A CCJ may seem like an obstacle when you are thinking about purchasing a car. However, having a CCJ does not mean you cannot apply for a loan. It is still possible to get car finance with a CCJ in the UK, but the borrower will have to pay higher interest rates or turn to specialist lenders instead of banks.
Car Loan First has access to a lenders’ panel, which considers other factors besides credit score, and provides affordable solutions to people with a CCJ. Curious how easy it may be for you? Try a free consultation now.
What Is a CCJ?
It is a court order made in England and Wales when an individual fails to settle their debts and the lender resorts to legal action. If he does not defend himself or makes no attempts at settling the debt, the court will make a judgment about his liabilities.
The CCJ is noted in the credit record, which is usually kept by the Registry Trust, and remains visible to any lender for six years starting from the day when it has been made. Settling the matter within 30 days results in its removal from the credit record, while payment after that period results in the marking of the judgment being marked as “satisfied”.
How Does a CCJ Affect Car Finance?
Creditors will assess the risk involved in offering loans using your credit history; having a CCJ indicates that you have missed repayments before to the extent that you had to appear in court. Conventional banks might reject your application automatically if there is evidence of this on your credit history, especially if it is recent or unpaid.
This is where CCJ car finance brokers come in handy; these companies base their assessment on your affordability and not on denying you the loan just because you have something in your credit history. You will still be able to obtain the loan, but on terms like high interest rates, bigger deposits, or less borrowing capacity.
Can You Get Car Finance With a CCJ?
Yes, in most circumstances. Basically, getting car finance is possible for the majority of motorists; however, your specific terms will be based on your overall financial standing and not just the CCJ.
Financial institutions usually consider whether the judgment is satisfied or not, its age, the value of the judgment, and your income compared to your expenses. A small satisfied CCJ from a number of years ago is considered quite differently from a recent, unsatisfied, larger CCJ, and this means that two customers with a CCJ could receive entirely different deals.
What Car Finance Options Are Available With a CCJ?
Hire Purchase (HP) will usually be the easiest way to go, because the finance company will still own the car until the last payment has been made, reducing their risk and increasing the likelihood of approval. Some specialist companies offer Personal Contract Purchase (PCP) financing too, but may have tougher criteria.
The two are almost entirely the same as car finance with bad credit, since a CCJ is only one of many different credit problems that specialist lenders regularly assess each day.
Some things to consider include:
- Hire purchase with a specialist lender.
- Guaranteed agreement to improve the strength of your application.
- Deposit payment to make the loan smaller.
- Part exchange of your existing car to reduce the size of the loan required.
- Differentiating among a few specialist brokers instead of a single bank.
How to Improve Your Chances of Getting Car Finance With a CCJ
It is all about preparation. Many of the tips provided here are similar to those in advice on car finance for bad credit. The reason for this is that a lender considering a CCJ will be looking at exactly the same affordability factors that any other form of bad credit involves.
There are several things you can do before you apply for finance:
- Look for inaccuracies on your credit file and get them sorted out.
- Make sure that you are registered to vote at your current address.
- Don’t make multiple applications for finance within a short period of time.
- Put some money aside as a larger deposit.
- Let the lender know about the CCJ.
- Try to settle the judgment; a satisfied CCJ looks better.
Should You Apply Before or After Settling a CCJ?
The timing is far more important than most customers know. If you are able to pay off the judgment first, then paying it before you make the application will put you in a better light, as an outstanding CCJ will show lenders that you have not sorted out your debt yet. However, waiting for a few months after you settle the matter might help to improve your overall credit record.
Nonetheless, waiting for this period may not always be a realistic approach when you urgently need the car due to various personal reasons. Hence, should you have an unsatisfied CCJ when making your application, then don’t think it means that there is no hope at all; you just have to be ready for some additional costs.
What Happens If You’re Refused CCJ Car Finance?
Just because you have been rejected once does not mean that all hope is lost. In fact, being rejected by one lender is not the end of the world, especially since there are many different approaches each finance provider takes when it comes to the presence of a CCJ and your ability to afford car loans based on your salary.
It is important to stop and think after such an event, since multiple loan applications can damage your credit file even more. Instead, take your rejection as a sign that you should better yourself: look for errors in your credit report, provide the lender with proof of your income, and find a broker who would look at your situation from the viewpoint of multiple lenders simultaneously.
Returning to the Highway Following a CCJ
A CCJ makes the process more complex but by no means impossible. With the right broker and some preparation, many motorists carrying the weight of a CCJ on their credit report will still be able to obtain a reasonable loan offer.
Car Loan First is an FCA-approved broker that has a range of lenders that are adept at considering applications from motorists carrying credit blight like CCJs and defaults, finding the right offer to match your actual ability to repay.
If a CCJ is standing between you and obtaining finance for a new vehicle, then apply today for your free, no-obligation quote.
Frequently Asked Questions
Will a CCJ automatically prevent me from obtaining car finance?
No. Mainstream banks will reject your application, but there are some specialist lenders who take into account your earnings and expenditures along with the CCJ, and hence getting approved is not out of the question.
Do a satisfied CCJ and an unsatisfied CCJ make a difference during an application process?
Yes. A satisfied CCJ is viewed more positively because it shows that you have repaid your debt, while an unsatisfied CCJ can influence the deposit and the interest rate required by the lender.
How long does a CCJ stay on my credit file?
CCJs stay on file for six years from the date of issue, but they may be expunged from your record after repayment within 30 days from the date it was made.
Is it possible to obtain finance even when having a CCJ and a small amount of money in deposits?
This is a more difficult task, but not impossible, since there are some specialist lenders who provide car finance with a minimal deposit.
