase, so it makes sense to arm yourself with as much knowledge as possible when committing to a sale. This is where an auto loan payment calculator steps up. Fast, simple and easy to use, these handy tools make it easy to crunch your numbers when shopping for a new car.

In this article, we’ll take a closer look at the benefits of using an auto loan payment calculator and why every new car search should start with this simple step.

The popularity of auto finance in the UK

Before we get started, let’s take a moment to spotlight the popularity of auto finance in the UK. In 2022, Finance & Leasing Association (FLA) members provided more than £50 billion to fund the purchase of cars in the UK. Why is auto finance such a popular choice for Brits? Here are some of the benefits:

Affordability

The option to make manageable monthly installments instead of a large lump sum is one of the key benefits of auto finance. Many Brits don’t have the funds to purchase a new car outright but can easily commit to monthly payments. This model allows Brits to get behind the wheel of cars that may otherwise be out of their budget.

Flexibility

From Personal Contract Purchase (PCP) to Hire Purchase (HP), there’s plenty of flexibility when it comes to auto finance. There’s no need to adopt a one-size-fits-all approach. Instead, borrowers are free to choose contract and payment terms that match their unique needs.

Regular vehicle upgrades

Unlike owning a car outright, auto finance allows motorists to upgrade to a newer vehicle more often, typically every two to three years. This makes auto finance an appealing option for motorists who love to have access to the latest makes, models and cutting-edge technology.

Zero maintenance

Most auto finance plans include comprehensive maintenance packages, which eliminates some of the biggest costs associated with car ownership. This peace of mind is a huge draw for many motorists.

Why use an auto loan payment calculator?

Crunching your numbers doesn’t have to be a headache. Here are the benefits of an online calculator:

1. Finetune your budget

Cars are one of the biggest purchases made by Brits, so it makes sense to finetune your budget before you commit. Auto loan payment calculators make it easy to punch in your numbers and generate instant data. Simply input information like the loan amount, preferred repayment term and personal credit rating to generate an instant quote estimate.

When you’re ready to proceed with your application, more information like your income, financial history, job status and personal circumstances is used to generate a more accurate quote.

2. Compare repayment terms

The total cost of your car loan can vary significantly depending on your chosen repayment terms. Auto loan calculators make it easy to compare different repayment terms and choose a timeframe that fits your budget. For example, the monthly cost of a £7,500 loan with a repayment term of three years is around £243. In comparison, the monthly cost with a repayment term of five years is around £160.

3. No impact on your credit score*

Using an auto loan payment calculator allows you to learn more about your budget and potential borrowing power, without affecting your credit score. Instead of hard searches that leave a footprint on your credit history and can raise red flags for potential lenders, an auto loan calculator gives you the freedom to explore your options with zero repercussions.

4. Transparent cost analysis

Auto loan payment calculators break down the cost of financing and make it simple and easy to understand. You’ll get an instant idea of the principal amount borrowed vs how much you will pay in interest over the lifetime of the loan. This amount is determined based on the average Annual Percentage Rate (APR) secured by borrowers. This transparency helps British borrowers make smart and well-informed decisions when it comes to auto loans. It’s a philosophy that all brokers authorised and regulated by the Financial Conduct Authority (FCA) should adhere to.

5. Avoiding overcommitting

Calculating monthly payments in advance helps borrowers take out realistic and manageable loans. This proactive approach to auto finance helps prevent overcommitting and avoid financial stress down the line.

6. Borrow from trusted lenders

The best auto loan payment calculators are designed to connect borrowers with trusted lenders. For example, at My Car Credit we work with Evolution Funding Limited to match your application with a large panel of auto finance lenders.

7. Find the best match for your needs

Auto loan payment calculators don’t just match you with lenders. The best tools use specialised technology and algorithms to select the best products for your needs. This not only improves your chances of acceptance but unlocks the best possible rates.

