Pandemic caused bad credit

Has the pandemic increased our personal debt?

Poor Credit Car Leasing

Poor Credit Car Leasing

Whilst we were all in it together, the pandemic affected us all differently.  Whilst employees were able to either go to work or receive a furlough payment, many small business owners were left in despair.

For years accountants had advised small business owners to take a small personal salary and to top up their income in dividends.  The company pay more corporation tax as you're declaring more profits, but you as an individual will pay slightly less tax so the net result often works out better.  

The small personal salary is usually equivalent to the first tax bracket, so many Company Directors of small companies receive an annual personal salary of £12,500.  

When the Government announced the first lock down with a furlough scheme, they agreed to cover 90% of peoples salaries, up to £2,500 each month.  They then introduced a similar scheme for those self employed, but what was uncovered days later was that, whilst a Company Director must complete a self assessment and are always declared as self employed when it comes to lending for example through a Mortgage, they were placed in a separate category in this scheme.  Therefore could only claim 90% of the paye salary that they declared and not the "top up" that appeared on their self assessment.  Not the full amount that they paid tax on each year.  So even though their business was forced closed and they would usually earn for example £50,000 per annum, the amount they could claim in furlough was 90% of the £12,500 per annum, which was £937.50 per month.

They may of had 3 or 4 children in school age and found themselves in a position where their income didn't even cover the mortgage or rent let alone, the utility bills other related debt and shopping.  They didn't qualify for free school meals or universal credit, so found themselves in dire situations.  Companies that had premises received a £10,000 grant, hardly touched the surface if your landlord didn't reduce the rent.  Many businesses only managed to stay afloat in those first 12 months if they had business savings to fall back on.  Certain categories of businesses were excluded from further grant schemes, for example a car dealership.  Even though there's massive delays and no product to sell, there's no grants, unlike in hospitality where they were able to operate as a takeaway and could still claim monthly grants.  

Many people relied on credit cards, chasing bills, which is only manageable short term, who expected to be plunged into another lock down which lasted longer over the winter months?  They had no choice, if they wanted to keep their business alive, they had to apply for a bounce back  loan; in the meantime their personal credit report was showing signs of becoming credit hungry which effects your personal credit score. 

Times have been tough and thankfully we have a couple of lenders who understand this, so as long as you can demonstrate that the issues are historic and things are moving back in the right direction, we should be able to assist you.  We have a detailed list of cars for lease with bad credit.

If you've been lucky enough to survive without your credit rating being affected, you can select car leasing deals for offers relating to a good to excellent credit rating.