What do you need when applying for car finance?
Updated: Monday, 15 May 2023
If you’ve never applied for car finance before, you’ll want to know what documents you’ll need before starting the application process. If you have all the documents ready, it could help avoid any unnecessary delays.
In this guide, we’ll list which documents you need when you apply for car finance. We’ll also discuss other important factors you should consider.
Proof of income
Most lenders ask for 2 to 3 months of bank statements or payslips when you apply for car finance. This is to prove that you can afford your monthly payments. At Moneybarn, we ask for 2 consecutive months of bank statements or payslips.
In some circumstances, the lender might ask for additional proof of income. This might be as part of their affordability checks, or if you are self-employed looking for car finance. If that is the case, the lender will be able to guide you through that process.
Benefits might also be counted as part of your income, depending on the benefits you claim and the lender you apply with. To get car finance on benefits with Moneybarn, your monthly income must be over £1,000 after tax (or over £1,300 for a joint car finance application).
For more information on the types of income we accept, please see our guide which lists the sources of income.
Proof of identity
As part of your car finance application, you’ll need to provide proof of identity. This is usually done with a full valid UK driving licence. Some lenders might let you use your passport, along with a completed DVLA or DVA mandate, if you are in the process of getting your licence renewed.
Lenders usually ask for a copy of both sides of your driving licence, so you should make sure it is up to date before you apply.
If you need to renew your driving licence, the DVLA can help.
Address history
As part of your car finance application, the lender will ask for your address history. The exact length they need might depend on the lender, but we ask for the past three years. This is to help confirm your identity.
What happens if I can't provide three years of address history?
Unfortunately, we do not accept applicants who have less than 3 years of UK address history.
How long will it take for my car finance to be approved?
When filling out your application, make sure you use the correct information to avoid any delays.
Once you’ve submitted an application, the lender will give you an indication of whether they can offer you finance.
There are three potential outcomes:
- Rejected: If your application is rejected, don’t worry. We’ve written a guide to some steps you could take to help figure out why you’ve been refused car finance.
- Approved: If your application is approved, the lender will contact you to help with the next steps.
- Approved in principle: The lender may ask you for more information before they make a final decision. They could ask for more documents as part of their affordability or credit checks, or they may need to confirm certain parts of your application.
What else do I need to consider when applying for car finance?
As well as getting the right documents prepared, there are some other things to consider before applying for car finance.
The type of loan
There are lots of different types of car finance available. You might want to consider each of the different kinds and find the one that suits you best. We’ve written a guide that explains how car financing works so you can make an informed decision.
If you’d like to fully own the car once the agreement ends, then you might wish to go for Conditional Sale (CS) car finance. If you’d rather hand the car back at the end of the loan term and get a new car, then you might consider a PCP or PCH plan.
If you can’t afford to purchase a car outright, you might also consider taking out a personal loan to fund this. It’s worth reading up on the difference between car finance vs a personal loan, to see which option is best for you.
Your budget
The next important thing to consider is your budget. A lender will only be able to offer you finance if it is affordable and appropriate for your personal situation. To help this, you could make a monthly budget.
To do this, try making a list of your monthly expenses. Consider the cost of your mortgage or rent, food shopping, utility bills, and so on.
If you’re considering getting a new car, make sure you consider the additional costs like fuel, servicing, MOTs, and road tax. For more details, we’ve written a full guide to all the different costs involved in owning a car.
Of course, this can vary from month to month, but you should be able to work out your average monthly budget. You can then see how much spare there is in your budget for your car finance repayments.
Once you know your budget, you could use a car finance calculator to see how much your monthly repayments might be depending on how much you’re looking to borrow for your new car.
Your credit file
When you apply for credit, a responsible lender will use a credit check to understand your eligibility. By doing this they will be able to see your credit file.
Some of the common things they will look at include how much credit you have, your credit utilisation, and if you’ve missed any payments in the past.
If you have a poor credit history, you might find it more difficult to get car finance. However, some specialist lenders such as Moneybarn provide car finance for those with bad credit.
If you don’t know what your credit score looks like, you can view your credit score for free on sites like ClearScore or Experian. Or, if you want to learn more about credit, we have a range of guides that will help you understand your credit score:
Is there a minimum credit score to get car finance in the UK?
There isn’t a minimum credit score that car finance providers look for. This is because there are three different credit reference agencies, and each use their own credit score ranges.
For more information, we’ve written a guide explaining why there is no specific credit score needed for car finance.
What should I ask the lender before I take out a loan?
Some important things include:
- The loan term, or in other words, how long will the agreement last for
- The finance amount, this is the total amount you will need to repay
- The APR, or interest, that you will pay on your loan, for more information on this please see our guide that explains what APR means.
