Joseph Law

Bumper Content Writer

Alastair Shephard

Content Writer

If you find yourself struggling to afford your car payments in the UK, maybe because of the soaring cost of living or your circumstances have changed, don’t panic. 

We understand it’s a very worrying situation but we’re here to help. 

We’ll walk you through what to do when you can’t pay your car finance anymore, and explain your options. 

We’ll show you that you can manage the situation and relieve the pressure on your finances - not to mention the pressure on you.

The first thing you should do is get in touch with your lender. 

Not paying your car finance means you’re breaking your contract, it’s important to be open with the car finance provider straight away. 

They’ll appreciate the fact that you’re being proactive and that you want to make the situation right. 

What Will Happen If I Can’t Pay My Car Loan Repayments?

There are a few possibilities when you stop making your car repayments. 

This is likely the order in which things will happen.

Firstly, your lender will write to you when you miss a payment to discuss your situation and the possible options to get you back on track. 

If you miss more payments and don’t contact them they’ll issue a default notice. This will be recorded on your credit file. 

Further missed payments could then result in late payment penalties. 

These fees can vary between lenders but you can check how much your lender charges in the small print of your contract. 

Missing several payments could result then mean a County Court Judgment being made against you. 

A CCJ is an official demand for repayment by the lender. We’ll talk more about how late car payments affect your credit file and credit rating a little further on. 

Finally, as a last resort, your car may be repossessed. 

This will only happen if you’ve missed several payments and you simply can’t make them up. 

Or if you’ve not been in touch with the lender, and are deliberately avoiding them. 

Many lenders will work with you to find a solution, and repossession is always the final option for them. 

Apart from a genuine concern for clients, it’s also in a finance company’s interest to keep these agreements going. 

Here at Bumper, we’ve spoken to people who work at car finance companies and they’ve assured us that repossession really is a last resort. 

Don’t worry when you get in touch with them – contacting them quickly is the best move you can make.

Will late car finance payments affect my credit score? 

Yes, missing car loan payments can lower your credit score. 

Your credit score reflects how well you’ve repaid loans and credit agreements in the past, so not keeping on top of your car payments will result in a lower credit score.

This could be a problem in the future as lenders use your credit score to decide whether or not you can borrow. 

Another issue is that the default marker and County Court Judgment stay on your credit file for six years. 

This can significantly reduce your chances of getting a good mortgage or loan deal in the future. 

What are my options when I can’t afford my car payments? 

The most common options for someone struggling with car payments are to do the following:

Let’s go over each of these options in more detail.

Can I give my car back to the finance company? 

You might be able to hand your car back depending on the type of finance you’ve taken out and how much is left to pay. 

Personal Contract Purchase (PCP) and hire purchase (HP) contracts

 do let you return the car – a process called 

However, this is only an option if you’ve repaid 50% or more of the loan (including fees and interest). 

If you haven’t repaid over 50% you can pay the difference as a lump sum, although we appreciate this might be difficult when you’re struggling to make your repayments. 

Something else to consider with voluntary termination is that, if you’ve repaid more than 50% of the loan, you’ll lose that extra money if you hand the car back. 

In our opinion, voluntary termination is a better option if you have an HP agreement rather than a PCP. 

This is because with Personal Contract Purchase you’ll also have to make the large final payment, which might be difficult to fund. 

Refinancing for cheaper monthly payments 

means taking out a new loan that has better, more affordable terms. The new lender then repays your original loan. 

A cheaper monthly payment is the goal of refinancing, and you can achieve this via a lower interest rate or longer loan term. 

This might sound ideal in theory, but you do need to be a little careful with refinancing, as you can pay significantly more money overall. 

On the plus side, the lower monthly payments help with the immediate financial pressure you’re under. 

If you’re interested in refinancing the first thing to do is find out from your lender how much they need to settle the loan. Then search for any available deals with other finance companies. 

If you want to part-exchange your car for a cheaper one, again, you’ll have to ask for a settlement figure from your lender. 

You’ll also need to find out how much your car is worth. You can do this online but you could also visit a few car salesrooms for a value. 

Hopefully, your car will be worth more than the settlement figure and you can part-exchange for a cheaper vehicle.

If the car is worth less than the amount you need to settle the loan you’ll have to find the difference yourself, which may or may not be possible.

 that might be helpful in this situation.

This means you borrow the difference between your car’s value and the loan settlement figure. For this to work, though, you’d need to find a much cheaper car so the monthly payments do reduce. 

Are there any organisations that can help? 

 offer free help and moral support to people struggling to repay car finance and other types of borrowing. 

