Advice and Tips

6 reasons your car finance has been refused

Advice and Tips // 05 August 2019

If you’re thinking of getting a new car you may be wondering if you’re eligible for car finance. Many driver’s send-off applications with high hopes only to find they’ve been rejected by one or more providers.

At Moneybarn we want to make sure everyone has the opportunity to enjoy that new-car feeling. To ensure this happens we’ve put together a list of the main reasons why people may get refused car finance, so everyone can understand and hopefully find the car finance they need, even if they have bad credit.

Paying for poor credit

You may be refused car finance if your credit score is low or in poor shape. This could be because of outstanding debts, missing or late payments on your mortgage, credit cards or bills.

Remember, instances of bad credit can potentially stay on your credit file for up to six years!

Other reasons could include; if you’re not on the electoral register, you have a County Court Judgment (CCJ), you’ve recently changed address and many more.

It’s important you find out if your poor credit is the reason you’ve been rejected by the lender. If so, don’t lose hope, you can start building your credit rating up straight away. Use tools like Experian and Clearscore to tell you your credit score, they also offer tips on how to improve it.


Age is more than a number

Each lender considers different criteria when reviewing applications and for some, age can be a make or break factor.

Some lenders are willing to make an offer to those who are 18-21, but many lenders do have age limits when it comes to car finance.

If you’ve been refused car finance simply because of your age and the rest of your application is strong, take a look at other lenders’ criteria and call around to find a policy you may be accepted for.

Birthday cake candles

Choose your car wisely

Car finance lenders decide whether you’re accepted or declined based on risk. They’ll look at your credit score and track record of paying back owed money. Some companies like us will accept more people than mainstream lenders. If you are accepted, you’ll have to send over proof of income, like bank statements, so we can work out what you can afford.

Make sensible choices when it comes to your application – it’ll give you the best chance of approval from your lender.

Comparing apples

Prove your payment credentials

For most lenders, they’ll base your application on how long you’ve been employed. They want you to prove you have a stable income and a track record of staying employed.

You’ll need to be able to provide proof of your income to the lender. To make the process smoother make sure you’ve got at least a few months’ payslips or bank statements to hand when you go to apply.

Those without a steady income, who are unemployed, or students will find it harder to get approved for a loan, but there are some ways to improve your chances.

Proof of good credit – such as not missing any of your monthly bills will strengthen your application, plus having a deposit sum you can use upfront can encourage approval.

Calculating bills

Be road-ready

It may seem obvious, but anyone applying for car finance should have a full, current and valid UK driver’s license.

If you’re yet to pass your driving test or are currently serving a ban from driving, you will find you can’t get car finance.

However, it is possible, with some lenders to be accepted for car finance without a valid license. If you make a joint application with a partner who does have a valid license, it could improve your chances. Just remember, you won’t be able to drive the car without one.

Driving licence

Keep an eye on credit

If you’ve recently opened a new credit card and are yet to use it or have a card you no longer use, it can cause complications when it comes to applying for car finance.

This is because you’ve technically got unused credit against your name.

If you’ve no intention of using the card, paying off any outstanding balance and cancelling it could improve your credit score and your finance application.

Handing over credit card

If you’ve been refused credit in the past, check you’re not making any of the mistakes mentioned in this article. If you’d like any further information on why you may have been declined car finance, get in touch with our team. If you feel like you’re in good shape, financially that is, consider making an application or use our car finance calculator to help understand what you might be able to afford.