Whether you’re searching for your next job, retired, or simply in between jobs, finding the funds to buy a new car can be challenging. You might be worried that, just because you’re out of employment, you can’t get a car on finance.
In this guide, we’ll explain the things to consider when looking to get car finance if you don’t have a job right now.
This is a situation that many people find themselves in. Even though you’re between jobs, a car is still important to help you get around, and maybe even get to future job interviews.
Most lenders require you to have a certain monthly income to be eligible. You could research different lenders or depending on your circumstances you might wait until you’ve been in the new job for a few months before applying for finance.
If you’re in between jobs and claiming benefits, there are some lenders that accept applications for car finance while claiming benefits.
If you aren’t currently in a job or have only recently started a new job, you might find it difficult to get car finance. There is no set period of time you should be in a job for before applying for car finance. However, you might want to consider waiting three to six months before you apply, so that you have some payslips or bank statements to provide proof of income.
If you’re a housewife, househusband, or have left work to focus on childcare, you might be wondering if you are eligible for car finance.
Since you might not have an income by yourself, you might consider making a joint application for car finance. This is where you and another person in your household, such as your partner or family member, apply together. For more details, please see our guide on joint car finance that explains the things you should consider.
Just because you’re unemployed, doesn’t mean you can’t apply for car finance like everyone else. The most popular types of car finance include Conditional Sale (CS), Personal Contract Purchase (PCP) and Hire Purchase (HP).
CS car finance is the type of finance we offer at Moneybarn. This is where the lender pays the dealership for you, and you make monthly repayments until the finance amount is repaid. During your agreement, you will be the registered keeper of the car, and once you’ve made your final repayment, you will legally own it.
PCP is where you pay a small deposit to take out a loan to cover the depreciation of the car. You then make monthly repayments over the agreed term. At the end of the agreement, you have the option to:
HP is where you borrow from a lender to buy a new car and make monthly repayments. You can then pay a final fee called the ‘option to purchase’ fee if you’d like to own the car outright.
If you’d like to learn more, check out our guide on how car finance works. It explains the different types of finance, and the pros and cons of each.
You will usually find it more difficult to get approved for car finance without a job. Lenders could see it as higher risk to lend to someone with no consistent income. Don’t worry though, there are some things you could do that might help your chances.
A joint finance application is when you apply together with someone at the same address as you. This might be a partner or family member. This could give you more flexibility as it means that two incomes are considered. For more information, please see our guide on joint car finance.
Some lenders allow you to use a guarantor for car finance. This is where you add another person to your finance agreement who will be responsible should you not make your repayments.
Please note that we don’t accept applications with a guarantor.
Lenders will check your credit file, and the information in it, to understand your eligibility for car finance. Before you apply, it might be a good idea to check your score to see what it looks like.
If you don’t know how to check your score, or aren’t sure what it means, check out our guides:
Another good way of increasing your chances of securing car finance when unemployed is by paying a large deposit. A higher deposit usually reduces your monthly repayments and can shorten your loan term.
If you’re not sure, we’ve written a guide to no deposit car finance, so you can make an informed decision. It explains what it is, and the pros and cons.
As part of your application you will usually have to provide details on your employment status. This could include your employment status, name of employer, job title, and salary. Some lenders may ask for further details on your employment history, but this varies depending on the lender.
Most lenders will require some proof of income to make sure the finance they offer is affordable.
If you aren’t employed because you are a homemaker and your partner has a job, then you could consider making a joint finance application. To do this, your monthly combined income must be over £1,300 (after tax).
This depends on the lender. To apply with Moneybarn, you must have monthly earnings over £1,000 (after tax).
You should be wary of any lender claiming to offer guaranteed car finance, as this doesn’t exist. A responsible lender will never tell you car finance is guaranteed even if you don’t have a job.
Whether you have no employment history, or are simply in between jobs, finance can’t be guaranteed to you. For more information please see our guide that explains why there’s no such thing as guaranteed car finance.
Lenders will use a credit check to assess your eligibility for car finance. As part of this they may ask for further documents, such as proof of income. For example, if you applied with us, we ask for 2 months of payslips or bank statements.
We can’t speak for all lenders, but usually car finance companies don’t contact your employer directly. If they need extra documents, they would contact you to get them.