How Do I Know If I Can Get Car Finance?
So you're considering getting car finance for your next car, but are you even eligible? Is it worth going through the application process, only to see the dreaded "computer says no" message at the end? Well, here we tackle the most popular questions around car finance and loan eligibility. So read on and find all the answers.
Check out this video, where Jade takes you through some of the common questions around car finance eligibility 👇
How Are Decisions Made on Car Finance?
It may feel a bit like a secret science, but there are actually just a few factors that contribute to how companies make decisions on car finance or any finance. Essentially, they look at your credit profile and financial history to calculate affordability, and they need to be confident that you've proved you are who you say you are (usually via photo ID). If you're worried about your credit history, there are lots of tools online that show your current credit score, and often suggest ways you can improve it.
Who Can Get Car Finance?
Car finance is generally available to anyone over the age of 18 as long as you meet the lender's requirements. Factors to consider include location (usually, you need a UK address), age, the car you want to buy, current credit score and available income. These are the primary factors lenders take into account when making decisions on whether or not to offer car finance. You'll need to show proof of identity, address and income. The lender will also perform a credit check by accessing your credit report.
Am I Eligible for Car Finance?
Knowing if you're eligible for car finance can help you make the right decisions about your next vehicle purchase. There are several factors that go into determining eligibility, such as your credit score, requirements from the lender and your own personal details. When filling out an application, make sure you're honest and completely transparent. There's no one-size-fits-all approach to car finance, and it ultimately comes down to whether you meet the lender's eligibility criteria.
Can I Apply for Car Finance Direct?
Today's technology lets you apply for car finance direct with the lender online. In most cases, you'll get an instant response, unless they need more information about the application. This improved way of getting car finance offers a stark contrast from how it used to work when it was only available from banks or the car dealership. Today, anyone applying has more control over their application and can spend longer looking for the right finance deal before committing.
What is the Meaning of Getting Car Finance?
Car financing involves borrowing the required fund to purchase a car. You then pay the amount borrowed back over the agreed time period with the lender. Car finance is popular as it allows drivers to have payment flexibility, enjoy a greater selection of cars and boost their credit score by making regular monthly payments.
What Are My Options for Getting Finance for a Car Purchase?
There's more than one way to get finance on your car, which is great news as it gives you plenty of options. You can go down the hire purchase (HP) route, get a personal contract purchase (PCP), lease the car via a personal contract hire (PCH) or you can get a personal loan and pay for the car with one payment. There are also subscription-based models and cash payments, although the latter isn't technically a form of car finance. Just remember that you should only commit to car finance if you can comfortably afford the repayments.
Is it Easy to Get Car Finance?
Car finance is easy to apply for, but you're not guaranteed to get accepted. However, there are some general requirements that make qualifying for car finance that much easier. These include having a good credit score, knowing your budget in advance and keeping within it and understanding the type of car finance options available to you. You'll also need to go through checks, such as proving your identity, address, employment history and, of course, proving that you can drive. Having all of these to hand will make getting car finance a more seamless and transparent process.
What Credit Score is Needed to Get Car Finance?
There's a simple principle to credit scores and car finance. The better your credit score, the lower the interest rate you can get. This is because a great credit score shows a car finance lender that you've been responsible for paying back any debts you currently owe or owed in the past, and they see you as a lower-risk customer. Great credit scores can also enable you to borrow more, and also over a longer period of time. However, if you haven't got a great credit score, it certainly doesn't mean you can't get car finance! You'll just get offered a slightly higher interest rate, which means it will cost you a little bit more over the lifetime of the loan.
Will Multiple Finance Quotes Affect My Credit Rating?
This is a great question. The important point you need to look out for here is what sort of credit check the lender or broker runs on you when you get a quote. In theory, at the point of getting a quote, they should only run a 'soft search' which means they can see all your data, but it does not leave a mark on your credit file. However, some will just go ahead and run a 'hard search', which means that other lenders can see you've been applying for credit. This can be a red flag to some lenders. The good news is that it should be made clear to you when a hard search is about to run, so you can always pause your application before that point if you don't want to go ahead.
Can I Get Car Finance With a Low Credit Score?