They provide confidential independent advice to help you find a way out of your current financial difficulties. 

 is another source of free support if you can’t afford to pay your car finance. 

They offer an online and telephone service, but also Webchat, so you can quickly ask a question or find out more information from a trained debt adviser. 

Hopefully, this article has given you a plan of action to help if you find yourself unable to pay car repayments. 

The key step is to contact your lender before you actually miss a car payment if you can and to be open in explaining why you can’t afford your repayments. 

Even if you’ve missed a payment they should respond positively if you do this, and you’re also giving yourself the best chance of relieving the debilitating pressure of financial difficulty. 

Fit car repairs, services, MOTs, and accessories into your monthly budget with Bumper. Split the cost into monthly payments, completely interest-free. Choose from over 1000s garages and dealerships.

has been writing about cars for over seven years and writing for Bumper for over two, blending his passion for automobiles with a talent for storytelling.

Joseph has written about engineering and cars for Autozilla, Komaspec, and several engineering manufacturers. When he's not writing or tinkering with one of his five cars, Joseph dreams of owning an Alfa Romeo 33 Stradale.

What Happens If You Can't Afford Your Car Payments

If you’re about to take out car finance it’s worth knowing that it can affect your 

. Credit ratings play a big part in our financial lives. They help us to get good deals on mortgages and loans, so does car finance affect credit scores for good or bad? 

Like any borrowing, if you pay back on time, car finance will help your credit score. If you miss payments or pay late, it will negatively affect your credit score. To find out how we explain how the credit scores work in this article. 

A credit score, sometimes called a credit rating, is a numerical figure between 0 and 999. It helps finance companies decide whether or not to lend to you. A high number indicates you’re a reliable payer and a lower one that you may have missed some repayments. 

Missed payments are reported to credit reference agencies; Experian, Equifax, and TransUnion, and your credit score falls as a result. The agencies all use different scoring methods, though. This makes it quite confusing as your rating might be different with all three.

So how exactly does car finance impact credit score?

There are two different types of credit checks, hard and soft. The former is a more in-depth check that looks at everything on your file, all borrowing, bank accounts and other financial markers noted.

Every hard credit check performed is also noted on your credit report, meaning that applying for too many lines of credit, e.g. car finance, credit cards etc, in a short period of time will negatively affect your score.

Soft credit checks only take a glance around your credit history and are often used to give an agreement in principle, something used to give a ‘conditional’ offer of lending, often done at the very start of the application process. 

How car finance can affect your credit score 

Car finance can positively and negatively influence your credit score, typically at two stages – application and repayment.

If you apply too many times in a short period, lenders carry out ‘hard’ checks on your credit file. This could damage your credit score unless they’re treated as one inquiry. It’s a good idea to ask whether a ‘soft search’ can be carried out at the application stage - this is a limited check that doesn’t affect your 

. It can give you an idea of whether the application will be accepted.

If your application is successful, your credit score may still fall a little but this will only be temporary. As time goes on, and you make your repayments in full, you can considerably build up your credit score.

If you miss any repayments, pay late, or pay less than you’re supposed to, it harms your credit score significantly. This is because you haven’t kept to the terms and conditions of the finance contract.

Car finance boosts your credit score if you make all your repayments on time and in full. But this means it’s important to be 100% confident that you can ensure that the repayments are affordable for the whole finance term. Regular repayments show that you can manage your money and that you aren’t a credit risk to lenders.

Car finance companies and other lenders will always focus on the risk of not being paid. Your credit score gives them a strong insight into whether this might happen. Your previous payment history is the biggest indicator. 

A low credit rating can make it hard to obtain finance in the future. Even if you are offered loans with a poor credit score, you won’t get access to the best deals and it’ll cost you more in interest. 

Does applying for a car loan affect credit score?

Applying for a car loan doesn’t affect your credit score if the lender does a ‘soft-check’ on your credit file. This means they only look at certain pieces of information in your credit record and the search isn’t visible to other lenders. 

If you make numerous applications for car finance within a short period, though, it could negatively affect your rating. This is because too many applications suggest that you’re urgently in need of money. 

Get your FREE credit report with Checkmyfile 

to see what lenders may see when they check your report. Try it FREE for 30 days, then £14.99 a month. Cancel anytime.

Does Buying a Car on Finance Improve Your Credit Score?

Positive effects on credit when you buy a car

Buying a car positively impacts your credit when you meet all the instalments. It shows financial responsibility to repay a loan as set out in the contract. It can give you access to better loan and mortgage deals in the future. 