8. Free to use and obligation free

Auto loan payment calculators are completely free to use. There are zero obligations to commit to a loan or even finalise an application. This makes car finance payment calculators a great option for both serious buyers as well as motorists who are in the very early stages of researching loans.

Crunch your numbers today with My Car Credit

Whether you’re purchasing your first car or looking to upgrade an existing vehicle, there are no downsides to using an auto loan payment calculator. Fast, easy and transparent, the auto loan payment calculator from My Car Credit is designed to streamline the finance process. It not only helps you budget, but also gives you a clear and accurate look at the total cost of your loan. It’s this transparency that makes auto loan payment calculators such a valuable tool for motorists looking to make informed and financially responsible decisions.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Understanding How Far Back Lenders Look into Your Credit History

Tips for Car Finance Recovery After a CCJ

How to Strengthen Your Eligibility for Car Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

apr calculator car finance calculator car financing credit rating credit score Jan24 repayments

Car Finance with Fair Credit: What You Need to Know

While some Brits enjoy a glowing credit score, others aren’t so fortunate. Credit scores can slip for all kinds of reasons, from missed payments on credit cards to lack of financial history. Wondering if you’re eligible for car finance with fair credit? This article is for you. Read on to find out more about car finance with fair credit and what you need to know before finalising an application.

What is considered “fair” credit?

The first step is to understand exactly what “fair” credit means. UK lenders use three major organisations to source credit scores – Experian, Equifax and TransUnion. Each uses a different system to determine credit scores. Here’s a quick overview of what’s considered “fair” by each:

Experian – 721 – 880

Equifax – 380 – 419

TransUnion – 566 – 603

Fair is preceded by rankings of “good” and “excellent”. At the lower end of the scale is “poor”, which is anything below the lowest numbers listed above.

Why credit scores matter

Credit scores are one of the most useful ways for lenders to evaluate the financial history of potential borrowers and assess overall risk. Experian, Equifax and TransUnion use information like your direct debit history to assess your borrowing patterns and assign an individual credit score. They’ll also look at hiccups like missed payments and multiple credit card applications.

The higher your score, the less risky you’re considered. Applicants with strong credit scores enjoy a suite of benefits, including higher credit limits, lower interest rates and an increased chance of success. However, a lacklustre credit score doesn’t necessarily rule out car finance. You still have options, which is why it’s important to connect with experts who specialise in securing car finance with fair credit.

Can I get car finance with fair credit?

Fair credit doesn’t mean you have to rule out car finance. With the right broker and a strong application, you can still secure auto finance with a less-than-perfect credit score.

What to expect when applying for car finance with fair credit

Applying for car finance with fair credit isn’t always as straightforward as applying with an excellent score but it is possible. Here’s a quick overview of what to expect and consider throughout the process:

Stay realistic

Lenders are far more likely to approve your application if your expectations are realistic. For example, an affordable model like a Hyundai i10 is a much better choice than a luxury car like Land Rover. Similarly, considering buying used instead of new can be a great way to save money and win over lenders.

Be proactive about boosting your score

You can’t go back in time and make that missed credit card payment. But you can boost your credit score by doing things like joining the electoral role.

Apply for car finance with fair credit today

Wondering if you’re eligible for car finance fair credit? Give My Car Credit a call today to discuss how we can help you secure car finance with fair credit, or a lower score.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Understanding How Far Back Lenders Look into Your Credit History

Tips for Car Finance Recovery After a CCJ

How to Strengthen Your Eligibility for Car Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car financing credit rating credit score fair credit Jan24 repayments

Is Car Finance Good for my Credit Rating?

As with any financial loan, if your credit rating is good, lenders will consider you as a more eligible candidate for a favourable agreement. But is car finance good for your credit rating? We break it down below.

Does car finance impact your credit rating?

If you apply for car finance with My Car Credit, we’ll perform a car finance eligibility checker before advancing your application. This is a soft search of your credit score, meaning that it won’t impact your overall rating. It allows us to see your financial history without leaving any mark on your credit file.

