How To Get Car Finance With Bad Credit

You can check your credit file online for free using Experian, Equifax or Credit Karma. When you check your credit file you should make sure all your …

It’s a common misconception that having a bad credit rating means that you will be rejected for any sort of loan or finance. If you’ve been refused car finance in the past, you’ll know how disheartening it is. However, bad credit doesn’t have to stop you from getting the car you want!


Car finance and credit scores

When applying for bad credit car finance, a potential finance lender will want an indication of whether you can be trusted to pay back your loan or finance. Your credit score reflects how good of a borrower you are and is determined by a number of factors. A bad or low credit score usually indicates that you have had problems making repayments in the past. Your credit score can be checked by potential lenders using a hard or soft search. A soft search means that a potential lender can search your credit file but doesn’t have full access and it also doesn’t harm your current credit search. A hard search however does leave a mark on your credit report, meaning that potential lenders can view your full credit report, see when you have applied for credit in the past and if you have been declined. Lenders should tell you first if they are going to perform a hard search.

Check your credit file

One of the first things you should do before applying for car finance is check your credit file. You can check your credit file online for free using Experian, Equifax or Credit Karma. When you check your credit file you should make sure all your information is up-to-date and accurate. Even having the wrong current address could be affecting your credit score. You should also consider removing any financial partners you no longer need. If you have taken out a joint application with someone else, you may still be financially linked. If you no longer have an active credit agreement with them and they have a low credit score, their score may be dragging yours down.

Types of car finance

In the UK there are typically 3 types of car finance agreements which are most popular. They are personal loan, Hire Purchase (HP) and Personal Contract Purchase (PCP) agreement. Within these agreements you usually borrow a set amount of money from a lender to fund your car and then pay it back in monthly instalments with interest to an agreed term. Each agreement does have its own terms and conditions so its best to do your research first. You may be more suited to a specific agreement depending on what you want. For example, as a personal loan can be used for pretty much anything, you can buy your desired car outright and be the automatic owner of the car whilst you make your repayments. Whereas, with an HP or PCP agreement, you aren’t the legal owner of the car until the last payment has been made.

Avoid multiple applications

As mentioned, some credit lenders will perform a search on your credit file before they decide whether to accept or decline you for finance. Making multiple credit applications in a short space of time can harm your credit score. When a hard search is performed, a mark is left on your credit file and can harm your credit score. So multiple applications can be detrimental to your current score and it can also indicate to lenders that you are desperate for credit.

Increase your deposit

The bigger deposit you put down for a car, the less you have to borrow in the long run and can reduce your monthly payments. A bigger deposit can increase your chances of getting approved for car finance. However, if you want to keep your savings for a rainy day, there are also now deposit options available for people with bad credit.

Pay off your debts

This one can be tricky if you’ve had problems in the past paying back your debts or money owed. However, this is one of the best ways you can increase your credit score. Ultimately, lenders want to see that you are able to pay back your bills on time and in full and even a few months’ evidence of making all your repayments on time can improve your credit score.

Work out your budget

Car finance is a great way to get the car you want in affordable monthly payments but make sure you can actually afford it each month. If you have high levels of debt and repayments, it may be hard for you to commit to a finance deal that you will stick to. There are also other costs associated with owning and running a car such as insurance, road tax, fuel costs, breakdown cover, MOT and servicing costs and more. When calculating your car finance budget, make sure you aren’t going to sell yourself short each month.

Image by Gerd Altmann from Pixabay

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Amid Notices From Landlords, Cars24 Receives NBFC License

Till date, the company has raised $61 Mn from investors such as Sequoia Capital, FCI Fund and KCK Global. Other major online used car …
Cars24 Receives NBFC License To Offer Vehicle Loans To CustomersCars24 Receives NBFC License To Offer Vehicle Loans To Customers

Gurugram-based online used car marketplace Cars24 said that it has procured an non-banking financial company (NBFC) license from the Reserve Bank of India (RBI) and will be venturing into the consumer lending business. The company has formed a new entity — CARS24 Financial Services — for the same.

The company will be launching its services in Delhi, Mumbai and Bengaluru in August 2019 and will scale up to the other cities gradually. With the NBFC license, the company aims to provide seamless and instant access to credit.

Founded in 2015 by Vikram Chopra, Gajendra Jangid, Ruchit Agarwal and Mehul Agrawal, Cars24 claims to create an efficient and reliable way for car owners to sell their used cars at the best price. All one has to do is book an appointment with any of the Cars24 branches, visit the branch and sell a car in a single visit.

