What You'd Say to Your Younger Self Before Getting Car Finance

Car finance can be a bit of a minefield, but here are some of our tips at Carmoola, if we could go back and teach our younger selves how to finance a car.

Do you wish you would’ve done things differently when you were applying for car finance?  Don’t worry, as even if your first application didn’t turn out the way you wanted, you can prepare better for next time. Maybe you got rejected by a car finance company, and you couldn’t get that ideal car you wanted. So, when you apply next time, we would love you to avoid this, and we hope these tips will increase your chances of getting approved. So, if you need car finance advice in the UK, read on.

Qualifications to Apply for Car Finance

The first thing you need to do is check that you are qualified to apply for car finance. Here is a checklist with everything you are going to need;

  • You have to be at least 18 years old
  • Employed or self-employed
  • May need to present 3 months of payslips or bank statements as proof of income. 
  • Must have been a UK resident for at least 36 months – some lenders may ask to see a utility bill as a proof of address. You can also use bank statements for this.
  • Your driving licence shows the lender that you’re legally allowed to drive. 🚗

Another great way to prove your income is the SA302 tax calculation, which proves the last 4 years of your income. 

Review Your Credit Report

Already knowing your chances of getting approved is a huge step towards car finance application success. One way to do that is to learn about your financial history. Car finance companies look into an applicants’ credit reports to understand their spending behaviour as well as whether they make timely payments on their loans. 

Your credit report is a summary of how you have handled your credit including your payment history and your accounts that are currently open. We will talk about open accounts a little later on. 👍

Your credit score is based on your credit report, and car finance companies consider your score when you apply for car finance. If you have a low score, it might be because you have too many current loans, or you’ve been missing repayments. Do you have several credit cards or a poor record of repaying on time? Or it might simply be that you are young and haven't yet built up a good credit history. These are the details that car finance companies look into, and take into account when offering you your finance package.

You can check your credit score at websites like; TransUnion, Experian and Equifax

If your score is lower than you would expect, it's worth checking that all your details are correct - if not then do raise this with the credit agency.

Car financing companies will look at your rating and apply it to their own system to then determine whether they lend you any money. And if they will, how much, and at what interest rate. Better scores can attract better interest rates, so it's well worth sorting out this aspect before you proceed further. 

What happens if you have applied multiple times for finance? 

If you have applied multiple times, each of the applications will appear on your credit history, which can impact your credit score for the negative and therefore negatively affect your future car finance application. This will likely be worse if you already have a poor credit score. 

Check for Errors

Errors and fraudulent activities can severely affect your credit score, therefore negatively affecting your chances when you apply for finance. One option is that you check your credit history regularly, and look closely if there are any transactions you don’t recognise. These are the transactions that might be errors or even fraudulent activities of someone using your name. If this happens, get in touch with your credit reference agency as soon as possible. 

The agency can then handle the problem, and either update your score or provide an explanation on why they believe it is correct as it is. The car finance company will also see information about this dispute in your file so that they are aware that there are errors in your credit history. 

Improve Your Financial Records

Good advice for customers is to start taking steps to improve your financial records before getting car financing. Settle existing loans, close dormant bank accounts, and assess which credit cards have the highest interest rates and terminate them. These factors can all help your chances when applying for car finance. As someone who is applying for car finance, that is what you need to do; make your application as strong as possible!

Another proof of address that your car finance company will look for on your credit record is that your name is on the electoral register and that matches your given address. Traceability is vital for them so making sure you are registered and that your address is correct can improve your chances of getting car finance. 

Show that You’re Financially Responsible

There are a lot of great deals out there from a whole host of car finance sites. These offers can be quite overwhelming as you can get a high-end car or a more expensive car than what you’ve originally wanted. However, the question you need to ask yourself; is if you can honestly afford it?

If you have an excellent credit record and score, you could enjoy great car finance deals that will allow you to purchase a higher-end car. But keep in mind that you have to be realistic about what you can afford.

If you don’t need a more expensive car or you know the monthly repayment amount is too high for your budget, you can say no to those deals. In the end, Jeff Bezos drives a Honda Accord, so is that high-end car really a "want" or a "need"? Instead, stick to the budget that’s right for your financial situation. This is a way that you can show the car finance company that you are financially responsible. 

Get a Guarantor for Your Car Finance 

Guarantors are great for younger drivers who want to buy their own cars, as they back you up for your application. A guarantor improves your chances of getting a good car finance deal. This step is recommended especially to those who do not have enough credit history yet or have low credit scores because they’re still quite young.  

Something that needs to be made clear before you ask someone to be your guarantor, is to make sure they understand the responsibility that they have to undertake if you can’t keep up with the repayments. The guarantor will vouch for you and they will also be responsible for repaying the loaned amount in the event that you miss any payments/default. You don’t want it to get to that point as it can affect your relationship with the person who agreed to be your guarantor. 

You might like to ask your parents, a family member, or a trusted friend to be your guarantor. Keep in mind this guarantor should have an excellent credit rating and a good financial history. It would also be better if the guarantor owns their own home. However, car finance companies also accept guarantors who are tenants but have lived at a particular address for many years. 


If you’re looking for car finance PCP advice, or HP advice, do check out our other blogs. It’s important that you’re ready and well-informed before you apply for car finance, and the Carmoola blog is the perfect place to get free advice on car finance, so you are prepared when the day comes. Prepare your documents and information, do your research on the best car finance company, and check your credit histories. Take all the steps you need to take to improve your chances of getting a great deal for your car finance. 

Today, applying for car finance has been made very simple. You can go online to check the car finance companies near you, what their rates are, and how much you need to prepare for the monthly repayments. You can learn more about this by using our online  car finance calculator. It can give you an estimate of the repayment amount to expect. 

Ready to upgrade your new car? Follow the steps below to get your car finance journey started today.

  • Go to the Carmoola App
  • Enter your details & verify your ID
  • You will then get an illustration of what you could potentially borrow, over how long & what it would cost per month.
  • Then go ahead and apply! 

And then if you are accepted, go on to find your dream car, and then you can go ahead and simply pay with your virtual Carmoola card at the dealership (or online)! What’s not to like.” 😃