New car finance for someone with bad credit and/or debt?
Discussion
I have a friend who is trying to get a new car. Current PCP (which was an excellent deal) runs out in a few months. I believe it was a 3 year deal.
Unfortunately owing to work related circumstances/job loss has accrued a number of debts. He's paying them back (including support from StepChange debt recovery charity) and as expected money is rather tight.
He doesn't have the £££ to pay off the balloon on the current car and has looked at trying to get a new finance deal on something else. He has been rejected (maybe not unexpectedly) given his current debt/credit history. Unfortunately I'm not privy to his budget but iirc he mentioned it was a v entry level Audi he was rejected on.
He needs to drive a fair distance once a week and needs a reliable car. He's too worried to buy an old second hand car owing to the risk of break down and lack of warranty etc and consequently feels much more 'safe/comfortable' buying new.
Are there any specific organisations/manufacturers that cater for individuals in such a situation? Or is this a case of 'sorry mate', it's shed motoring for you for the time being.
My advice was buyan old thirsty petrol BMW something old and Japanese but thought I'd open the question up to PH and see if anyone had any suggestions. TIA. 
Unfortunately owing to work related circumstances/job loss has accrued a number of debts. He's paying them back (including support from StepChange debt recovery charity) and as expected money is rather tight.
He doesn't have the £££ to pay off the balloon on the current car and has looked at trying to get a new finance deal on something else. He has been rejected (maybe not unexpectedly) given his current debt/credit history. Unfortunately I'm not privy to his budget but iirc he mentioned it was a v entry level Audi he was rejected on.
He needs to drive a fair distance once a week and needs a reliable car. He's too worried to buy an old second hand car owing to the risk of break down and lack of warranty etc and consequently feels much more 'safe/comfortable' buying new.
Are there any specific organisations/manufacturers that cater for individuals in such a situation? Or is this a case of 'sorry mate', it's shed motoring for you for the time being.
My advice was buy
Almost no chance, too much risk for the finance companies offering in house finance such as Audi/VWFS
Maybe find a broker online who will look into it and find someone to lend to him, but it will be high APR, and that will push the monthly cost up massively
Better off going used, and if he’s that worried, get a warrantee, but again interest rate will be high.
Doubt even the banks would lend to someone with a debt management plan.
Maybe use something like clear score to see if he can get a personal loan to pay off the balloon? Again higher APR but will still be less a month than a new car.
Maybe find a broker online who will look into it and find someone to lend to him, but it will be high APR, and that will push the monthly cost up massively
Better off going used, and if he’s that worried, get a warrantee, but again interest rate will be high.
Doubt even the banks would lend to someone with a debt management plan.
Maybe use something like clear score to see if he can get a personal loan to pay off the balloon? Again higher APR but will still be less a month than a new car.
I’ve seen plenty of dealers on Autotrader who offer deals for people with ‘bad credit’. Maybe try them?
Though there may be a difference between getting a poor credit score from missing a few CC payments and being on a repayment plan/IVA.
Given he’s met the payments on the current car, any chance the existing lender could be persuaded to let him continue to make the same payments and keep the car under a lease purchase?
Though there may be a difference between getting a poor credit score from missing a few CC payments and being on a repayment plan/IVA.
Given he’s met the payments on the current car, any chance the existing lender could be persuaded to let him continue to make the same payments and keep the car under a lease purchase?
Robertb said:
I’ve seen plenty of dealers on Autotrader who offer deals for people with ‘bad credit’. Maybe try them?
Though there may be a difference between getting a poor credit score from missing a few CC payments and being on a repayment plan/IVA.
Given he’s met the payments on the current car, any chance the existing lender could be persuaded to let him continue to make the same payments and keep the car under a lease purchase?
Will the current PCP supplier either extend the PCP or do a new PCP (12/18 months) on his current car, although if its a new PCP on his 3 year old car they may have to do a new credit check....Though there may be a difference between getting a poor credit score from missing a few CC payments and being on a repayment plan/IVA.
Given he’s met the payments on the current car, any chance the existing lender could be persuaded to let him continue to make the same payments and keep the car under a lease purchase?
Sounds like a 10/15 year old Honda / Toyota maybe the easier option for the next 12 months or so.
Thanks for the replies chaps. The big sticking point is that it needs to be new so it is reliable and covered by a warranty if any issues arise. Also needs to be suitable for dogs in the boot.