With Cars24 Financial Services, the company will facilitate vehicle loans to customers as well as finance channel partners to help them expand their businesses. The customers will be eligible for a credit based on the car value they are buying. For consumers, the average ticket size of a loan would be INR 2.5 Lakh- INR 3 Lakh.

Further, channel partners will be eligible to a credit as high as INR 1Cr depending upon their requirement.

Vikram Chopra, cofounder and CEO, CARS24 said, “With less than 15% penetration of financing in the used cars segment, we feel that there is a massive market opportunity that can be tapped under the financing sector. We are delighted with this progress and intend to set a benchmark for a delightful customer experience on our platform with our new offering.”

The company is planning to hire over 200 people for the business and is targeting loan disbursement worth $25 Mn within the maiden year of its launch.

The company will offer financing at competitive interest rates based on the credit worthiness of the consumers. It will also allow consumers to sell their cars to Cars24 at any time in the future to pay back the loan.

“With our lower turn-around-time for credit as compared to other banks, we believe that our consumer lending business will benefit both our customers as well as channel partners. The idea is to help those buyers who have been unable to fulfill their dream of owning a car due to lack of funds and support from traditional institutions and banks,” said Ruchit Agarwal, cofounder and CFO, Cars24.

The development comes soon after reports surfaced that Cars24 has shut down about a dozen outlets in Delhi. It had reportedly received nearly six legal notices from landlords in Delhi for non-payment of rent for months. They have alleged that the company then shut down the stores at various places in “violations” of the lease agreements.

The company intends to scale up its presence in over 300 Tier 2,3 and 4 markets by 2021. Till date, the company has raised $100 Mn from investors such as Sequoia Capital, FCI Fund and KCK Global.

Other major online used car marketplaces in India are CarDekho, Droom, Quikr, Olx, Mahindra First Choice Wheels, among others. According to an IBEF report, the Indian auto industry, one of the largest in the world, accounts for 7.1% of the country’s GDP.

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PG&E, California Governor Win Two-Week Reprieve From Creditor Attacks

… ownership of the company, while insurance companies joined by hedge-fund manager Baupost Group LLC have put forth their own takeover bid.

The judge presiding over PG&E Corp.’s bankruptcy declined to end the utility’s exclusive control over the proceedings, instead granting California Gov. Gavin Newsom’s administration time to try to avoid a free-for-all among competing restructuring strategies.

At a hearing Wednesday in the U.S. Bankruptcy Court in San Francisco, Judge Dennis Montali deferred a request by bondholders to terminate PG&E’s exclusive authority over restructuring terms after attorneys for Mr. Newsom and PG&E asked for a two-week delay.

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PG&E Keeps Bankruptcy Control for Now After Judge Delays Ruling

The group of financial companies — including Seth Klarman’s Baupost Group — with $20 billion in claims against PG&E has also floated a broad …

(Bloomberg) — PG&E Corp. remains in exclusive control of its bankruptcy for at least another two weeks after a judge sided with California Governor Gavin Newsom’s call for more time to develop alternatives to a bondholder restructuring proposal.

Judge Dennis Montali delayed ruling on a bondholder request to end PG&E’s control so they could submit their restructuring plan, and gave the parties until Aug. 9 to see if they could come up with a process for evaluating alternative reorganization proposals. A hearing will be held Aug. 13 on the bondholder’s group motion to end PG&E’s exclusivity.

Counsel for the bondholder group, which includes Pacific Investment Management Co. and Elliott Management Corp., strongly objected to delaying a ruling on the grounds that PG&E may not be able to exit bankruptcy by June 30. The San Francisco-based utility needs to have a restructuring plan by that date to be able to dip into a $21 billion wildfire insurance fund that would be set up to help utilities pay for fire claims.

“What they are proposing is an unprecedented, undocumented road to nowhere,” Michael Stamer of Akin Gump Strauss Hauer & Feld LLP said in a San Francisco courtroom. “Everything that the ad hoc group is doing has been under a desire to move the process forward.”

Newsom called for the court to allow time for the development of a new process for submitting restructuring proposals ahead of Wednesday’s hearing. The administration said it will support giving PG&E time to develop its own plan for emerging from the largest U.S. utility bankruptcy. PG&E currently has the exclusive right until Sept. 29 to submit a plan to restructure and exit bankruptcy.

PG&E rose as much as 6.7% on Newsom’s statement before paring gains. The shares closed at $18.89 on Wednesday in New York.

