You may be under the impression that having a CCJ against your credit file can stop you in your tracks when it comes to buying a new car, however, this may not be the case.

There are many specialist credit brokers on the market, including us at Ucan, who believe that credit history shouldn’t be a barrier to owning a car that can assist you in your everyday life. In this guide, we’ll explain what happens when you get issued a CCJ and how it will affect your car financing application.

What is a CCJ?

CCJ stands for County Court Judgment, and you may be served one if someone takes court action against you for owning them money and you fail to repay your debts. This judgment type only applies to England, Wales, and Northern Ireland.

Before a CCJ is issued, your debtors are required under the Consumer Credit Act to formally inform you via warning letter that they will be pursuing legal action at least 14 days prior. You will have the opportunity to repay what you owe within this time and the letter will outline how the issue can be resolved. Ultimately if you don’t take the steps to repay the debt, a CCJ will be issued.

Receiving a CCJ means that the court has formally agreed that you owe the money and if you haven’t responded to the initial warning letter, the court won’t have heard your side.

The CCJ will be served through the post, and it will contain a summary of the following:

  • How much is owed.
  • How you will repay (in instalments or in full).
  • The payment deadline.
  • Who you will be paying.

You usually have two weeks to respond to the CCJ, in which you have two options; you can either:

  • Dispute the judgement: in this scenario, you should seek assistance from a professional financial advisor to facilitate the dispute.
  • Admit the claim: this will result in filling out an N9A admission form, which will allow you to provide details of your financial standing including income and expenditure, as well as being able to offer to repay the debt. The court will inform you of the rate at which your debt will be repaid if your offer is accepted, if rejected the court will let you know how much you should pay alongside the rate of repayment.

How long does a CCJ stay on your credit report?

Unless you can pay the full amount owed within a month, a CCJ will stay on your credit report for 6 years. Having a CCJ on your credit file may affect your credit applications, including car financing, as mainstream providers may be wary of accepting an application with a CCJ attached.

CCJ Types

The status of your CCJ may impact your car finance application. Let’s take a look at the two types:

What is a Satisfied CCJ?

A satisfied CCJ means the judgement has been settled in full, with all the associated debt being paid off. Whilst the debt has been fully paid off, a satisfied CCJ will remain on your credit report for up to 6 years. You will more likely be able to secure financing with a satisfied CCJ than an active CCJ.

What is an Active CCJ?

An active CCJ means that the judgement remains unpaid and still has debt associated. This CCJ type has the most negative impact on your credit report and will make it more challenging to secure financing from a mainstream lender.

Can I Get Car Financing with CCJ?

Due to the negative effect on your credit file, being issued a CCJ may make your car financing journey a little bit trickier, however, it isn’t all doom and gloom.

A CCJ signposts to mainstream providers that you have a history of not repaying your debt and therefore, are more of a risk. However, specialist lenders weigh up various factors that stretch beyond CCJs when assessing applications including:

  • Income stability: You may be able to sway lenders in your favour by demonstrating consistency with your income and expenditure. Consistent income shows you will be able to make regular loan repayments.
  • Employment history: Having a stable employment record may reassure providers that you will be able to maintain financial obligations throughout your repayment plan.

Whilst most mainstream lenders may be deterred by a CCJ on a credit file, specialist credit brokers, such as Ucan, believe that credit history shouldn’t stop your ability to own a car and may be able to assist you on your way to owning a vehicle. Apply today and get an instant quote from Ucan.

Applying for Car Finance with a CCJ

Applying for car finance with a CCJ will be a similar journey as a regular application with the possibility of being required to provide some extra documentation.

You will likely be asked for:

  • Proof of income: this can be shown through payslips and tax returns.
  • Proof of address: usually demonstrated through utility bills or bank statements.
  • Driving licence

With a CCJ attached to your credit file, and depending on the status of your CCJ, you may additionally be required to provide:

  • An explanation of the CCJ: providers may want to know the reason for the CCJ and your current repayment status.
  • Proof of settlement: if you’ve concluded your CCJ, lenders may need to see documentation as proof.

Car Finance for CCJ at Ucan

At Ucan, we understand that you may feel anxious about applying for car financing with a CCJ attached to your credit file, however, we’re here to assist you on the road to getting your new set of wheels. Apply today and receive a simple finance quote in 30 seconds.