To me it just seems like another way to build up debt.
Quattr04. said:
Almost no chance, too much risk for the finance companies offering in house finance such as Audi/VWFS
Maybe find a broker online who will look into it and find someone to lend to him, but it will be high APR, and that will push the monthly cost up massively
Better off going used, and if he’s that worried, get a warrantee, but again interest rate will be high.
Doubt even the banks would lend to someone with a debt management plan.
Maybe use something like clear score to see if he can get a personal loan to pay off the balloon? Again higher APR but will still be less a month than a new car.
Unfortunately I don't know how much the balloon payment is, but I imagine it is going to be significant.Maybe find a broker online who will look into it and find someone to lend to him, but it will be high APR, and that will push the monthly cost up massively
Better off going used, and if he’s that worried, get a warrantee, but again interest rate will be high.
Doubt even the banks would lend to someone with a debt management plan.
Maybe use something like clear score to see if he can get a personal loan to pay off the balloon? Again higher APR but will still be less a month than a new car.
To me it just seems like another way to build up debt.
Auto810graphy said:
If VW have said no they are best re finance the balloon with someone like CarFinance247 or Zuto as they deal with sub prime.
So you can use another company to finance the new car without needing to use the VW finance?Robertb said:
I’ve seen plenty of dealers on Autotrader who offer deals for people with ‘bad credit’. Maybe try them?
Though there may be a difference between getting a poor credit score from missing a few CC payments and being on a repayment plan/IVA.
Given he’s met the payments on the current car, any chance the existing lender could be persuaded to let him continue to make the same payments and keep the car under a lease purchase?
Interesting suggestion, I'll run it by him.Though there may be a difference between getting a poor credit score from missing a few CC payments and being on a repayment plan/IVA.
Given he’s met the payments on the current car, any chance the existing lender could be persuaded to let him continue to make the same payments and keep the car under a lease purchase?
66HFM said:
Will the current PCP supplier either extend the PCP or do a new PCP (12/18 months) on his current car, although if its a new PCP on his 3 year old car they may have to do a new credit check....
Sounds like a 10/15 year old Honda / Toyota maybe the easier option for the next 12 months or so.
You might be right re the new PCP and credit check. Still worth an ask.Sounds like a 10/15 year old Honda / Toyota maybe the easier option for the next 12 months or so.
[quote=g3org3y]Thanks for the replies chaps. The big sticking point is that it needs to be new so it is reliable and covered by a warranty if any issues arise. Also needs to be suitable for dogs in the boot.
[quote=Quattr04.]
While I appreciate you trying to help out a mate, he’s living in fantasy land.
Yes, he could potentially get a new deal at punitive rates. Secondhand cars can also come with warranty and be reliable, as well as fit dogs in the boot.
I know it sounds snarky, but he needs to cut his cloth (or whatever the term is) - he’s just making more problems for himself.
In essence - it’s shed time.
[quote=Quattr04.]
While I appreciate you trying to help out a mate, he’s living in fantasy land.
Yes, he could potentially get a new deal at punitive rates. Secondhand cars can also come with warranty and be reliable, as well as fit dogs in the boot.
I know it sounds snarky, but he needs to cut his cloth (or whatever the term is) - he’s just making more problems for himself.
In essence - it’s shed time.
My partner is in a StepChange agreement with her debts. 3 years in with 1 to go and she will be back to 0 debt. It has been a battle, but being won.
Her car, a 2013 Citreon "could" do with being changed sometime in the future, she looked at these companies that advertise loans to people with CCJ, bad credit history etc.
The terms being offered for a small car circa £8-10k (25% deposit, plus PX on the Citreon, so £5k loan ish) were horrendously high, and were totally unaffordable.
I dread to think what they would have been for a new car. I doubt anything would have been offered due to the size of the loan
I think some also required a guarantor.
She has accepted that a new, to her, car is now a dream only.
Tell your friend that he needs to wake up and get a shed for a few years, not more expensive debt.
Her car, a 2013 Citreon "could" do with being changed sometime in the future, she looked at these companies that advertise loans to people with CCJ, bad credit history etc.
The terms being offered for a small car circa £8-10k (25% deposit, plus PX on the Citreon, so £5k loan ish) were horrendously high, and were totally unaffordable.
I dread to think what they would have been for a new car. I doubt anything would have been offered due to the size of the loan
I think some also required a guarantor.
