What checks are done for car finance?

What do car finance companies check?

Lenders look at a few different things before they decide to lend to you. The Financial Conduct Authority (FCA) regulates car finance, and its rules say lenders must check you can afford what you borrow before they say yes.

Proof of identity

Lenders need to check you are who you say you are and that you’re at least 18. They’ll usually check this online in seconds, but some may ask you to upload a copy of your passport or driving licence.

Driving licence

Most lenders ask for a full UK driving licence. Some will accept a provisional or foreign licence, but you may have fewer deals to choose from. Make sure your licence is in date and your address on it is correct.

Address history

Lenders usually ask where you've lived for the last three years. This helps them match you to your credit report and protects you from fraud. Being on the electoral roll at your current address makes this step much easier.

Employment history and proof of income

Lenders want to see that you have steady money coming in and enough left over after your bills to cover your potential new repayments.

What they look at	Examples
Your job	Your employer, job title and how long you've worked there
Your income	Recent payslips, bank statements, or tax returns if you're self-employed. Some lenders also count benefits or a pension as income.
Your outgoings	Rent or mortgage, household bills and other credit payments

Some lenders now use Open Banking to check your income and spending. With your permission, it lets them safely view your recent bank transactions, usually from the last three months. This can be quicker than sending payslips or statements. Open Banking is:

• regulated by the FCA
• read-only, so no one can move money from your account
• your choice, and you can withdraw your permission at any time

Credit history

Your credit report shows how you've handled borrowing in the past. Lenders look at:

• whether you pay bills and credit on time
• how much you already owe
• any missed payments, defaults or County Court Judgments (CCJs)

There are three main credit reference agencies in the UK that hold your credit report: Equifax, Experian and TransUnion. You can check your report with each one for free.

Can I get car finance without a credit check?

Usually not. Lenders regulated by the FCA must check you can afford the payments, and looking at your credit report is a big part of that.

Take care with any deal that promises "no credit check". It could come with very high costs, or from a firm that isn't properly regulated. You can look up any lender on the FCA register before you apply.

The good news is that many lenders start with a soft search. This lets you see your chances without any effect on your credit score.

When are credit checks done?

Lenders use two types of credit check, and they happen at different stages.

Type of check	When it happens	Effect on your credit score
Soft search	When you check your eligibility or get a quote	None. It shows on your credit report, but only you can see it
Hard search	When you send a full application	Can lower your score a little for a short time. Other lenders can see it.

A hard search stays on your credit report for at least 12 months. Lots of hard searches close together can worry lenders, so compare quotes with soft searches first. Then make one full application when you've found the right deal.

Can I get car finance with bad credit?

Yes, it's often possible. Some lenders work with people who have lower credit scores. They understand that situations change, so they look at what you can afford today, not just your past credit history.

You might pay a higher interest rate, or the lender may ask for a larger deposit. A few things can help your application:

• Pay a bigger deposit, so you borrow less and your monthly payments are lower.
• Apply with a guarantor. This is someone who agrees to pay if you can't. You'll still need to show the payments fit your own budget.
• Choose a cheaper car, as smaller payments are easier to fit into your budget.

Will I be accepted for car finance?

No one can promise a yes until the lender finishes its checks. But you can get a good idea first. An eligibility checker uses a soft search to show how likely you are to be accepted.

Lenders are more likely to approve you when:

• your income covers the payments with some room to spare
• your details match across your application, ID and credit report
• you're registered on the electoral roll

It’s a good idea to check your reports before you apply, so you can fix any mistakes first. If a lender does turn you down, you can ask which credit reference agency it used and check that report.

How long does it take to get car finance approved?

Many lenders give a decision on the same day.

Stage	Typical time
Eligibility check	A few minutes
Decision on a full application	A few minutes to a few hours
Extra checks, such as proof of income	Usually one to three working days

Having your documents ready before you apply helps you avoid delays.

How to prepare for car finance checks

A little preparation can make the checks quicker and boost your chances of a yes. Before you apply:

• check your credit report with Equifax, Experian and TransUnion, and ask them to fix any mistakes
• register on the electoral roll at your current address
• gather your ID, recent payslips or bank statements, and your addresses from the last three years
• work out how much you can pay each month after your bills
• use eligibility checkers to compare deals before you make a full application