Were you looking to learn what is the minimum credit score to buy a car in the UK as you’re in the market for a new vehicle?
This article answers questions like ‘What credit score is needed to buy a car?’ and ‘How can I improve my creditworthiness to get a better loan?’
Let’s crunch the numbers!
Naturally, the higher your credit score to finance a car, the more likely you are to get a loan. However, you may still be able to obtain some sort of financing even with lacklustre scores.
Unfortunately, we cannot provide you with an exact minimum credit score to buy a car in the UK as all three credit rating agencies follow different scoring models. However, if your score falls in their ‘good’ category, you’ll have a decent chance of getting a favourable loan.
While the ‘Good’ credit score to buy a car ranges between 531–670 and 604-627 for Equifax and TransUnion, respectively, Experian’s is 881–960. Moreover, only TransUnion utilises a maximum range of 710, while those of the other agencies extend up to 1,000.
Note: Before applying for a loan, you should also recheck your current score, learn how it is calculated, and review the current credit score ranges in the UK.
If you are applying for car finance with a fair credit score in the UK, you may be able to get your loan, but the conditions may be less than favourable with greater fees and interest rates.
Some lenders may even reject your application outright, and those few that provide such risky loans approve limited sums and make it harder for you to pay out your debts.
Did you know? Nearly 7% of UK households had a debt that they couldn’t pay!
Therefore, before applying for a credit for a car, consult with a credit broker who will help you understand the minimum credit score to buy a car in the UK, how to raise it, and connect you with the right lending institutions that will offer you a good deal under your circumstances.
While your credit score is the main factor to be considered when you apply for a credit for a car in the UK, financial institutions will also evaluate criteria such as:
Candidates with a non-existent credit score needed for car finance, such as young drivers, may be disregarded as banks require additional data to assess their creditworthiness. To finance your purchase in such cases, look into other revenue sources, such as online sales.
If you are looking into lending or buying a car with a credit card or a loan in the UK, you may be offered one of several financing options, as explored below:
You can get a car with a hire purchase (HP) plan by paying an initial deposit and making monthly payments (including interest) until you repay the total car value. At that point, you become the vehicle’s legal owner.
When you ask for a personal contract purchase (PCP), you will have to pay an upfront sum and provide monthly deposits after that. However, instead of repaying the full car cost, you are only covering the difference between the ‘brand new’ and the ‘used car’ price.
Note: Once your contract ends, you can either pay the remainder to get full ownership of the vehicle or return it to the dealership.
Similar to PCP, the personal contract hire (PCH) is a long-term rental scheme that requires you to pay an initial deposit along with monthly payments for the use of the car. However, you cannot purchase the vehicle once your rental term ends.
If you opt for a personal loan with any financial institution, you can purchase the automobile outright with a single lump sum, but you will have to repay the borrowed amount to your lending institutions in regular instalments (with interest) over a specific time period.
You may be interested in: Personal Loan Statistics in the UK
So you’ve opted for buying a car with a loan, but your credit score leaves much to be desired? Fret not, as you can always improve your chances by following a few tips and tricks:
Note: You might have to wait a while until you improve your credit score to finance a car purchase, so spend as little as possible until your reach your goals.
Will I get accepted for car finance? What credit score is needed for car finance in the UK? These are questions that a lot of people have, and the answers vary depending on whom you ask. Generally, though, you’ll need a credit score in the ‘Good’ band of any rating agency, and even if yours is lower than that, you can always improve it with the above tips and tricks.
While taking out any type of loan (including vehicle credit) harms your credit score in the short term, you will significantly improve your rating if you make your payments on time.
Yes, buying a car on a credit card is an acceptable payment form with many UK dealerships. However, before doing so, check your card’s interest rates to ensure you are not overpaying.
If you are wondering what credit score is needed to buy a car in the UK, note that the answer to that question may vary greatly depending on which agency estimated your creditworthiness and the requirements set forth by the car finance companies you approached. However, to get acceptable rates, you need to be in the ‘Good’ score range of any credit rating body.