Many people don’t realise that your credit score affects the price you pay for a car on finance. We’ve used a car finance calculator to estimate the cost of buying some of the most common new cars on finance, and discovered the different prices you could pay if your credit score is bad, fair or excellent.
If your credit score is not quite as good as you’d like, do not fear, as our experts at Uswitch have some excellent advice on how to improve your credit score that could help you buy a car for a better price, and that advice can be found below.
Cost of the most popular car models
Ford Fiesta
Registered Vehicles: 1,531,436
Listed Price: £16,645
Cost on Finance with an Excellent Credit Score: £20,014
Fair Credit Score: £23,673
Bad Credit Score: £27,073
Cost Difference Excellent vs Bad Credit Score : £7,059
The most popular car in the country at the moment is the Ford Fiesta with over 1.5 million vehicles registered in 2020. The Fiesta has been sold in various different forms since 1976 and a base model will now cost you £16,645. When bought on finance with a four year repayment period, the total cost will be £20,014 with an excellent credit rating, which is over £7,000 less than the cost of the same car when you have a bad rating on your credit score.
Ford Focus
Registered Vehicles: 1,198,667
Listed Price: £22,215
Excellent Credit Score: £26,778
Fair Credit Score: £31,672
Bad Credit Score: £36,222
Cost Difference Excellent vs Bad Credit Score: £9,443
The Fiesta’s big brother ranks in second place in terms of the most popular car models in the UK with just under 1.2 million registered. Ford’s premium hatchback is more expensive than the Fiesta with the cost of owning one just over £22,000. When you have a bad credit score the Focus will set you back £36,222, which is a massive increase of £9,444 on the cost of buying it over four years with an excellent credit rating.
Vauxhall Corsa
Registered Vehicles: 1,059,717
Listed Price: £16,815
Excellent Credit Score: £20,269
Fair Credit Score: £23,974
Bad Credit Score: £27,073
Cost Difference Excellent vs Bad Credit Score: £7,149
In the early 1990s Vauxhall’s parent company General Motors decided to ditch the popular Nova, with the Corsa becoming the new supermini sold by the company in Britain. Over the decades it has gone through various redesigns but is still as popular as ever with over one million vehicles registered. With a bad credit rating, the Corsa will cost in excess of £27,000 which is £6,731 less than the cost of a four-year finance deal with an excellent rating.
Volkswagen Golf
Registered Vehicles: 1,053,818
Listed Price: £23,360
Excellent Credit Score: £28,158
Fair Credit Score: £33,305
Bad Credit Score: £38,089
Cost Difference Excellent vs Bad Credit Score: £9,931
The Golf is the most expensive car which ranks in the top five for the most popular models with a base cost of £23,360. When purchasing a Golf on a 48-month finance deal with an excellent credit score rating the total cost of the vehicle will be £28,158. Unfortunately, with a bad credit score, the popular VW will cost in excess of £38,000 which is around the same as the cost of a brand new Mercedes E-Class. The Golf name has been going strong since the mid-’70s and when choosing his ‘Cars of the People’ James May remarked “why not just have a Golf?” Perhaps the high cost is what stops everyone from having one.
Vauxhall Astra
Registered Vehicles: 847,059
Listed Price: £19,185
Excellent Credit Score: £23,125
Fair Credit Score: £27,352
Bad Credit Score: £31,281
Cost Difference Excellent vs Bad Credit Score: £8,156
The fifth most popular car in the UK is lagging somewhat behind the other four with over 300,000 fewer vehicles being registered than the model above it. To make things worse, two of the cars ahead are its two main rivals in the Focus and the Golf. However, the Vauxhall Astra is much more affordable than those two with the cost of purchasing one with a bad credit rating being £31,281, which is around £5,000 cheaper than the Ford. Despite this, it is even more advantageous to purchase an Astra when you have an excellent credit score because then it will only cost £23,125.
Advice on how to improve your credit score
If reading the above leaves you feeling worried about the excessive cost of paying for your next car due to a poor credit rating, all is not lost. Here are some top tips from Uswitch's personal finance expert, James Andrews, on how to improve your credit score to help you get the best deal when purchasing a car:
Tips on how to improve your credit score
Register to vote at your current address, and make sure your bank and credit accounts use this address too.
Close unused accounts. If you've never had a credit card or similar, consider taking one out and using it for regular, small purchases which you repay in full and on time.
The importance of improving your credit score
Having a poor credit score can add hundreds of pounds to the costs of a loan, as well as see you rejected outright from being offered some products - including car finance.
By contrast, a good score means you can qualify for the cheapest rates available.
Factors that can impact your credit score which are less known to the general public
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.
Being good with money and never getting into debt can actually be a bad thing as it gives no evidence on how you'll react if given a loan.
The best tips and advice to young people who have a poor credit score and want to finance a car
First, check your report to see what your score is. Second, check what's in there and that it's accurate. Third, take steps to improve your score.
Things like missed payments, county court judgements and the like will stay on your report for years. But that doesn't mean you can't improve.
Provided you make your payments on time, don't apply for many new products in a short space of time (six months, for example), and keep a stable address, things will improve.
In as little as four months you'll see scores start to improve and after a year you should be in a far stronger position.
Methodology
We looked at each of the new cars currently being sold by some of the UK’s most popular car manufacturers, with the numbers of each car sourced from the Department for Transport and Driver and Vehicle Licensing Agency’s vehicle registration data.
The list prices for each vehicle were sourced from the individual manufacturer websites, which we then ran through Money.co.uk’s car finance calculator to find out how much would be owed for the different levels of credit score.
All prices correct as of April 2021.
