Exploring Soft Search Car Loans: Are They a Good Option?

When it comes to purchasing a car, financing often plays a key role. According to a study by Nimblefins, the most popular cars in the UK cost in the region of £12,000 to £36,000 to buy new in 2024. While opting for a used vehicle can offer a more affordable alternative, prices still range around several thousands of pounds, making it impossible for some to buy outright.

As such, car finance has become an increasingly popular option for prospective car buyers. Traditional car loans typically require a credit check to assess the borrower’s creditworthiness, with good credit scores significantly impacting the approval process and loan terms offered.

However, at Bad Credit Motor Finance, we understand that not everyone has a stellar credit history.

If you have bad credit, a soft search car loan could be the solution you need. Read on as we explore the intricacies of soft credit car financing and identify whether it is the right option for you.

What is a Soft Search Car Loan?

There is no way to obtain car finance without some form of credit check. Responsible lenders in the UK are legally required to assess your ability to repay a loan. While a traditional hard credit check might not be involved, lenders offering soft credit check options typically use alternative methods to evaluate your creditworthiness. 

Lenders using soft search solutions open the avenue for individuals with bad credit or no credit history to access car finance options. A soft credit check doesn’t leave a visible footprint on your credit file, meaning no impact on your credit score and no other lenders can see it.

Apply for a no-obligation quote now to find a bad credit car finance option tailored to your needs.

What is the difference between a hard and soft credit check?

When applying for car finance, understanding the difference between hard and soft credit checks is crucial for making informed decisions. Here’s a breakdown of how each one works:

AspectHard Credit CheckSoft Credit Check
Impact on Credit ScoreCan lower your credit score temporarilyDoes not affect your credit score
Visibility to LendersVisible to other lendersNot visible to other lenders
Duration on Credit ReportStays on your report for 12 monthsVisible only to you
Consent RequirementsRequires explicit consentCan be done without consent
Frequency of ImpactMultiple hard checks in a short period can negatively affect your scoreNo impact, regardless of frequency
Detail LevelProvides a detailed view of credit historyProvides a summary view of credit history

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The Pros and Cons of Soft Search Car Loans

Soft search car loans offer a range of benefits, particularly for individuals with poor or no credit history. Here are some of the key advantages:

  • Improved Access to Financing: Traditional lenders often have stricter credit score requirements, making it difficult for bad credit applicants to qualify for car finance. Soft search car loans open the door to car ownership for many by removing the barrier of a hard credit check.
  • Increased Chance of Approval: While not guaranteed, soft credit checks can increase your chances of approval for a car loan compared to traditional lenders. By prioritising other factors such as employment history, bad credit lenders offer a path to obtaining a vehicle.
  • Credit Building Opportunity: Making regular, on-time payments on a soft search car loan may help improve your credit score over time. Check with the lender beforehand to see if they are reporting the repayments to credit reference agencies, as it could help you secure better deals on loans and mortgages in the future.

However, before committing to a soft search car loan, it is wise to consider all the factors involved in the process:

  • Higher Interest Rates: Typically, the tradeoff for a soft search car loan is higher interest rates compared to traditional car finance. Lenders who use a soft search may compensate for the perceived higher risk of defaults by charging a higher Annual Percentage Rate (APR). Carefully compare APRs between different lenders before making a decision.
  • Vehicle Choice: The selection of cars available under soft search loans might be limited compared to traditional lenders. Choice may be restricted to a smaller pool of cars with less options in terms of make, model, year, and features.
  • Potential for Rejection: Some lenders may provide conditional acceptance based on a soft credit search but may still conduct a hard search before payout. This additional step could potentially lead to a decline if discrepancies or issues arise during the final review process.

As an FCA-authorised and regulated credit broker, Bad Credit Motor Finance can find a deal tailored to your needs – get a free, quick quote today!

Two columns which list the pros and cons of soft search car loans for a UK audience.

FAQ Soft Search Car Loans

How Does a Soft Search Car Loan Work?

Soft search car loans function similarly to traditional car loans but with a more flexible approach to assessing eligibility. Instead of relying solely on credit scores, lenders use a soft credit check alongside considering factors such as income, employment history, and affordability. This can help individuals with bad or no credit history to secure financing for a car.

Can I Get Car Finance Without a Credit Check?

Technically, no. The Financial Conduct Authority (FCA) in the UK regulates car finance, and lenders must perform some form of credit assessment to comply with regulations. However, some lenders can offer car finance with soft credit checks to evaluate your suitability.

Will I Get Car Finance with a Poor Credit Score?

Yes, it’s still possible to obtain car finance with a poor credit score. Many lenders specialise in financing for individuals with poor credit histories, focusing on factors beyond solely credit score to assess an application. However, it’s important to be aware that a poor credit score may result in higher interest rates and less favourable loan terms.

What Is the Lowest Credit Score to Finance a Car?

There isn’t a single minimum credit score for car finance in the UK. Traditional lenders might have score requirements, but soft search lenders tend to look more at your overall financial situation than your credit profile.

What Is the Easiest Car to Get Approved For?

The ease of approval for a car loan depends on various factors, including your credit history, income, and the lender’s criteria. Generally, cheaper cars with good resale values are easier to finance.