Can I get car finance with a CCJ?

It’s unlikely that you’ll be able to get car finance with a CCJ, although not impossible. Other options you can consider include settling the debt, waiting until the CCJ drops off your credit report or getting a personal loan, or a guarantor loan.

6 min read
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How to finance a car with a CCJ 

If you’re unsure of how to get car finance with a CCJ, then you should be aware that having a CCJ will considerably limit your choices. Some car finance companies might lend to you but if they do it will be at a higher interest rate.

There are four options for you to consider if you have a CCJ:

1. Consider a ‘bad credit’ personal loan 

A ‘bad credit’ personal loan is a loan that’s designed for people with a thin or poor credit history. So, if you’re struggling to get approved for car finance, you could check your eligibility for a ‘bad credit’ personal loan instead. Then you would pay off the personal loan in monthly instalments.

Shop around to find the best deal for you and use an eligibility checker. This tool will show you which deals you’re likely to be accepted for. Remember, any credit application you make leaves a footprint on your credit history - and multiple applications made within a short space of time can show as red flags to lenders.

It’s important to note that if you fail to make your monthly repayments for a loan on time and in full your credit score will be damaged, and you could slide further into debt. If you’re struggling to make the payments in full, you should at least make the minimum payment required to avoid late fees (but interest will still apply).

You could also speak to your loan provider to see if they’ll restructure your repayments – just remember the loan will take longer to pay off if you do this and your credit score will be affected if you make reduced payments.

2. Consider a guarantor loan 

A guarantor loan is a form of borrowing where a third party (such as a trusted family member or friend) becomes financially responsible for it paying the debt if the borrower doesn’t pay for any reason. If you take out a guarantor loan, the financial provider will take your guarantor’s financial history into account alongside your own, giving you more chance of being accepted – if your guarantor has a good credit score.

However, a guarantor loan can be risky for the guarantor – if you fail to make repayments then the finance company can chase them for the full remaining balance. Defaulting on your loan will impact their credit score as well as your own, and potentially damage your relationship. So consider this option carefully before applying.

3. Settle the debt 

If you still owe money on your CCJ it might be best to settle the debt before applying for car finance. Most lenders will take the view that it’s unlikely you’ll be able to afford repayments on a car if you’re already in debt. They’ll be reluctant to lend to you while you have an active CCJ but may be able to offer you finance once you’ve cleared your debt.

4. Wait until the CCJ drops off your credit report 

If you’ve cleared your debt and you’re still struggling to get car finance, you could wait until the CCJ drops off your credit report. This may be the best option for you if you aren’t sure that you’ll be able to afford repayments on a car at the moment. You can also take this time to build up your credit score with the incentive of being offered a better deal once your CCJ has dropped off. It will normally take six years from the date of the judgement for this to happen.

Can you get a CCJ removed? 

You can get the CCJ removed if you pay off the debt within one month of the judgement. Follow these three simple steps:

  • apply to the county court where the judgement was received and fill out court form N443
  • pay the £15 court fee – people on a small income may be able to get the fee removed
  • the court has a month after receiving your evidence to get the CCJ removed from your record

Unfortunately removing a CCJ is a lot harder if you take longer than a month to pay off the debt. It takes six years for the CCJ to stop showing up on your record once registered - but the good news is that once you’ve paid off the debt the CCJ will show as ‘satisfied’ instead of ‘unsatisfied.’ Once your CCJ is ‘satisfied’ you should find it easier to get approved for car finance.

If you have a CCJ and are worried about managing your dept you can contact StepChange for free confidential legal advice.

How do you build your credit score?

Here are five ways you can build your credit score and improve your chances of being accepted for car finance:

1. Keep your credit report up to date

Make sure your credit report is accurate by closing any unused accounts and by keeping your address updated on the electoral register.

2. Have your bills in your name

This will only help if you pay them on time and in full – not doing so will damage your credit score further.

3. Don’t make too many applications at once

Avoid making multiple credit applications in a short space of time because each application leaves a footprint on your credit history whether you’re accepted or not.

4. Keep your credit utilisation ratio low  

Ideally your credit utilisation ratio should be 30% or less. (This means you spend 30% or less of your available credit across all of your credit cards and overdrafts put together).

If you raise your credit limit on one of your accounts but don’t spend any more on it, your credit utilisation ratio will improve. Only do this if you will not be tempted to spend more of the credit limit because that would put you further in debt.

5. Keep on top of debts

Always make debt repayments on time and in full. This will show lenders that you’re a responsible borrower.

Can car finance be in someone else’s name? 

Normally applying for car finance in somebody else’s name or on behalf of another person is called ‘fronting’ and is considered to be fraud. This is because a finance company’s decision about whether to lend to you is based on your financial history – not anyone else’s. If somebody else applies for you that decision won’t be accurate.

‘Fronting’ can have serious consequences for both parties involved. The person who is ‘fronting’ may be liable for the repayments and both people involved could end up on the fraud database.