Adding a different type of borrowing to your credit file can also boost your credit score as lenders see you’re dealing with a range of different credit and finance agreements. For example, paying off your car loan alongside credit card or store card balances. 

Credit cards are known as ‘revolving credit’ but car finance is ‘instalment’ credit as you pay a fixed sum each month as part of an instalment plan. Buying a car using finance strengthens your credit rating by showing you can repay consistently over a long period of time.

How quickly will car finance improve your credit score?

Because your credit score is a value of your reliability over time, any new lines of credit will take a little while to positively affect your credit score. 

Some people find as little as 6 months of on time payments is enough to improve their 

, but this will depend on your previous credit history.

How does buying a car negatively affect credit?

Missing a single payment can lower your credit rating, particularly if you don’t make the payment quickly. The lender is likely to report it to the credit reference agencies.

If you fall far behind with car finance repayments the detrimental effect on your credit rating will be severe and long-lasting.

Some lenders will declare the loan to be ‘in default’ after just 30 days. Others allow around 90 days before they call in debt collectors to recover the amount, or to repossess the car.

Defaults remain on your credit file for up to seven years and can limit the attractive finance deals that you’re offered in the future. If your credit rating is very low you may not be able to borrow at all until it improves.

Does Car Loan Refinancing Affect Your Credit?

Does car finance affect getting a mortgage?

If you pay your bills on time it will improve your credit and thus your chance of getting a mortgage. If you default on your finance payments, the bank will be less likely to offer preferable mortgage rates. 

Because your proposed mortgage lender will use your credit score when considering your mortgage application, car finance affects this in a similar way to any borrowing.

By limiting the number of car finance applications you make and checking that only ‘soft’ searches will be carried out, you can protect your 

 and there should be no negative effect. 

If your application is successful, car finance will have a positive effect as long as you make all your repayments on time.

Demonstrating that you can manage your money responsibly has the biggest positive influence on your credit rating and can lead to better deals on loans in the future. 

Bumper offers interest-free loans on car repairs to keep your car on the road and help you manage your money. Choose from 1000s of garages and dealerships nationwide.

 has been writing about cars for over seven years and writing for Bumper for over two, blending his passion for automobiles with a talent for storytelling.

Does Car Finance Help Your Credit Score?

The best car finance deal offers you affordability and good value. Still, it’s not always easy to unearth a great deal amidst all the technical details and jargon. So we’ve put together a guide to finding the best car finance deals in 2023. 

We'll help you wade through that jargon, hone in on the details you need to know and guide you towards the best possible finance deal for you. 

Is it better to finance a car through a bank or a dealership?

Dealerships can offer attractive packages if you want the flexibility of a PCP. Financing your car through a bank can also be good if you get pre-approved for a loan. You also don’t have to worry about mileage caps. 

Ultimately, it depends on what you’re looking for but I suggest that if you’re pre-approved by your bank you should then go to a dealership and compare their finance quotes to get a full picture of what's available. 

Taking out a 5-year car loan can be worth it compared to a shorter-term loan if you want to make lower monthly repayments. Bear in mind that the overall cost of buying the car will be higher as you’ll pay more in interest. 

Of course, during the loan period, you can refinance your car but there are positives and negatives to that option, so you'll need to decide if 

What’s the easiest way to finance a car?

The easiest way to finance a new car could be with PCP as this type of finance offers you flexibility, but a hire purchase deal may also be suitable. If you’re buying a used car, consider funding it with a personal loan or cash. 

Finding the best car finance deal does take time, but armed with the details and need-to-knows we’ve talked about you’ll soon be on your way to owning that dream car.

PCP offers flexibility when the contract finishes. You could buy the car outright, upgrade it, or hand it back to the dealership if you don’t want to continue. 

With a hire purchase agreement, you don’t own the car until the final payment is made. You pay a deposit and then the rest of the loan is divided into repayments, generally over five years. 

A personal loan spreads the cost over a fixed period and the interest rate is also fixed. 

What do you need to know when looking for the best car finance deals?

Three key figures to look at and compare are the percentage APR, the interest rate, and the loan term. So what do these mean? 

APR, or Annual Percentage Rate, is the total cost you’ll pay in a year for borrowing money. The APR includes the lender’s standard fees plus the interest rate. There are two different types of APR: 

This is a representative figure you can use to compare car finance deals as a first step. Be aware, though, that even if lenders advertise what seems like a ‘good’ APR, they’re not obliged to offer it to you. This is where personal APR comes in. 

A personal APR takes account of your personal financial situation, including your credit history, how much you want to borrow, and for how long. Based on this you could be offered a higher or lower APR, or the one advertised. 

