How hard is it to get approved to finance a car?

Daniel Timblick, Senior Credit Risk Analyst, Wednesday, 12 April 2023
Updated: Friday, 14 July 2023

Car finance is a popular way to pay for a vehicle in the UK. There are lots of different types of car finance, and lots of different lenders, so you might be wondering how hard it is to qualify for car finance.

In this guide, we’ll explore the things that might make it difficult to get approved to finance a car. We’ll also give you some tips that could help your chances of getting approved.

Do I qualify for car finance?

Each lender is different and might have different lending criteria. If you are eligible to apply with them, a responsible lender will then use a credit check. This is so they can understand whether you can afford any finance they could offer.

To learn more about this, take a look at our guide on hard search vs soft search credit check. It explains that some lenders use a hard check at the point of application, which does affect your credit score, while some lenders use a soft search which doesn’t.

As well as checking your credit history, lenders also look at:

  • Your age
  • Your address history
  • Affordability.

Why might car finance make sense for me?

Purchasing a car outright can be expensive, which is why some people prefer to use car finance to spread the cost over an agreed period of time.

You might consider getting car finance for several reasons:

Car finance spreads out the cost over time

You might not have the money to buy a car outright. Or you prefer to have a budget and know how much you have to pay for the car each month. Some types of car finance have fixed monthly payments so you know exactly what you need to repay each month.

There are lots of different options available

As car financing has become more popular, more options have become available. Nowadays, plenty of different choices are available to help you find exactly the type of car finance agreement that’s right for you. And it’s often relatively easy to take out car finance too, with most lenders allowing applications online.

The most common types of car finance include:

For more information about each type and their pros and cons, please see our guide which explains how financing a car works.

Car finance enables you to buy the vehicle you need

If you pay cash, you’re limited to the car you can afford at that point in time. However, if you get car finance, you might be able to get a newer car, or one with better specifications that ticks more of you boxes.

Spreading out the cost with car finance might mean that you can purchase the car that you need rather than settling for something less.

Car finance can help with budgeting

Budgeting might be more flexible if you’ve opted for car finance. You’ll know what your monthly repayments are, which allows you to plan around your car finance when it comes to other things like living expenses, entertainment and fuel costs.

Car finance can boost your credit score

If you make your repayments in full and on time, your credit score may increase over the course of your car finance agreement. This can help make it easier to get credit in the future.

If you don’t know your credit score, Experian or ClearScore allow you to view your credit score for free. Or if you just want to learn more about credit, our other guides can help:

How hard is it to get approved for car finance?

Applying and being approved for car finance doesn’t have to be difficult or time consuming, especially if you have good credit. Even if you aren’t, some lenders specialise in offering bad credit car finance.

If you’ve got a good credit score and fit the lender’s criteria, it should be relatively easy to be accepted for car finance. It is important to know the ins and outs of car finance before you sign up to an agreement.

Let’s look at some related questions that you might have about getting approved for car finance.

What credit score do I need to finance a car?

Often, the better your credit rating is, the lower your interest rate will be. But even those with a poor credit history can find finance companies that will approve their applications, but they might be offered a higher interest rate or have to put down a deposit.

Before applying for car finance, it’s worth doing what you can to improve your credit score. A good credit history and score could increase your chances of getting approved and could even reduce the interest rate you are offered. Although this isn’t always a quick win, it’s most definitely worth looking into ways of improving your credit score.

There is no specific credit score you need to get car finance. There are three different credit reference agencies (CRA) in the UK, each with their own credit scores. Car finance companies use different CRAs to view your credit file.

Can I get car finance with a bad credit score?

There’s no saying whether or not you will be able to get car finance with bad credit, but some lenders such as Moneybarn specialise in this. You might be offered higher interest rates than someone with good credit, so you could look to improve your credit score before applying.

Representative 30.5% APR.

To better understand what is meant by bad credit, please see our guide that explains bad credit and common myths.

Can I get car finance as a self-employed person?

Car finance companies traditionally see self-employed people as higher risk because they don’t have a regular income compared to people in employment. It is still possible to get car finance when self-employed, but you might have to provide extra documents to prove your income.

Tips for getting approved for car finance

If you’re worrying about getting approved for car finance or have been refused car finance in the past, there are some things you could do that may improve your chances:

  • Keep on top of your bills – this will prove to the lender that you are responsible with money and will make the car finance repayments
  • Fix any wrong information – check your credit report, and if there’s anything that’s wrong or out of date then contact the credit reference agency to get it updated
  • Register for the electoral roll – if your name isn’t on the electoral roll, you might find it harder to get credit
  • Put down a larger deposit – a bigger deposit means you will borrow less money from the lender.

These are just some ways you could increase your chances of getting car finance.

FAQs around getting approved for car finance

This depends on the finance company you’re applying through, so we can’t speak for other lenders.

When you complete an application with us, you’ll get an immediate indication of whether we could offer you finance. For more information about this, please see our guide that explains how long car finance approval takes with us.

How much a lender will give you depends on how well you fit the lender’s criteria, your credit history, and your affordability. At Moneybarn, we offer finance for cars between £4,000 to £35,000.