If we decide that you’re a viable candidate for car finance, we’ll advance your application. At this point, our credit check will be hard, meaning that lenders will have access to your details and your rating will take a hit.

Is car finance good for your credit rating?

There are two main ways that car finance can improve your credit rating.

It’s also worth being aware that when you first apply for car finance and undergo a hard credit check, your overall score may dip because you’ve taken on a new loan.

Making timely repayments

The most important factor to a credit score is payment history. As such, if you make all of your monthly repayments on time and in full, this will build up your credit rating over time.

Diversifying your credit mix

A credit mix refers to the type of loans in your credit file. Having a diversified credit mix can improve your credit score, because it indicates that you can handle different types of loan.

Car finance counts as instalment credit, whereas a credit card is revolving credit. Adding car finance to your credit file diversifies it, which lenders look on favourably.

Can car finance damage your credit rating?

Car finance can negatively impact your credit rating if you don’t make your monthly repayment schedule. If you don’t make your instalment in full, or if you miss it entirely, this can negatively impact your credit score.

In these instances, you’ll be given a short period in which you can make the loan up. If you fail to make this payment, your ‘delinquent’ loan will be reported by the lender to major credit bureaus. This will negatively impact your credit rating.

If you miss several payments, lenders will declare your loan in default. The account will be passed over to debt collectors and your car may be repossessed. All of these negatively impact your credit score.

Find out more about car finance and credit ratings

To find out more about the kind of car finance we offer, as well as how it could impact your credit rating, contact My Car Credit on enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Understanding How Far Back Lenders Look into Your Credit History

Tips for Car Finance Recovery After a CCJ

How to Strengthen Your Eligibility for Car Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car financing credit rating credit score Jan24 repayments

How to Choose the Right Used Car for Your Budget

Your Credit History – What Can Lenders See?

Proof of Your Income

Gain the Lender’s Confidence With a Down Payment

A Car Finance Affordability Assessment

Knowledge Is Power: Know What Lenders Look For

Secure Poor Credit Car Finance With My Car Credit

Teamwork Makes the Dream Work

Rates from 9.9% APR. Representative APR 10.9%

Related articles

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Require more help?

Your credit score and credit report are important. The higher your overall score and better your credit report, the better your chances are for finance acceptance. That’s true no matter what type of loan you’re applying for, whether it’s a pay monthly mobile phone or a mortgage.

How long does it take to improve your credit score?

How to improve your credit score

Prove your residency

Pay your bills on time

Pay off your debts

Keep credit utilisation low

Minimise new credit applications

Dispute errors on your credit report

Consider applying for a credit builder card

Avoid bankruptcy and CCJs

How long does negative information remain on a credit report?

Secure speedy car finance with My Car Credit

Rates from 9.9% APR. Representative APR 10.9%

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Car finance is a way of making the process of purchasing a new or nearly-new vehicle easier, allowing you to spread the cost of your car over a series of affordable repayments.

What checks are done for car finance?

Driving licence

Proof of identity

Address and history of address

Employment history and proof of income

Credit report

What is your finance company checking for?

Checking your identity

Assessing your reliablity

Looking into affordability

Checks completed for over a large panel of lenders

Rates from 9.9% APR. Representative APR 10.9%

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How the classic car financing calculator works

Loan amount

Repayment terms

Personal credit rating score

Crunch your numbers with My Car Credit

Why use the classic car financing calculator?

Quick and easy

Customised solutions

Transparent pricing

The next step: a soft search

Rates from 9.9% APR. Representative APR 10.9%

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Flexible and affordable, auto finance is one of the most popular ways to purchase a car in the UK. A good understanding of the average car loan interest rate is one of the best ways to make smart and informed decisions when choosing a lender.

Britain’s relationship with car loans

What is the average car loan interest rate in the UK?

Bank of England interest rate

Cash interest rate