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Am I eligible for car finance?

It’s likely you’re eligible for some type of car finance. There are deals available to cover all types of circumstances, including those with a low credit score and guarantor arrangements. You can use an eligibility checker or online calculator to see which offers you’re eligible for, including PCP (personal contract hire) and HP (Hire Purchase) deals.

4 min read
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What are the main things to consider when applying?  

While most people will be considered, here are some basics you should bear in mind. 

  • you must be over 18 – car finance is a type of loan, so you must be at least 18 to qualify
  • you must be a UK resident – this is the same with all credit arrangements
  • you’ll likely need an income – part of the checks will be your affordability (to make sure you’re able to cover the monthly repayments) 
  • your credit score will be looked at as part of the check – the higher it is, the more likely you are to be accepted – and with low rates 

Is there a minimum deposit required? 

This depends on the lender, broker or dealership. Some places will require a deposit for their finance deals, and this is usually around 10% of the car's value. 

However, many places will offer car finance with no deposit needed, including us. You can use a car finance calculator to see how much you could borrow without a lump sum. 

Do I need a full driving license to be approved? 

No, you don’t. You’ll need a full license if you intend to drive the car alone, but not to take out finance. You will need some proof of ID though. 

However, it’s somewhat uncommon to take out car finance without a driver's license and some lenders may choose to only arrange deals for those with full licenses.  

Do I need to be employed to apply for car finance? 

To get most mainstream car finance deals, it’s likely you’ll need to be employed. The important thing is a regular income, to ensure the deal is affordable for you. You need to be able to cover the monthly repayments on time, every month. 

However, there are options if you’re retired, unemployed or a student – you just need to find a specialist lender. You might be best using a broker, rather than going direct to a dealership. Our partner CarFinance247 looks at all situations, so you can try our car finance calculator. 

If you struggle to get Hire Purchase or PCP, you could consider a secured loan or a personal loan to buy a car. 

Will I be accepted for car finance if I claim benefits? 

In short, yes, it’s possible. Some brokers will accept car finance applications for those on benefits. There are car finance deals to suit most budgets - it’s about having a steady income. 

Does being retired affect my chances of being approved? 

No, it shouldn’t. An income from being retired is classed as a reliable, steady income, so this alone shouldn’t impact your chances. The amount you can borrow may be impacted though, as this is all relative to your affordability. If you’re retired, it could be likely you’re on a lower income than if employed. 

Can I get car finance with a guarantor? 

Yes, this is possible, but not all brokers, lenders and dealerships offer this. It’s best to check that a particular company do offer this before considering making an application.  

What can I do to improve my chances of being accepted? 

There are several things than could help your chances of being accepted, these include: 

  • checking your credit report – have a look for any discrepancies holding you back and report them to the credit reference agency involved. You can check your report for free (for life) with CredAbility
  • register on the electoral roll – if you haven’t already, a quick way to boost your score is to register to vote. It’s easily done online at gov.uk
  • sticking to your repayments– one of the biggest reasons for a drop in your credit score is missing repayments on your credit arrangements, make sure you set up direct debits so this doesn’t happen to you 
  • do your research and use eligibility checkers – to increase your chances of acceptance, make sure you’re applying to the right places. Look for speciality lenders if you need to – and use an eligibility checker to see if you’re likely to be accepted before you apply
  • limit your applications– don't apply in too many places, any application is a hard credit check and this can give your score a knock 
  • lower your debt– part of what makes up your eligibility is your debt-to-income ratio, if this is low, it’s likely you’ll be accepted for more credit. If this is too high, lenders will be less likely to want to add more to your monthly repayments 

Find 45 ways to improve your credit score, including actions you can take right now and long-term strategies. 

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*Representative example: Borrowing £6,500 over 5 years with a representative APR of 21.9%, an annual interest rate of 21.9% (Fixed) and a deposit of £0.00, the amount payable would be £172.09 per month, with a total cost of credit of £3,825.54 and a total amount payable of £10,325.54. Rates may differ as they are dependent on individual circumstances. Subject to status. We're a credit broker, not a lender. **See our cashback offer T&Cs