Your credit rating has an outstanding effect on what type of car finance you can get. OK, let me rephrase that, you'll probably get accepted with a poor credit rating or bad credit history, but you'll have to pay the price in terms of interest. Most car finance interest rates range from 0% to 20+%. 0% car finance interest deals often come from a hefty deposit, ie trading down from an expensive new car to an older or cheaper car, and putting more than 50% of the value down. What you generally see is car interest rates from 5-8% for most people with average to good credit ratings.
Here are some tips on how to get good car finance rates and deals:
1 - Check your credit score first. See if there is anything you could change or pay off before applying for finance.
2 - Pay off any debts or at least get your usage of available credit down to less than 30%.
3 - Do you have a deposit or a car to part exchange as a deposit - as low or 0 deposit car finance deals often come loaded with extar fees and high interest rates.
4 - Use a broker, they'll generally find you a better deal than a dealership can. This means you can have the money ready and waiting and have less of a wait until you actually get to drive the car off the forecourt.
5 - Make sure you can pay for it, and have an idea of when you want to trade up or sideways to avoid losing too much money on depreciation compared to the guaranteed resale value the dealer gives you.
If you have a low credit score, then opting for a car finance company that deals with people in your situation specifically is a good idea. They will normally check your employment, your credit history, your earnings and how long you have been in employment for. This wil determine whether they will offer a finance deal or not - it's not like an unsecured loan, though, as there is a car involved so if you weren't to pay or couldn't then the car could be repossessed, so the finance company can retrieve and recover their costs. This would be a black mark on your credit file, but once it is done it's done, there is no comeback or other goods that they would take as they would with a loan.
In most cases, bad credit car finance deals are more common than any other, due to the fact there is an asset involved. So, if you were thinking of putting off going for a new car on finance; why wait? You'll probably get a good deal.