Counsel for the California Public Utilities Commission stressed the need for a competitive, orderly process for evaluating restructuring proposals that would give the regulator time to consider factors including the environmental impact and cost to ratepayers of a successful plan. PG&E also needs approval from the CPUC to exit bankruptcy.

“We cannot permit competition to turn into chaos,” CPUC lawyer Alan Kornberg of Paul Weiss Rifkind Wharton & Garrison said in bankruptcy court.

CPUC’s motion for a two-week delay on the exclusivity motion is supported by the company, another creditor group of financial companies holding insurance claims, a shareholder group represented by Jones Day, and the committee of tort claimants, according to Kornberg.

The group of financial companies — including Seth Klarman’s Baupost Group — with $20 billion in claims against PG&E has also floated a broad outline of its own restructuring strategy.

A collection of shareholders represented by Jones Day and PJT Partners Inc. said the decision by the court was a welcome step toward satisfying claims against the company and helping it emerge from bankruptcy.

“The investors look forward to working with the company and all stakeholders constructively throughout this process and stand ready to provide capital, as needed, to ensure that the most efficient and equitable form of financing is achieved,” Steve Zelin, a partner at PJT, said in a statement.

Wildfire Liabilities

PG&E filed for bankruptcy in January to deal with an estimated $30 billion in liabilities from wildfires that its equipment may have ignited in 2017 and 2018.

PG&E has accused the ad hoc bondholder group of trying to “hijack the Chapter 11 plan process” and argued last week in a court filing that it should be allowed to finish its plan without interference.

The Newsom administration is concerned that the competing proposals could get mired in litigation if allowed to play out in court, making it more difficult for PG&E to emerge from bankruptcy by June 30 as required under legislation passed this month.

In May, Newsom asked the court to deny PG&E’s request for an extra six months to file its restructuring plan and instead be required to submit it by Aug 15. The judge ruled then that PG&E could have until September.

–With assistance from Steven Church.

To contact the reporters on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net;Scott Deveau in New York at sdeveau2@bloomberg.net;Allison McNeely in New York at amcneely@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, ;Liana Baker at lbaker75@bloomberg.net, Michael Hytha, Joe Ryan

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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Cost of city living

A Credit Karma study found suburbanites have almost four times more in their savings accounts than people in cities. Get tips to stop sacrificing …
Advertiser Disclosure

We think it’s important for you to understand how we make money. It’s pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That’s why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don’t represent all financial products out there, but our goal is to show you as many great options as we can.

Living in a city may mean you’re trading your rainy day funds for skyline views.

A Credit Karma/Qualtrics survey of 1,022 American adults found that people who live in urban areas report having a median of $1,000 in their savings accounts. Those in suburban areas, however, report having nearly four times as much in their savings accounts — a median of $3,600. (Learn about our methodology.)

The higher cost of necessities could be leaving city dwellers with little wiggle room in their budgets to save. Our survey found 57% of urban respondents’ monthly income goes toward essentials like rent, food and utilities, while nearly half (47%) of those living in cities have or have had student loan debt.

Sacrificing savings to live in the city may seem OK in the short term, but city dwellers may be less financially secure in the long run as they head toward retirement. Our survey shows just 29% of people in cities report having 401(k) retirement accounts, compared with 40% of those in the suburbs.

So is it time to pack up and move outside city lines? Not quite. We have some tips below that can help if you’re feeling the financial strain of city life. But first, let’s take a look at some of the reasons city dwellers may have less room in their budgets to save compared with those in the suburbs.

Key survey findings

Respondents who live in cities have a median $1,000 in their savings accounts compared with $3,600 for those in suburban areas.
City dwellers report having a median $500 in their checking accounts compared with $1,000 for suburbanites.
While 40% of suburbanites have a 401(k), just 29% of city dwellers do.
The top financial goal for urban respondents is to become financially stable (51%), while suburbanites say their top financial goal is to grow their savings or investments (46%).
People in cities are more likely to say their top reason for moving in with a roommate would be to keep rent costs down (63%) compared to people in the suburbs (44%).

Static wages and a rising cost of living are a drag on city living

It’s no secret that wages haven’t kept up with therising costs of living. According to the Bureau of Labor Statistics, between 2013 and 2017, average income before taxes rose 15%, but expenses increased by around 17.5%.

Our survey shows that city dwellers in particular might be feeling the pressure of slow wage growth and the high cost of living: 22% said they believe their income is “very low” for the area they live, compared with just 13% of suburbanites. What’s more, 20% of city dwellers say they spend more than they make most months, and the top financial goal cited among urbanites (51%) was to become financially stable.

