How a bad credit score can cost drivers dear

Gareth Herincx

6 days ago
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Having a poor credit score could end up costing you as much as £8,000 extra when financing one of the UK’s most popular cars, according to new research by

For instance, the best-selling Ford Fiesta costs £16,645 to buy outright. However, when bought on finance with a four-year repayment period, the total for someone with an excellent credit rating is £20,014 – or a staggering £7,059 more (£27,073 total) for a driver with a bad credit score.

The data was obtained by the comparison and switching service using a car finance calculator to determine the cost of 10 cars bought on finance for motorists with different levels of credit score.

Cost to finance the UK’s 10 most popular cars

Popularity rank Car Model List Price Finance cost with excellent credit rating Finance cost with fair credit rating Finance cost with bad credit rating Difference between excellent and bad credit score
1 Ford Fiesta £16,645 £20,014 £23,673 £27,073 £7,059
2 Ford Focus £22,215 £26,778 £31,672 £36,221 £9,443
3 Vauxhall Corsa £16,815 £20,269 £23,974 £27,417 £7,149
4 Volkswagen Golf £23,360 £28,158 £33,305 £38,089 £9,931
5 Vauxhall Astra £19,185 £23,125 £27,352 £31,281 £8,156
6 Volkswagen Polo £17,355 £20,920 £24,743 £28,298 £7,378
7 BMW 3 Series £32,595 £39,290 £46,471 £53,147 £13,857
8 Nissan Qashqai £23,555 £28,393 £33,583 £38,407 £10,014
9 Toyota Yaris £19,915 £24,005 £28,393 £32,472 £8,466
10 Mini Cooper £27,115 £32,684 £38,658 £44,211 £11,527
Source: – All prices correct as of April 2021

Plan ahead for a better credit score

James Andrews, personal finance expert at, reveals how to improve your credit score to help you get the best deal when purchasing a car on finance: “Registering to vote, having bills in your name, keeping to 30% or less of your total available credit (per account) and not having a credit history can all impact your credit score.

“When financing a car, first check your credit report to see what your score is. Secondly, check what’s in there and that the information is accurate. Lastly, start taking steps to improve your score.

“Providing you make your payments on time, don’t apply for many new products in a short period (e.g six months), and keep a stable address, your credit rating should improve. In as little as four months you should see your scores start to improve and after a year you should be in a far stronger position.”

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Guarantor Car Loans: What Do You Need To Consider?

Guarantor car loans are the same as most other forms of guarantor finance. Someone else, usually a family member or close friend (or anyone else who trusts you enough), will guarantee that your finance repayments will be made if you don’t keep up with them yourself.

This protects the lender in instances where the applicant’s credit report or personal circumstances suggest there is a slight risk in their ability to uphold payments. The loan provided will pay the guarantor the money and they will pass it to you.

What should you consider before securing this type of car finance deal? Carry on reading to find out!

How is a Guarantor Loan Different to Others?

The primary difference between a guarantor loan and other types of loan is the number of parties involved. This is not just a two-way relationship like most finance deals, as there is a third party involved (your guarantor). It may sound complicated, but guarantor car finance is ideal for those with less than perfect credit history, or no credit history at all.

Guarantors must be aware that they may face financial consequences and their credit score may be affected if the credit is not repaid.

Who are Guarantor Loans for?

If you have low or no credit rating, this is a wise choice, especially if you are a young driver. Many people in the younger generation will not have had adequate time or opportunity to build up much of a credit rating. This is completely understandable and there is nothing wrong with that, but it can make it difficult to find car finance. If you have a guarantor, their credit history that will be taken into account too, not just yours. There are pros and cons to these arrangements so make sure you understand the terms of the loan for you and the guarantor before you arrange one.

Who Should Your Guarantor Be?

Ultimately, this is up to you, but it should be someone you trust and trusts in you. You may at some point need to have an awkward conversation with them about money, so it should be someone you feel comfortable doing so with. They also need to be able to afford your monthly payment if you miss one. Being a guarantor is a big commitment, so trust is important. To protect themselves, the lender may require your guarantor to be over the age of 21 and a homeowner.

Does the Guarantor Get Credit Checked?

Yes, your guarantor will be credit checked before a deal is agreed upon. So, they may want to check their credit score and ensure all their information is correct before you apply for guarantor car finance. Usually, your guarantor will need to have a good credit rating to show lenders they can be relied on to make payments if you cannot.

Is Bad Credit Car Finance a Better Option?

Bad credit car finance is a wise choice for people with bad credit because it removes the need to make an upfront deposit at the start of the deal – and the need for a third party guarantor! Instead, a ‘soft search’ credit check will be conducted to give an indication of whether credit can be sourced for you and the type of credit that can be sourced.

This will not affect your credit report in any way but will provide a good sign of what is available to you. If and when you are happy with what your potential lender finds, then a ‘hard’ credit check will be done to progress your application and prove you can keep up with payments. This means you should be able to find quality cars from quality dealerships, without the need to ask mum and dad to be your safety net!

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Car Club vs Car Ownership

by car blog editor · April 19, 2016

We all enjoy the convenience of having our own vehicle, but the cost of owning and running it can be draining on our finances.

So is joining a Car Club a more economically viable option? We have looked at the numbers based on casual use and produced an infographic comparing the two options. See how they match up below:


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