Can I still get car finance with a CCJ?
2 July 2023
By Joy Pearson
If you've found yourself with a County Court Judgement (CCJ) on your credit report, it's understandable that you may be feeling disheartened and worried about your ability to get car finance. But fear not! It's important to know that despite the impact of a CCJ can have on your credit score, there are still viable options available to you, even with a less-than-perfect credit score. In today's post we'll guide you through everything you need to know about CCJ car finance, from what it is and how it works, to what you should know before applying. Let's begin.
To start, it's essential to clarify the definition of a CCJ is... A CCJ is a court order issued in England, Wales, and Northern Ireland that requires you to pay a debt or debts that you owe. To acknowledge. the court judgment, you would have a CCJ put on your credit profile for a period of 6 years and once paid, this is will noted as "satisfied" or "unsatisfied" if unpaid. Failure to repay the debt within a specific time frame results in the CCJ being recorded on the person's credit report for six years, adversely impacting their creditworthiness and future credit approval prospects.
CCJ car finance operates similarly to other types of car finance. Once you submit your application, the lender will conduct a thorough assessment of your financial situation, taking into account factors such as your credit history, income, and expenditure. The lender's objective is to determine whether you meet their eligibility criteria for car finance. If you have a CCJ on your credit report, the lender will take it into account during the application review process. This will involve examining the CCJ's details, including the amount owed and the length of time it has been on your report. While having a CCJ on your credit report may limit your options, it doesn't necessarily mean you won't qualify for car finance. Ultimately, the lender's decision will depend on a combination of factors, such as your credit score, affordability, and the type of car finance you're seeking. If you're approved for CCJ car finance, it's essential to make your repayments on time to avoid further damaging your credit score and risking repossession of your vehicle.
If you're approved, it's also worth noting that the interest rate offered to you will typically be higher than that of borrowers with an excellent credit score. This is because lenders perceive borrowers with CCJ's as higher risk due to their past financial difficulties. Nevertheless, making regular and timely payments can go a long way in gradually improving your credit score, thereby increasing your chances of securing better interest rates and more favourable terms for future applications. It's important to remember that missing payments or defaulting on your CCJ car finance agreement can severely damage your credit score and result in repossession of the vehicle. Thus, it's crucial to ensure that you can comfortably afford the monthly repayments before agreeing to any CCJ car finance agreement.
Now, before applying for car finance with a CCJ, it's important to conduct thorough research and carefully review the terms and conditions of the loan you're looking for. It's imperative to understand the interest rate you'll be charged, as well as any fees associated with the loan. Moreover, you must ensure that you can comfortably afford the monthly payments and that you're comfortable with the length of the loan term. Additionally, it's highly advisable to shop around and compare offers from multiple lenders, this will enable you to find the best possible deal on your finance, and ensure that you're getting the most competitive interest rate available.
By taking the time to research and compare offers, you can feel more confident in your decision and potentially save a significant amount of money over the loan term. It's also important to note that some lenders may offer the option to pay off the loan early, which can save you even more money in interest charges.
Having a CCJ on your credit report can understandably make it more difficult to obtain car finance. However, by considering CCJ car finance, you can still get the car you need while working on improving your credit score. By understanding the terms and conditions of the loan, and making your payments on time, you can gradually improve your financial standing and potentially qualify for better interest rates in the future.