She has accepted that a new, to her, car is now a dream only.
Tell your friend that he needs to wake up and get a shed for a few years, not more expensive debt.
ConnectionError said:
My partner is in a StepChange agreement with her debts. 3 years in with 1 to go and she will be back to 0 debt. It has been a battle, but being won.
Her car, a 2013 Citreon "could" do with being changed sometime in the future, she looked at these companies that advertise loans to people with CCJ, bad credit history etc.
The terms being offered for a small car circa £8-10k (25% deposit, plus PX on the Citreon, so £5k loan ish) were horrendously high, and were totally unaffordable.
I dread to think what they would have been for a new car. I doubt anything would have been offered due to the size of the loan
I think some also required a guarantor.
She has accepted that a new, to her, car is now a dream only.
Tell your friend that he needs to wake up and get a shed for a few years, not more expensive debt.
This. Her car, a 2013 Citreon "could" do with being changed sometime in the future, she looked at these companies that advertise loans to people with CCJ, bad credit history etc.
The terms being offered for a small car circa £8-10k (25% deposit, plus PX on the Citreon, so £5k loan ish) were horrendously high, and were totally unaffordable.
I dread to think what they would have been for a new car. I doubt anything would have been offered due to the size of the loan
I think some also required a guarantor.
She has accepted that a new, to her, car is now a dream only.
Tell your friend that he needs to wake up and get a shed for a few years, not more expensive debt.
Thirded (or fourthed?).
Your friend needs to cut himself free from the financial shackles of a PCP finance deal until he's back on steady ground. A Honda Civic is all the car 90% of the population will ever need. It's comfortable, reliable, economical and reasonably priced. Sure its not exactly sexy (unless you get a Type R) but it sure as hell is compared to the bus or digging yourself a huge financial hole because your pride wouldn't let you be seen in anything that didn't have a German badge and a plate issued in the last 12 months.
Your friend needs to cut himself free from the financial shackles of a PCP finance deal until he's back on steady ground. A Honda Civic is all the car 90% of the population will ever need. It's comfortable, reliable, economical and reasonably priced. Sure its not exactly sexy (unless you get a Type R) but it sure as hell is compared to the bus or digging yourself a huge financial hole because your pride wouldn't let you be seen in anything that didn't have a German badge and a plate issued in the last 12 months.
ChevronB19 said:
While I appreciate you trying to help out a mate, he’s living in fantasy land.
Yes, he could potentially get a new deal at punitive rates. Secondhand cars can also come with warranty and be reliable, as well as fit dogs in the boot.
I know it sounds snarky, but he needs to cut his cloth (or whatever the term is) - he’s just making more problems for himself.
In essence - it’s shed time.
Yep, I know. It's exactly what I advised. Yes, he could potentially get a new deal at punitive rates. Secondhand cars can also come with warranty and be reliable, as well as fit dogs in the boot.
I know it sounds snarky, but he needs to cut his cloth (or whatever the term is) - he’s just making more problems for himself.
In essence - it’s shed time.
ConnectionError said:
My partner is in a StepChange agreement with her debts. 3 years in with 1 to go and she will be back to 0 debt. It has been a battle, but being won.
Her car, a 2013 Citreon "could" do with being changed sometime in the future, she looked at these companies that advertise loans to people with CCJ, bad credit history etc.
The terms being offered for a small car circa £8-10k (25% deposit, plus PX on the Citreon, so £5k loan ish) were horrendously high, and were totally unaffordable.
I dread to think what they would have been for a new car. I doubt anything would have been offered due to the size of the loan
I think some also required a guarantor.
She has accepted that a new, to her, car is now a dream only.
Tell your friend that he needs to wake up and get a shed for a few years, not more expensive debt.
Thank you for adding your personal experience. Totally agree.Her car, a 2013 Citreon "could" do with being changed sometime in the future, she looked at these companies that advertise loans to people with CCJ, bad credit history etc.
The terms being offered for a small car circa £8-10k (25% deposit, plus PX on the Citreon, so £5k loan ish) were horrendously high, and were totally unaffordable.
I dread to think what they would have been for a new car. I doubt anything would have been offered due to the size of the loan
I think some also required a guarantor.
She has accepted that a new, to her, car is now a dream only.
Tell your friend that he needs to wake up and get a shed for a few years, not more expensive debt.
