It's possible to get a car loan even if you’ve got poor credit or struggled with borrowing in the past. At Asda Money, we work with a carefully selected number of trusted lenders that make up our lender panel. With just one eligibility check, you’ll be able to see all the available loans that match your requirements. Our lenders offer loans from £500 up to £25,000 with a range of loan terms available.

If you have a bad credit score, you may still have a range of car finance options available to you, including:

• Car loan: a personal loan to help you buy a car outright. By taking out a car loan, you’ll own your car and won’t have to make any ‘balloon payments’ at the end of a finance agreement. It may cost you less in the long run too dependant on the interest rate available, but you will need to keep up with your monthly repayments.
• Hire Purchase (HP): once you’ve paid your deposit, you’ll make monthly payments towards your car. You’ll own it outright once you’ve made the final payment and paid all the fees.
• Personal Contract Purchase (PCP): You pay a deposit and then borrow towards the remaining value of the car. Once the contract is up, you make a large final ‘balloon payment’ to keep the car. Or you can return the car and take out a contract on a new one.

If you have a bad credit history, a car loan or car finance is likely to be more expensive. But you can keep the costs down by:

• Buying or leasing a cheaper car, or for a longer term investment, one which holds its value.
• Agreeing a longer loan term to reduce your monthly payments. This does mean you’ll pay more interest.
• Boosting your credit score. If you can improve your credit score, you’ll likely have more options for car loans or finance with better interest rates.

A credit score lets lenders know how reliable you are at borrowing money and paying it back. It’s calculated using a range of factors including your repayment history, how many accounts you have and your total level of debt. If you’ve missed payments in the past and have had problems borrowing money, it will likely have a negative impact on your credit score.

You won’t be able to get a car loan without passing a credit check. Lenders want you to pass this check so they can be confident you’re able to afford the monthly repayments.

When you complete an eligibility check for a car loan with Asda Money, a soft search is carried out which doesn’t negatively affect your credit score. If you decide to apply for a loan from a particular lender, that lender may then complete a hard credit search which shows up on your credit file.

You can do a number of things to help improve your credit score, such as:

Pay your bills on time: paying your monthly credit card bills in full and on time every month demonstrates responsible borrowing.

Check your credit report for errors: any incorrect information can negatively affect your credit score. Check for mistakes and ask for them to be fixed.

Register for the electoral roll: this is such a simple thing, but it helps lenders confirm your address and can boost your score.

Close unused accounts: by leaving unused accounts open you can negatively affect your credit score. Simply closing them can give it a boost.

Don’t make too many applications at the same time: every credit application will show up on your credit history. Lenders can be concerned with too many applications in a short space of time.

Keep below 50% of your credit card limits: by keeping within this limit you’ll show lenders you can borrow responsibly.

If you have poor credit, you may consider one of the following instead of applying for a car loan:

Credit card: if you only need to make a small payment, a credit card may be a better option. Taking out a credit card and paying it back on time will also help you boost your credit score.

Borrowing from family or friends: a close friend or a family member may be willing to lend you the money you need for your car. You won’t need a credit check and depending on the agreement you have, you might not pay interest. Consider how it can affect your relationship, and make sure you draw up a loan agreement so everyone is on the same page about the amount being lent and the repayment schedule.