The cost of living can be high in cities compared with the suburbs, according to our survey findings. The table below shows some examples of where survey respondents report spending most of their money.

Percentage of take-home pay spent per month

City Suburbs
Essentials (food, utilities) 28.4% 26.6%
Rent/mortgage 28.6% 24.2%
Non-mortgage debts 14.1% 15.8%
Entertainment 10.3% 10.4%
Savings 8.5% 9.9%
Other expenses 10% 13%

But it’s not just the overall cost of living that’s leaving people in cities feeling the pinch. People in cities report spending more on housing than those living in the suburbs — almost one-third of their monthly pay (28.6%) compared with less than one quarter (24.2%) — and to spend the largest share of their income on housing.

And the cost of housing may drive city dwellers to move in with others at a higher rate. Among respondents who said they’d move in with a roommate, 63% of city dwellers said lowering their costs would be the top reason for doing it, compared with just 44% of those living in the suburbs.

Student loan debt hits city dwellers particularly hard

Student loan debt is a concern for many Americans no matter where they live. According to Federal Reserve Bank of New Yorkdata, in the first quarter of 2019 student loan debt climbed to $1.49 trillion. In June 2019, Credit Karma members with student loans had an average student loan debt balance of $36,140, according to TransUnion credit reports.

A higher rate of student loan debt among people in cities could be hindering their ability to save. Our survey found 47% of urbanites currently have or in the past held student loan debt, compared with 39% of those living in the suburbs.

A2019 Freddie Mac survey found that student loan considerations can have a big impact on people’s housing decisions. That survey found 51% of millennial renters had to make a different housing choice because of their student loans, while over half of workers employed in the essential workforce — think healthcare, education and law enforcement — had to make housing decisions with student loan obligations in mind.

But withfewer affordable housing options in urban areas, city residents could be left with no choice but to dedicate large portions of their paychecks to rent and student loans, with only a bit left over for savings.

Younger generations have a higher tolerance for expensive housing — and shared spaces

The younger the generation, the more willing its members are to spend and share in order to afford housing, our survey found.

Gen Z respondents, in particular, said they’d be willing to spend nearly half (49%) of their paycheck on rent or mortgage if they had to. Millennials were close behind at 45% of their paycheck. But Gen X respondents and older said about a third of their paycheck (36%) is as high as they’d be willing to go.

What’s more, nearly one-third of Gen Z respondents said they’d consider moving in with someone they didn’t know, compared with just 17% of millennials. The reason? Nearly half (45%) of Gen Z respondents said they would do it to make their rent more affordable.

With younger generationsincreasingly moving to urban areas and housing coststrending higher, millennials and those in Gen Z could very well see a larger portion of their pay going to housing — and it seems they’ve already started adjusting their expectations and strategies accordingly.


Saving in the city: How to live your best life while planning for the future

Based on our survey results, it’s clear that managing to save is a struggle for many people, especially if they’re living in cities. If that describes your situation, we have some tips to help you budget and work on your savings:

Know thyself (and thy budget)

Be honest with yourself about how much you can afford and stick to that. The U.S. Census Bureau recommends spending no more than 30% of your monthly income on rent. As a starting point, if you’re looking for housing, do the math and see what 30% can get you.

If your ideal area or apartment puts you over that threshold, ask yourself what you can tolerate and what you’re willing to compromise when it comes to your living situation. For example, are you willing to live with multiple roommates if it means saving a couple of hundred dollars a month?

Get creative and have an open mind

Although living with other people may not be everyone’s preference, it can be a way to help lower your housing costs. You could also consider getting a side gig to help supplement your living costs. A quarter of all city dwellers surveyed said one of their financial goals included getting additional sources of revenue. Adding to your total income each month could make it easier to put away some savings.

Don’t forget to prioritize future you

You don’t have to have a 401(k), stocks or a trust fund to become a saver. All it takes is setting aside any amount — no matter how small — each month in a savings account. Think about a percentage or a dollar amount you can spare from each paycheck and put it into the account. Over time,compound interest can help your money grow more quickly.


Methodology

On behalf of Credit Karma, Qualtrics conducted a nationally representative online survey in June 2019 of 1,022 Americans aged 18 and up to learn about savings and spending habits in urban areas vs. suburban areas. We also studied the generational differences among responses. To calculate the average student loan debt balance among Credit Karma members, we analyzed, in aggregate, the total student loan debt held by U.S. members as shown on their June 2019 TransUnion credit reports and divided that amount by the total number of U.S. Credit Karma members with student loans reported on their TransUnion credit reports for the same month.

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