Is Car Finance With Poor Credit More Expensive?

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Yes, car finance with poor credit can be more expensive than car finance with good credit.

Lenders consider poor credit to be a higher risk, and therefore they may charge higher interest rates, fees, or require a larger down payment to offset the risk.

Higher interest rates mean that you’ll pay more in interest over the life of the loan, and you’ll have higher monthly payments. For example, if you have a £15,000 car loan with a 5-year term and a 10% interest rate, you’ll end up paying over £3,500 in interest. But if you have the same loan with a 15% interest rate, you’ll pay over £6,500 in interest, which is almost double the amount.

Additionally, some lenders may require a larger down payment to offset the risk of lending to someone with poor credit. This means you’ll need to put down more money upfront, which can be challenging if you’re already struggling financially.

It’s important to shop around and compare offers from multiple lenders when looking for car finance with poor credit. Some lenders may specialize in working with people who have poor credit and may offer more favorable terms. It’s also important to consider the overall cost of the loan, including the interest rate, fees, and monthly payments, and to make sure that you can afford the loan before taking it out.