If you’re thinking of getting a new car, you may be wondering if you’re eligible for car finance? Many drivers send off applications with high hopes, only to find they’ve been rejected by one or more car finance providers.
At Moneybarn we want to make sure there’s the opportunity to enjoy that new-car feeling. To help this happen we’ve put together a list of the main reasons why people may get refused car finance, so everyone can understand and find the car finance they need, even if they have bad 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; not being on the electoral register, having a County Court Judgment (CCJ) or if you’ve recently changed address as well as many more.
It’s important you find out if your poor credit may be the reason you’ve been rejected. You can use tools like Experian and Clearscore to tell you your current credit score, they also offer tips on how to improve it. If your credit score is poor, don’t lose hope, you can start building your credit rating up straight away.
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.
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 are more likely to accept people with bad credit compared to 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.
For some lenders, one factor they might consider on your application is 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 even 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 upfront can help your chances of approval.
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, in some cases it can be possible to be accepted for car finance without a valid license. Your chances of this happening are only improved if you are making a joint application with a partner who does hold a valid license. Just remember, you won’t be able to drive the car without one.
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.
If you’ve been refused credit in the past, check all the things we mentioned above. If you’d like any further information on why you may have been declined, get in touch with our team.