When you apply for car finance, the lender will review various aspects of your financial circumstances to determine whether you’re a suitable candidate.
If they find that you’ve failed to stick to a previous credit agreement and have a CCJ as a result, this can affect your chances of being accepted as it suggests that you might struggle to keep up with repayments on a car loan.
This article will outline your options for getting car finance with a CCJ so you can better understand the choices available to you. It will also explore the actions you can take to increase your chances of being accepted for car finance with a CCJ.
What is a CCJ?
A County Court Judgment (CCJ) is a type of court judgment that you might be issued with if you have an outstanding debt that you’ve ignored for some time. CCJs are only issued in England, Wales, and Northern Ireland.
If you have received a CCJ, it means your creditor (the individual or company you’re in debt to) has gone to court to help them recover the money they are owed. This usually happens after they have tried several times to collect payment but have been unsuccessful.
Once a CCJ is in place, you must repay the debt as outlined by the court. In most cases, you’ll be issued a judgment in instalments, where you’re asked to make monthly repayments towards what you owe until your balance has been repaid.
The claim letter – which you’ll receive in the post 30 days before the CCJ is officially served – will outline the total debt you owe, when to make payment, and to who payment should be made.
How much debt do you have?
What is car finance?
Car finance is the general term given to the many ways you can pay for a car over time as opposed to paying for it outright. The various car finance options available include personal loans, personal contract purchase (PCP), and hire purchase (HP).
When you make a car finance application, the lender will review your financial situation to determine your creditworthiness (how likely you are to make repayments on a loan based on your past financial history). They will then use this information to decide whether to give you car finance.
However, while car finance can sound like an easy and cost-effective way to pay for a car when you can’t afford the full cost outright, there are various risks involved.
The key to navigating car finance effectively is to familiarise yourself with the various advantages, disadvantages, and terms of the type of car finance chosen. Most car finance agreements last several years, so it’s not a decision that should be taken lightly.
Can you get car finance with CCJ?
As previously mentioned, having a CCJ can negatively impact many areas of your life, including the types of credit agreements you’re allowed to enter into. This includes car finance.
When you’re served with a CCJ, it will be added to your credit report from all of the main credit reference agencies (Experian, Equifax and TransUnion) and a public register called the Register of Judgments, Orders and Fines for six years.
During this time, your credit score will be damaged and lenders will not only be able to see you’ve missed payments but also that the court has had to intervene because you’ve failed to come to an agreement over the debt.
However, while it’s more difficult to get car finance while you have a CCJ, it’s not impossible. Some car finance companies specialise in providing car loans for individuals who have poor credit scores due to a CCJ.
How do I find out if I have a CCJ?
If you’re preparing to apply for car finance, it’s important to know if you have anything on your credit report that could potentially stop you from being approved. But how can you know whether you have a CCJ?
Before you’re issued with a CCJ, you’ll receive a claim letter explaining what to do if you want to avoid a court judgment. So if you ever received a claim letter but chose to ignore it, chances are the court will have gone on to issue a CCJ against you.
Other ways to find out if you have a CCJ are to check your bank account and access the CCJ register (this will cost between £6 and £10). This will show you if you’ve paid anything towards the debt and if the CCJ is still active.
Finding out you have a CCJ when you didn’t know about it can be daunting, but a CCJ will never be served against you without proper notice first. By checking for a CCJ first, it can prevent you from getting a rejected application.
Can I get a CCJ removed from my credit report?
When a CCJ is issued against you, it is automatically added to your credit report for six years. During this time, it will be difficult to get approved for any type of credit, from car finance to a mortgage, as lenders will view you as less creditworthy.
However, if you’re in a position to pay the debt in full within one month of receiving the CCJ, it will be considered settled and will be removed from your credit file and the public register. In other words, there will be no evidence of the CCJ and you will be free to apply for credit as you wish.
The only other way you can get a CCJ removed from your credit report and the public register is if you can prove with evidence that it was issued in error. This is known as getting the CCJ ‘set aside’ and is recommended if the creditor didn’t follow the right process when serving you with the court judgment or you repaid the debt in full before you received the CCJ.
“No fuss, just simple, honest advice. Communication is good and they make the process as easy as they can.”
Will a satisfied CCJ affect my chances of getting car finance?
Any evidence of a CCJ will affect your chances of getting car finance, but a satisfied CCJ can improve your chances slightly. This is because a satisfied CCJ means you’ve paid off the debt and, as a result, you’re more likely to fulfil your payments on a car finance agreement.
The car finance company you apply to might ask you to provide proof that the CCJ is satisfied. To do this, simply show them a copy of your certificate of satisfaction, which shows that you’ve completed the CCJ and the debt has been repaid.
It’s also a good idea to send the lender copies of of bank statements showing that the debt has been repaid. The more evidence you can provide, the more likely you are to get car finance with favourable terms.
Remember, paying off a CCJ within one month of receiving it will get it removed from your credit report and the public register. If you’re in a position to pay off the debt as soon as possible, it can allow you to move on from the CCJ and get back to your life as it was pre-CCJ.
How can I increase my chances of getting car finances with a CCJ?
There are many things you can do to increase your chances of getting car finance with a CCJ. We’ve outlined the steps you should take if you can below:
Satisfy the debt
If you’re in a position to repay the debt, you should always do so. Even if it’s been more than a month since the CCJ was issued, you’ll have more luck getting car finance with a satisfied CCJ than if you were to leave the debt unpaid.
Save for a larger deposit
Depending on the type of car finance chosen, putting down a larger deposit can increase your chances of getting approved as you’ll have less to repay over the course of your term and the lender won’t be owed as much.
Consider using a guarantor
Applying for car finance with a guarantor can boost your chances of being approved if you have a poor credit history due to a CCJ as it guarantees the lender will be paid. This is typically a friend or family member with a good credit history who agrees to cover your payments in the event you’re suddenly unable to do so.
Make other payments on time
Making payments towards your other credit agreements in full and on time can show lenders that you are a responsible borrower and can be trusted to enter into a car finance agreement. This might make them more likely to give you credit while you have a CCJ.
Debt help tailored to you
From writing off a large portion of your debt, to readjusting your budget, we’ll find a solution that suits you.
Conclusion
When you apply for car finance, lenders will review your financial circumstances to determine if you’re a suitable candidate. If you have any evidence of debt, including a CCJ, they might be less willing to offer car finance as it indicates that you’ve struggled with debt recently.
Some car finance companies offer bad credit car finance for individuals with CCJs, which can allow you to access car finance without waiting six years for the CCJ to be automatically removed from your credit file.
If you can afford to repay the debt within one month of receiving the CCJ, it’s always recommended to do so. This will get it removed from your credit report as if it never existed and allow you to freely apply for credit going forward.