Car finance is a popular way to pay for a vehicle in the UK. There are lots of different types of car finance, and lots of different lenders, so you might be wondering how hard it is to qualify for car finance.

In this guide, we’ll explore the things that might make it difficult to get approved to finance a car. We’ll also give you some tips that could help your chances of getting approved.

Do I qualify for car finance?

Each lender is different and might have different lending criteria. If you are eligible to apply with them, a responsible lender will then use a credit check. This is so they can understand whether you can afford any finance they could offer.

To learn more about this, take a look at our guide on hard search vs soft search credit check. It explains that some lenders use a hard check at the point of application, which does affect your credit score, while some lenders use a soft search which doesn’t.

As well as checking your credit history, lenders also look at:

  • Your age
  • Your address history
  • Affordability.

Why might car finance make sense for me?

Purchasing a car outright can be expensive, which is why some people prefer to use car finance to spread the cost over an agreed period of time.

You might consider getting car finance for several reasons:

Car finance spreads out the cost over time

You might not have the money to buy a car outright. Or you prefer to have a budget and know how much you have to pay for the car each month. Some types of car finance have fixed monthly payments so you know exactly what you need to repay each month.

There are lots of different options available

As car financing has become more popular, more options have become available. Nowadays, plenty of different choices are available to help you find exactly the type of car finance agreement that’s right for you. And it’s often relatively easy to take out car finance too, with most lenders allowing applications online.

The most common types of car finance include:

For more information about each type and their pros and cons, please see our guide which explains how financing a car works.

Car finance enables you to buy the vehicle you need

If you pay cash, you’re limited to the car you can afford at that point in time. However, if you get car finance, you might be able to get a newer car, or one with better specifications that ticks more of you boxes.

Spreading out the cost with car finance might mean that you can purchase the car that you need rather than settling for something less.

Car finance can help with budgeting

Budgeting might be more flexible if you’ve opted for car finance. You’ll know what your monthly repayments are, which allows you to plan around your car finance when it comes to other things like living expenses, entertainment and fuel costs.

Car finance can boost your credit score

If you make your repayments in full and on time, your credit score may increase over the course of your car finance agreement. This can help make it easier to get credit in the future.

If you don’t know your credit score, Experian or ClearScore allow you to view your credit score for free. Or if you just want to learn more about credit, our other guides can help:

How hard is it to get approved for car finance?

Applying and being approved for car finance doesn’t have to be difficult or time consuming, especially if you have good credit. Even if you aren’t, some lenders specialise in offering bad credit car finance.

If you’ve got a good credit score and fit the lender’s criteria, it should be relatively easy to be accepted for car finance. It is important to know the ins and outs of car finance before you sign up to an agreement.

Let’s look at some related questions that you might have about getting approved for car finance.

What credit score do I need to finance a car?

Often, the better your credit rating is, the lower your interest rate will be. But even those with a poor credit history can find finance companies that will approve their applications, but they might be offered a higher interest rate or have to put down a deposit.

Before applying for car finance, it’s worth doing what you can to improve your credit score. A good credit history and score could increase your chances of getting approved and could even reduce the interest rate you are offered. Although this isn’t always a quick win, it’s most definitely worth looking into ways of improving your credit score.

There is no specific credit score you need to get car finance. There are three different credit reference agencies (CRA) in the UK, each with their own credit scores. Car finance companies use different CRAs to view your credit file.

Can I get car finance with a bad credit score?

There’s no saying whether or not you will be able to get car finance with bad credit, but some lenders such as Moneybarn specialise in this. You might be offered higher interest rates than someone with good credit, so you could look to improve your credit score before applying.

Representative 30.5% APR.

To better understand what is meant by bad credit, please see our guide that explains bad credit and common myths.

Can I get car finance as a self-employed person?

Car finance companies traditionally see self-employed people as higher risk because they don’t have a regular income compared to people in employment. It is still possible to get car finance when self-employed, but you might have to provide extra documents to prove your income.

Tips for getting approved for car finance

If you’re worrying about getting approved for car finance or have been refused car finance in the past, there are some things you could do that may improve your chances:

  • Keep on top of your bills – this will prove to the lender that you are responsible with money and will make the car finance repayments
  • Fix any wrong information – check your credit report, and if there’s anything that’s wrong or out of date then contact the credit reference agency to get it updated
  • Register for the electoral roll – if your name isn’t on the electoral roll, you might find it harder to get credit
  • Put down a larger deposit – a bigger deposit means you will borrow less money from the lender.

These are just some ways you could increase your chances of getting car finance.

FAQs around getting approved for car finance

This depends on the finance company you’re applying through, so we can’t speak for other lenders.

When you complete an application with us, you’ll get an immediate indication of whether we could offer you finance. For more information about this, please see our guide that explains how long car finance approval takes with us.

How much a lender will give you depends on how well you fit the lender’s criteria, your credit history, and your affordability. At Moneybarn, we offer finance for cars between £4,000 to £35,000.

 
Daniel Timblick, Senior Credit Risk Analyst
Bringing you guides that simplify the world of credit and answer common vehicle finance questions.
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