The interest rate on your loan determines how much you’ll pay over and above the amount you’re borrowing. The higher the interest rate, the more you’ll pay for your car overall. When you take out a loan the interest is added and the total is divided into monthly instalments. 

The interest rate you’re offered is based on your financial circumstances in the same way as the APR, so the basic difference between interest rates and APRs is that the APR figure includes the lender’s fees. 

This is the length of time you’ll repay the loan. Choosing a shorter loan term means you’ll pay less in interest overall but your monthly repayments will be higher. A longer loan term means lower monthly instalments but the total cost of financing your car will be higher. 

It’s essential to know how much your car finance will really cost as lenders typically charge a range of fees. These can include an application or administration fee, early repayment fees, and in the case of a PCP deal, a price for exceeding the mileage cap. 

How to find the best car finance deal in 2023

Compare deals online using the APR figure as a starting point. You could also use a broker to find the best deals on your behalf. This can save time and many brokers work on a commission-only basis, which means you won’t pay a fee for their service. 

Use pre-approval to protect your credit score

If you narrow down your search to one or two deals that seem good, see if the lender(s) will pre-approve you for the loan. Or if you’re going for a bank loan, ask your bank if they can do this. 

If you can negotiate down the price of the car you might be eligible for better finance deals in terms of the interest rate or length of the loan term. 

Think about the running costs as well as the purchase price

Even if you’ve found a good finance deal, think about how much it’ll cost you to run the car. A car with a bigger engine could cost you more in fuel and insurance, so factor in the total cost of owning it before you go ahead. 

The fine print will include any ‘hidden’ costs, such as early repayment fees and late payment penalties, as well as the interest rate, APR, and loan term. 

You need to shop around to find a good car finance deal and ensure your credit rating is as high as possible. Also, consider putting down a larger deposit if you can - 10% or more if possible - to lower your monthly repayments. 

You can get 0% car finance deals but you need to have an excellent credit rating. They’re commonly offered on new cars rather than used cars and can save you a lot of money. Be careful, though, because there might be other fees to add on that could make the 0% car finance less attractive. 

A good APR is typically between 6% and 12% but this may only be available if you have a good or excellent credit score. If your credit score is lower, an APR between 13% and 20% could be considered good. 

Bumper offers interest-free loans for car repairs so we’ve got you covered when you find that special deal. Available at over 4000 garages and dealerships.

2023 Guide to the Best Car Finance Deals 

If you’re struggling to pay for car repairs, or are in dispute with a garage about the service provided, this article explains your rights, responsibilities and how to deal with the threat of a garage keeping hold of your car for non-payment. 

As consumers we all have a significant level of rights and privileges that serve to protect us in purchases, and it’s best to be armed with a good knowledge of the legal obligations of both yourself and the garage carrying out the work. 

 states that: Under the laws of the Supply of Goods and Services Act 1982 and the Sale and Supply of Goods to Consumers Regulations 2002, garages have to provide work to your car that is: 

If you believe that these conditions are not met, there may be some further steps you can take - the first step however is to communicate as best you can, with the garage, laying out your issues with their service. 

What to try first - how to mediate yourself 

If you find yourself confused with a large repair bill, or want some form of compensation or remuneration for the inconvenience caused by a garage, it’s often better to discuss with the garage first before resorting to legal action. 

Stating your consumer rights might be necessary, but it’s often better to talk through the problem first with the manager, to identify their side of the story. Be polite and friendly, and try not to accuse the garage of any wrongdoing straight away. 

You may find a reasonable explanation for the large bill, or the garage being a bit more willing to discuss options for fixing the dispute. 

A fairly common complaint with some garages is finding additional costs on your bill, for work you were not aware of. There are guidelines around how a garage should proceed with unforeseen breakages. 

If an issue is particularly complex, or you simply need your car back no matter what, giving general instructions to fix a problem is the easiest for the garage. This can include diagnosis, parts, labour and testing. 

An example would be if your brakes are underperforming. If the garage has instructions to “fix the issue with the brakes”, it is reasonable to assume they will take them apart, find the fault, purchase the required parts (from a supplier of their choice), and fit them. 

In this case, it is hard for the consumer to find fault with the cost of the parts, or the extent of time taken to diagnose and repair - as long as it is reasonable. 

However, if you have a little more time, and want to keep an eye on the costs, you can advise the garage with specific instructions. An example of this would be: “Diagnose the issue and prepare a quotation for remedial work to the vehicle's brakes”. 

This work may still be chargeable, as often problems need some level of disassembly to identify the fault, but once the fault is known, the garage should not do any more chargeable work. 

