How difficult is it to get car finance?
Whether you find getting car finance easy or difficult will depend on your individual circumstances as lenders will look at each credit application on a case-by-case basis. Also, some car finance lenders specialise in providing finance for those with poor credit scores.
Having said this, you’re more likely to get accepted (and with better interest rates) if you have a:
- good credit score
- stable income
- no or little other debt
- the ability to afford the repayments.
Do you need good credit to finance a car?
Since car finance is a type of credit, lenders are more likely to accept your application if you have good credit history. This is because your credit history shows how well you’ve dealt with money in the past.
For instance, if you have a high credit score and a good repayment history, the lender may feel more comfortable about lending to you – as there’s a good chance they’ll get their money back, based on your past record.
What do car finance companies look for?
Besides your credit score, there are some other things that car finance companies look for when deciding whether to accept your application:
- how old you are – you need to be over 18
- whether you’re a UK resident – only British citizens or residents can apply
- your driving licence – you need to legally be allowed to drive in order to have car finance in your name
- your income – they need to know that you have a stable income
- affordability – to show you can afford the repayments
Will I get accepted for car finance?
Whether you get accepted for car finance depends on your individual circumstances and the provider’s criteria.
All car finance providers have different criteria, so if you are rejected by one, it doesn’t mean you’ll be denied by all of them.
So, if you have a poor or thin credit history you could still get car finance – but you might have fewer finance options available.
How do I know if I can get car finance?
If you’re unsure if you can get car finance, there are several things you can do to get a better idea before you apply:
- speak to a broker – they’re experts in the market and should be able to advise you
- contact a dealership – they can tell you what their guidelines are for accepting car finance applications
- use an eligibility checker – many car finance providers have online eligibility checkers where you can see how likely it is that you’ll be accepted before you apply (this tool won’t impact your credit score)
Remember, making multiple applications in a short space of time is a bad idea, as it can show as a red flag to lenders. Instead, you can reduce the number of applications you make by following the above tips.
How to get approved for car finance
If you’re struggling to get approved for car finance or to access a good deal, follow these eight steps to maximise your chances:
1. Pay all your bills on time, every time
This will help improve your credit score, increasing your chances. It will also show the car finance provider that you’re responsible with money.
2. Save for a deposit
If you’re able to put a deposit down on a car, lenders are more likely to look favourably on your application than if you need 100% finance. Also, saving for a deposit can improve the likelihood of you getting a better deal.
3. Register to vote
Registering to vote is a quick and easy way you can increase your credit score – by about 50 points! It lets lenders know that you have a fixed address, so they can contact you easily if they need to – and it helps them to confirm your identity.
4. Check your credit report
Check your credit report for any mistakes – fixing them will improve your credit history. You can do this by contacting the agency that conducted the credit check and telling them what corrections are needed. They may need you to provide evidence before they can update it.
5. Consider getting a guarantor loan if you have bad credit
Taking out car finance with a guarantor may be an option if you’re able to find somebody willing to be your guarantor who has good credit. The guarantor will become jointly responsible for the loan, so they need to be aware that if you stop making repayments on the loan, they’ll have to make them instead.
It’s worth noting that not all brokers, lenders and dealerships offer this, so your choices may be limited.
6. Research different finance options
There are other ways to access credit that you may find easier than taking out car finance. For instance, you might be able to take out a personal loan or a credit card to pay for a car. Just remember that you’ll have to pay the money back, so make sure you can afford the repayments.
7. Use a car finance eligibility checker
Use a car finance eligibility checker to see how likely you are to get accepted before you apply. Each time you make an application for credit a footprint is left on your credit history. So, you should use an eligibility checker to help you find the deals your eligible for, to limit the number of applications you make.
8. Fill in the application form carefully
If you provide incorrect information on the application form, you may get refused. Plus, the credit application will cause a temporary dip to your credit score (whether you are accepted or rejected). Double-check your answers and if you’re not sure how to answer a question, make sure you find it out instead of guessing.
Get Car Finance up to £100,000
- Check your eligibility without impacting your credit score
- No deposit needed
- Rates from 9.9%* APR
*Representative example: Borrowing £6,500 over 5 years with a representative APR of 19.9%, an annual interest rate of 19.9% (Fixed) and a deposit of £0.00, the amount payable would be £166.07 per month, with a total cost of credit of £3,464.37 and a total amount payable of £9,964.37. Rates may differ as they are dependent on individual circumstances. Subject to status. We're a credit broker, not a lender.
Disclaimer: All information and links are correct at the time of publishing.
