Cara Bradley

Written by

Cara Bradley

6 min read

Updated: 30/01/2024


There are few things more exciting than picking out a new car. Whether you’re looking to purchase your first set of wheels or upgrade your existing vehicle, a car loan could help fund the cost - it’s time to hit the road!

What are car loans?

A car loan is a sum of money borrowed from a lender to help cover the cost of purchasing a vehicle. This could be a brand-new car or a second-hand model.
You use the money to buy the car and then repay the balance of the loan over a set term in monthly instalments.

Who can apply for a car loan?

You can find a car loan at Viva Money if you:

  • Are over the age of 18;
  • Are a UK resident with a UK address;
  • Have a UK-issued bank account with a valid debit card; and
  • Have a regular source of income paid directly into your bank account.
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Can I apply for a car loan with bad credit?

Yes, you can apply for a car loan even if you have bad credit.
Having a lower credit score may make it more difficult to be accepted for a loan, although it is not impossible.
Some of the lenders Viva Money work with specialise in car loans for those with less-than-perfect credit scores.

If you are approved for a loan with bad credit, you might find that you are offered a more manageable borrowing amount at a higher interest rate.

A good credit score could increase your borrowing options and unlock a choice of credit products with better interest rates.

Ways to improve your credit score

You can take steps towards improving your credit score today.

  • Register to vote. This will link you to your current address and will make it easier for potential lenders to identify you.
  • Pay your bills and any current credit commitments on time. Falling behind on or defaulting on your repayments is likely to have a negative impact on your score.
  • Avoid making too many credit applications in a short space of time. When you apply for a loan or credit card directly with a lender, they will run a hard credit search on your financial history. Hard searches can remain on your credit file for up to 12 months and can lower your credit score. Credit brokers, such as Viva Money, use soft search technology to match you with a suitable loan. Soft searches do not have any impact on your credit score.
  • Check your credit report for errors; if you spot any, contact your credit reporting tool and ask them to update it with any changes, such as your name or address.
  • Perhaps a credit building credit card could help you? When used sensibly, these cards could help improve your score over time. You will also need to keep up to date with any other credit commitments you may already have in order to see an improvement in your score.

How can I search for a car loan with Viva Money?

Searching for a car loan with Viva Money couldn’t be easier. We’ve explained the process in four simple steps.

Step one

Think about how much money you think you are realistically going to need to cover the cost of your car, and how long you would like to pay it back.
Never borrow more money than you need or can comfortably afford to repay.
Next, complete our online form. This should take no longer than five minutes.

Step two

Using the information provided, we’ll run a soft search on your credit history and present your application to our panel of lenders. This process takes around 60 seconds. If we’re able to match you with a suitable loan, you’ll be redirected to the lender’s website.

Step three

The lender will carry out some further checks, including a hard credit search.
If the lender approves your application you will be sent a loan agreement. Read through this thoroughly before you sign. Pay particular attention to the interest rate you have been offered, and how much you will repay each month – you must be confident that you can manage your repayments before you sign your agreement.

Step four

Use the money to pay for your car, and then clear the balance of the loan in monthly instalments before the term comes to an end.

If I’m approved for a car loan how long will it take to receive the money?

Some of the lenders on our panel can send your funds the same day your application is approved, although the time it takes for the money to appear in your account will depend on your bank’s policies and procedures.

If you need a car loan urgently, it may be a good idea to speak with your lender and ask them when exactly you can expect the money.

Alternatives to car loans

Before you apply for a loan, it’s worth looking into alternative ways to finance a car. Knowing all your options means you can make the best decision for you and your circumstances.

  1. Save up
  2. While saving up for your dream car might take a little longer it could work out cheaper in the long run. When you take out a loan, you are charged interest on the amount you borrow. If you were to save up and pay for the car with your own money you would avoid paying interest.

  3. Leasing
  4. When you lease a car, you make monthly payments while using it, although you don’t ever own it.
    The amount of money you are charged will depend on various factors such as the model and condition of the car and the mileage you intend to do.
    If you exceed your mileage allowance, or the car suffers wear and tear while in your care, you may be charged additional fees.

  5. 0% finance
  6. Depending on the type of car you purchase, you may have the option to put down a deposit and then pay the remaining balance in monthly instalments.
    It’s worth noting that you may be asked to provide a initial deposit, although if you make your repayments on time every month it’s unlikely that you will be charged any interest on the balance.

  7. Hire purchase
  8. Hire purchase is similar to 0% finance agreements in that you pay an initial deposit and then make monthly repayments. The difference with a hire purchase agreement is that you will not legally own the car until you have made the final payment towards it. You may also be asked to pay an additional ‘option to purchase’ fee.
    The balance is secured against the car, which means that if you default on your repayments, the company are within their rights to take the car from you.
    Ending a purchase agreement before the balance has been cleared could also result in fees.

I’m struggling to make my loan repayments - what can I do?

Feeling unable to keep on top of your repayments can feel overwhelming, but please try not to panic. Take a deep breath and a step back – focus on the practical things you can do.

First, get in touch with your lender and let them know of your situation. They will appreciate you reaching out and being honest, and will work with you to find an appropriate solution.

We understand that talking about money can be uncomfortable, but know that free, impartial, non-judgmental advice can be found on sites such as MoneyHelper, Citizens Advice, and National Debtline.

Viva Money is proud to work alongside debt charity StepChange to provide a free, online Money Health Check quiz. Your answers are confidential and will generate advice to help you take your next steps.