Vsix and Vtec said:
Thirded (or fourthed?).
Your friend needs to cut himself free from the financial shackles of a PCP finance deal until he's back on steady ground. A Honda Civic is all the car 90% of the population will ever need. It's comfortable, reliable, economical and reasonably priced. Sure its not exactly sexy (unless you get a Type R) but it sure as hell is compared to the bus or digging yourself a huge financial hole because your pride wouldn't let you be seen in anything that didn't have a German badge and a plate issued in the last 12 months.
TBF to the friend, the 'new car' desire is genuinely brought about by a (misguided) belief in the security that it'll be reliable and if any issues arise the manufacturer warranty will cover it (rather than wants to show off or keep up with the Jonses). Your friend needs to cut himself free from the financial shackles of a PCP finance deal until he's back on steady ground. A Honda Civic is all the car 90% of the population will ever need. It's comfortable, reliable, economical and reasonably priced. Sure its not exactly sexy (unless you get a Type R) but it sure as hell is compared to the bus or digging yourself a huge financial hole because your pride wouldn't let you be seen in anything that didn't have a German badge and a plate issued in the last 12 months.
One other thing to consider is the agreement with StepChange.
StepChange ask your creditors to freeze interest and you repay the capital owed.
You also agree not to take on more debt whilst the program is live.
You are effectively paying for the car with the interest StepChange are saving you.
If the creditors find out they may cancel the agreement and request repayment in full.
StepChange ask your creditors to freeze interest and you repay the capital owed.
You also agree not to take on more debt whilst the program is live.
You are effectively paying for the car with the interest StepChange are saving you.
If the creditors find out they may cancel the agreement and request repayment in full.
Edited by ConnectionError on Wednesday 15th January 18:02
It sounds crazy to buy a new car. I suspect your friend still does not understand how he got into debt in the first place. In complete denial.
However, surely the obvious suggestion is to lease a vehicle?
Obvious but definitely not sensible.
I am not in any debt, get paid well and run around in a ten year old ds3. It is absolutely fine. (And cheap!)
However, surely the obvious suggestion is to lease a vehicle?
Obvious but definitely not sensible.
I am not in any debt, get paid well and run around in a ten year old ds3. It is absolutely fine. (And cheap!)
It blows my mind that someone with a history of debt problems and had used stepchange to agree a deal with creditors would even consider trying to buy/lease a new car on finance.
I am another person who gets paid well, doesn't have any debt and drives a 13 year old car. I also sleep a lot better at night knowing I don't owe anybody any money.
Just buy a cheap shed and stop using the excuse of "must be reliable" to justify wanting a new, shiny thing.
I am another person who gets paid well, doesn't have any debt and drives a 13 year old car. I also sleep a lot better at night knowing I don't owe anybody any money.
Just buy a cheap shed and stop using the excuse of "must be reliable" to justify wanting a new, shiny thing.
Edited by ThingsBehindTheSun on Wednesday 15th January 21:21
Sadly, I’m guessing your friend has got themselves into this position because of some poor financial decisions. Another massive one would be to buy a brand new car!
It’s absurd in 2025 to believe that only a new car can be reliable?! They are often worse than cars many years old as the first owner discovers all the initial issues from manufacture. The fact is many cars 5 years old + will be 100% reliable.
Borrow as little as possible - I’m sure for £3 or £4k they could get something that does the job reliably. It’s not the time to go for an aspirational badge, model, or spec.
It’s absurd in 2025 to believe that only a new car can be reliable?! They are often worse than cars many years old as the first owner discovers all the initial issues from manufacture. The fact is many cars 5 years old + will be 100% reliable.
Borrow as little as possible - I’m sure for £3 or £4k they could get something that does the job reliably. It’s not the time to go for an aspirational badge, model, or spec.
g3org3y said:
Unfortunately I'm not privy to his budget but iirc he mentioned it was a v entry level Audi he was rejected on.
Possibly irrelevant but for me, this paints the picture quite clearly. Serious debt issues, unable to get realistic credit (if at all) however still wants the new Audi...
Feels like the perceived image of "doing well" is possible a higher priority than actually accepting his poor situation.
Champagne lifestyle aspirations on a budget that'd barely by Tesco Value lemonade.
I think I'd be saying your piece to him then step back, if he won't listen / won't accept his situation then that's on him... or he needs proper help.
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