Can I get car finance with a CCJ?

We understand that life can be unpredictable, and you may find yourself in financial difficulties through no fault of your own. Even so, if you’ve had a CCJ, prospective lenders will know that you’ve managed your money poorly in the past. This can make it more difficult to secure car finance with a CCJ, but it’s not impossible! There are specialist lenders that look to help people find the right bad credit car loan for them, though interest rates may be higher.

7 min read
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What are CCJs?

A County Court Judgment, or CCJ for short, may be issued if you have defaulted on a credit account and don’t fulfil further payment requests or agreements. It’s a legal route open to finance providers in England, Wales, and Northern Ireland, and a court will formally decide whether you owe the money or not. You’ll receive a copy of the judgment in the post detailing the amount you owe, how to pay, the payment deadline, and who you must pay. If you can’t afford to pay the full amount straightaway, you can ask to change the terms or pay it back in instalments.

What options are available for CCJ car finance?

If you’re looking for CCJ car finance, there are several different types of car loans you could consider:

Hire Purchase (HP)

Hire purchase agreements are one of the most common types of car finance. Typically, you’ll be asked to put down a deposit upfront, followed by fixed monthly payments for a period of up to five years. At the end of the loan term, you may pay a small ‘Option to Purchase’ admin fee and you can then take ownership of the car.

Personal Contract Purchase (PCP)

Personal contract purchase car finance can offer lower repayments than HP, as you don’t borrow the full value of the car. Instead, you need only borrow the difference between the cost of the car and its predicted future value when your agreement is due to end.

When you reach the end of your agreement, you can choose to hand the car back to the lender or buy it by paying the one-off balloon payment, to cover the remaining outstanding balance. Alternatively, depending on the value of your car at the end of your agreement, you may be able to use it as a deposit for a new car.

Personal Loan

Personal loans work differently from HP and PCP loans, as they aren’t typically secured to the vehicle. This means that you’ll take ownership of the car as soon as you’ve used the loan to pay the seller. However, as the loan is unsecured, it does pose more risk to the lender and so may not be an option for you if you have a bad credit score and have had a CCJ in the past.

Guarantor car finance

Having a CCJ can affect your credit score and make it tough to get a car finance loan. While you may be hoping to find a CCJ loan with no guarantor, having one in place could help lenders look more favourably on your application.

With guarantor car finance, you’ll need to appoint a guarantor who is willing to step in and make your loan repayments if you can’t. They’ll typically need to be over 18, have a good credit score, and in some cases, be a homeowner. As being a guarantor is a big commitment, it’s a role usually taken only by close friends or family members.

What information will I need to supply for CCJ car finance?

When applying for CCJ car finance, you’ll typically need to complete an online application form. This will ask you to provide a few personal details, including your address history, employment history, and current income, as well as the amount you’d like to borrow. As your CCJ may indicate that you could pose a higher risk to lenders, you may be asked to provide further information about your financial situation as it stands today.

Each lender may require different documents, but you’ll probably also need to supply:

  • Proof of income (e.g., recent bank statements or payslips)
  • Proof of address (e.g., a utility bill or council tax statement)
  • Proof of ID (e.g., a passport or full UK driving licence)

How long does a CCJ stay on your credit file?

When you receive a CCJ it will be marked on your credit report and recorded on the Registry of Judgments, Orders and Fines. It will remain on your credit file for six years but may be marked as ‘satisfied’ once you’ve repaid the debt owed. A satisfied CCJ reassures lenders that you have completed your payments but can still give them pause to consider why you had a CCJ in the first place.

If you’re able to pay the full CCJ amount within a month of receiving the judgment, it may be removed from the registry entirely, although the default that led to the CCJ will likely remain on your credit file for six years from the date it was registered.

How does a CCJ work?

If you’ve missed a payment or are struggling to find the funds to cover your loan, you probably won’t receive a CCJ straightaway. Debtors must issue you with a warning letter or default notice first. This will outline how much you owe and how you can repay the debt.

If you can’t meet these terms, the creditor will be able to pursue legal action against you. If the judge is in their favour, a CCJ will be issued with a deadline for repayment. Not sure if you have a CCJ? For a small fee, you can view the Registry of Judgments, Orders and Fines to check if there are any judgments against you. Alternatively, you can check your credit report, as it should also appear there.

How to improve your credit score after a CCJ

The good news is that credit scores aren’t fixed, and you can take steps to improve yours over time. It’s not an exact science and there’s no set score that will guarantee you’ll be approved for car finance, but following the guidelines below may get your score moving in the right direction after a CCJ:

  • Register on the electoral rollhead online to register for free every time you move house.

  • Pay your bills on time – consider setting up a direct debit after payday to reduce the chance of paying late.

  • Check for mistakes on your credit report – regularly looking at your credit report can help you spot unusual activity or incorrect details.

  • Don’t use all the available credit – using a smaller percentage of your total credit and not maxing out your credit cards could boost your score.

  • Don’t apply to several lenders at once – several hard credit searches in a short period of time could negatively affect your score.

  • Check your financial links – having joint credit cards or mortgages could mean someone else’s credit profile is affecting your creditworthiness.

How to apply for car finance with a CCJ

To make a new car finance application with a CCJ, you can complete our online form to get a no-obligation quote. This will ask you to provide personal details such as your name, address, and date of birth, as well as your recent employment history and the amount you’d like to borrow. You may also be asked to provide proof of address, income, and ID.

A soft credit check will then be carried out to find out if you’re eligible – without affecting your credit score. In most cases, your CCJ will show up during a soft credit check.

Lenders will typically consider each application individually and take the details of your CCJ into consideration, including the amount owed, whether you’ve already started making repayments, and how long it’s been since the CCJ was first issued.

If you do find a car finance approval, keep in mind that you may be asked to pay a higher monthly interest rate to offset the risk posed to the lender.

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*Representative example: Borrowing £6,500 over 5 years with a representative APR of 19.9%, an annual interest rate of 19.9% (Fixed) and a deposit of £0.00, the amount payable would be £166.07 per month, with a total cost of credit of £3,464.37 and a total amount payable of £9,964.37. Rates may differ as they are dependent on individual circumstances. Subject to status. We're a credit broker, not a lender.

Disclaimer: All information and links are correct at the time of publishing.