If you’ve never applied for car finance before, you’ll want to know what documents you’ll need before starting the application process. If you have all the documents ready, it could help avoid any unnecessary delays.
In this guide, we’ll list which documents you need when you apply for car finance. We’ll also discuss other important factors you should consider.
Proof of income
Most lenders ask for 2 to 3 months of bank statements or payslips when you apply for car finance. This is to prove that you can afford your monthly payments. At Moneybarn, we ask for 2 consecutive months of bank statements or payslips.
In some circumstances, the lender might ask for additional proof of income. This might be as part of their affordability checks, or if you are self-employed looking for car finance. If that is the case, the lender will be able to guide you through that process.
Benefits might also be counted as part of your income, depending on the benefits you claim and the lender you apply with. To get car finance on benefits with Moneybarn, your monthly income must be over £1,000 after tax (or over £1,300 for a joint car finance application).
For more information on the types of income we accept, please see our guide which lists the sources of income.
Proof of identity
As part of your car finance application, you’ll need to provide proof of identity. This is usually done with a full valid UK driving licence. Some lenders might let you use your passport, along with a completed DVLA or DVA mandate, if you are in the process of getting your licence renewed.
Lenders usually ask for a copy of both sides of your driving licence, so you should make sure it is up to date before you apply.
If you need to renew your driving licence, the DVLA can help.
Address history
As part of your car finance application, the lender will ask for your address history. The exact length they need might depend on the lender, but we ask for the past three years. This is to help confirm your identity.
What happens if I can't provide three years of address history?
Unfortunately, we do not accept applicants who have less than 3 years of UK address history.
How long will it take for my car finance to be approved?
When filling out your application, make sure you use the correct information to avoid any delays.
Once you’ve submitted an application, the lender will give you an indication of whether they can offer you finance.
There are three potential outcomes:
- Rejected: If your application is rejected, don’t worry. We’ve written a guide to some steps you could take to help figure out why you’ve been refused car finance.
- Approved: If your application is approved, the lender will contact you to help with the next steps.
- Approved in principle: The lender may ask you for more information before they make a final decision. They could ask for more documents as part of their affordability or credit checks, or they may need to confirm certain parts of your application.
What else do I need to consider when applying for car finance?
As well as getting the right documents prepared, there are some other things to consider before applying for car finance.
The type of loan
There are lots of different types of car finance available. You might want to consider each of the different kinds and find the one that suits you best. We’ve written a guide that explains how car financing works so you can make an informed decision.
If you’d like to fully own the car once the agreement ends, then you might wish to go for Conditional Sale (CS) car finance. If you’d rather hand the car back at the end of the loan term and get a new car, then you might consider a PCP or PCH plan.
If you can’t afford to purchase a car outright, you might also consider taking out a personal loan to fund this. It’s worth reading up on the difference between car finance vs a personal loan, to see which option is best for you.
Your budget
The next important thing to consider is your budget. A lender will only be able to offer you finance if it is affordable and appropriate for your personal situation. To help this, you could make a monthly budget.
To do this, try making a list of your monthly expenses. Consider the cost of your mortgage or rent, food shopping, utility bills, and so on.
If you’re considering getting a new car, make sure you consider the additional costs like fuel, servicing, MOTs, and road tax. For more details, we’ve written a full guide to all the different costs involved in owning a car.
Of course, this can vary from month to month, but you should be able to work out your average monthly budget. You can then see how much spare there is in your budget for your car finance repayments.
Once you know your budget, you could use a car finance calculator to see how much your monthly repayments might be depending on how much you’re looking to borrow for your new car.
Your credit file
When you apply for credit, a responsible lender will use a credit check to understand your eligibility. By doing this they will be able to see your credit file.
Some of the common things they will look at include how much credit you have, your credit utilisation, and if you’ve missed any payments in the past.
If you have a poor credit history, you might find it more difficult to get car finance. However, some specialist lenders such as Moneybarn provide car finance for those with bad credit.
If you don’t know what your credit score looks like, you can view your credit score for free on sites like ClearScore or Experian. Or, if you want to learn more about credit, we have a range of guides that will help you understand your credit score:
Is there a minimum credit score to get car finance in the UK?
There isn’t a minimum credit score that car finance providers look for. This is because there are three different credit reference agencies, and each use their own credit score ranges.
For more information, we’ve written a guide explaining why there is no specific credit score needed for car finance.
What should I ask the lender before I take out a loan?
Some important things include:
- The loan term, or in other words, how long will the agreement last for
- The finance amount, this is the total amount you will need to repay
- The APR, or interest, that you will pay on your loan, for more information on this please see our guide that explains what APR means.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