If you have instructed a garage on this basis, and they have gone on to buy or fit parts, without your instruction, they have not abided by the authorisation terms. 

What to do if the garage has not fixed the fault 

If you have trusted a garage to find and fix a fault, but it is still present, you may have grounds for complaint, unless the garage can prove that the new fault is a separate issue, or outside of the scope of work authorised. 

If a new fault has developed, speak to the garage immediately, and if possible book it in with the expressed notification that you require them to inspect their previous work, and you are not to be billed for any more diagnostic time. 

Bear in mind that due to the complexity of many systems, it’s possible that the new fault was not directly caused by the garage, and is the result of deferred repairs. 

Can a mechanic keep my car if I refuse to pay? 

In a word, yes. In the UK until a bill has been paid the garage can keep the car as a “Lien”, which is the right to keep the property until a debt is paid. 

It’s a necessary tool for garages to have, as once the work is completed, they have no power to ensure payment by the customer. 

The waters are muddied slightly if the work carried out is in dispute over any of the issues we’ve already discussed, including quality, price or time, where you may want and need your car back as soon as possible, but don’t want to accept the work completed by paying the bill. 

One way to get your car back, but not forgo the right to contest the level of service provided, is to pay the bill as ‘under protest’. This way the payment of the bill is not a marker of you agreeing with the transaction, if the complaint was to be elevated. 

Can a garage sell my car for non-payment? 

Whilst the garage is allowed to prevent you from collecting your car if you don’t pay, their ability to sell the car to recover costs is not as straightforward. 

 states the garage is not allowed to sell the car whilst the payment is in dispute. 

What if you can't afford the car repair? 

Sometimes car repairs take you by surprise and appear at the worst of times. If you’re worried about how to cover a large car repair bill, Bumper may have the solution for you. 

Bumper offers zero-interest financing on car repairs, from hundreds of approved partners across the country. Spread out your car repair bill by paying in instalments with 

To get started, enter your registration and postcode to 

Can a Garage Keep My Car For Nonpayment? 

With the vast number of cars on the road nowadays, collisions are sometimes unavoidable. Apart from the risk of injury, there's also the inconvenience of being without a car while it's being repaired and the difficulty of dealing with insurance providers. 

If your car has been in an accident and is unable to be repaired, it will be ‘written off’ by the insurance company. So, what happens if your car is written off while on finance? And what if it's not your fault? 

In this article, we'll discuss insurance write-offs and all the different types, along with examining each scenario so you know what to do should the worst happen after a pcp car accident. Scroll down to get the lowdown in minutes. 

An insurance write-off, also known as a total loss, is a determination made by an insurance company that the cost to repair a vehicle following an accident is greater than the vehicle's value. In other words, the car is deemed beyond repair and not worth fixing. 

When an insurance company writes off a car, it is usually due to one of three reasons: 

If you have a big repair bill that can’t be funded by insurance, split the car repair into interest-free monthly installments. With Bumper, you can apply for a credit limit of up to £5,000 and see a list of local dependable garages near you.

Are there different kinds of car write-offs? 

Yes, there are multiple categories of write-offs. Insurance companies use these to assess the damage. 

The four classifications used up to October 1, 2017, were A, B, C, and D, with the severity of the damage descending by category starting with A. 

After consideration, the ABI revised the salvage rule to emphasise structural problems that compromise safety rather than just the expense of repairs. These days, the categories are A, B, S, and N. 

Cars that are severely damaged ought to be crushed and never be seen again on the road. Even parts that can be salvaged must be destroyed. 

Crushing the body shell is required. Despite some pieces being salvageable, there has been considerable damage. The car should never be driven again. However, salvaged pieces can be used in other vehicles that go on roads. 

Category S (Structurally Damaged but Repairable) 

This might involve a twisted or bent chassis or a collapsed crumple zone during a collision. A professional repair is required because Category S damage goes beyond mere cosmetic issues. Until the repair is complete, driving won't be safe. 

Category N (Not Structurally Damaged, Repairable) 

For vehicles that haven't suffered structural damage, the problem may be merely cosmetic or an electric issue. However, don't assume these vehicles can be driven. Non-structural issues can affect the brakes, steering, or other safety-related components. 

What happens if your car is written off while paying finance? 

Personal Finance

What Happens If You Can't Afford Your Car Payments

Does Car Finance Help Your Credit Score?

2023 Guide to the Best Car Finance Deals

Can a Garage Keep My Car For Nonpayment?

Car On Finance Written Off But It's Not Your Fault?

How Car Loan Refinancing Works

What Happens If You Can't Afford Your Car Repair?