Having a low credit score makes it harder to get car finance but not impossible. Before making a decision, the lender will look at your credit score. They may still decide to offer you a loan, but it's likely that the interest rates will be higher. The higher your score, the lower the interest rates. So it might be worth trying to improve your score before applying for finance.
Can I Get Car Finance With a Bad Credit Score?
It's not impossible to get car finance with a bad credit score, although you will be subject to higher interest rates. Therefore, it's probably in your best interest to improve your credit score before applying for finance. It could make a significant difference to the amount you pay for the monthly instalments.
Can I Get Car Finance if I Have No Credit History?
A good credit score makes getting car finance easier. Indeed, having any type of score is generally better than not having one at all. Still, that doesn't mean you can't get finance if you don't have a credit history – it might just be a little bit harder. You may be required to get a guarantor, go straight to your bank for a loan or find a lender that specialises in lending to people without any credit history.
Can I Get Car Finance if I Just Moved to the UK?
In order to get car finance, you will need a good credit score. If, however, you've just moved to the UK, there's every chance that you won't yet have built up your score. Therefore, it can prove tricky securing car finance for your vehicle if you're a new resident. Unfortunately, your previous credit score from another country doesn't count and you may need to explore the option of getting a guarantor.
Can I Get Car Finance if I'm Subject to an IVA?
Being subject to an IVA (involuntary arrangement) means you will have a legally binding arrangement whereby an insolvency practitioner agrees on an amount for you to pay each month according to your ability and income. If you're subject to you, a car finance company may decide against giving you car finance as they see you as high-risk. However, they may still decide to give you finance, though you will likely need to pay higher interest rates.
Can I Get Car Finance if I Already Have an IVA?
An IVA is when you have an involuntary arrangement due to difficulties paying off debt. You can still get car finance with an IVA, but it will likely prove more difficult than if you didn't have one. Lenders may be cautious about lending to someone who has an IVA in place as they see you as a high-risk borrower. However, they may also see that you're on your way to becoming more financially responsible. Mostly, it depends on the amount you want to borrow and how long you'd like the loan for.
Can I Get Car Finance if I Have a CCJ?
CCJ means County Court Judgment and can be brought against a person in the event that there is no response to repayments from the lenders. It also negatively impacts your credit score and makes it harder to get car finance – though not impossible. Ideally, you won't be in a position where you have a CCJ. If, however, you do have one, you can still get car finance. It might be harder to obtain though, and you'll likely need to find a lender who specialises in lending to people with CCJ. On top of that, you can expect to pay higher interest rates.
Can I Get Car Finance if I Have Been Declared Bankrupt?
Bankruptcy lasts for around six years on your credit report, making it harder to get things like finance. Even so, most lenders will still ask if you've previously declared bankruptcy, and because it has affected your credit score, you may find it difficult to secure car finance. Yet, it's not impossible as long as you're not in your first year of bankruptcy. You will, however, likely be subjected to higher interest rates.
Can I Get Car Finance if I Receive Benefits?
There's no reason why you shouldn't be able to get car finance if you receive benefits. However, you may need to be realistic with your budget to meet affordability requirements from the lender. You should also look out for higher interest rates, deals that seem too good to be true and don't forget to check your credit score – a higher score will increase your chances of getting approved and paying lower interest rates.
Could I Use a Guarantor to Get Car Finance Application Approved?
If you find that you don't meet the requirements for car finance, one options involves getting a guarantor. A guarantor will be responsible for making payments on your behalf if you can no longer afford them. Someone who needs a guarantor could be a person with low or no credit history because they're a young student or have just moved from abroad and not yet had the chance to build their score up. Essentially, they help you increase your chances of getting finances as they act as an extra security measure.
When Will I Need a Guarantor to Get Car Finance?
A guarantor can be a safety net for the lender if you don't qualify for car finance. If your credit score doesn't meet the lender's requirements or you don't pass the affordability criteria, a guarantor will guarantee the loan and step in to pay it if you can no longer make the payments for any reason.
Can Car Finance be in Someone Else's Name?
While it's not illegal to get car finance in someone else's name, it is generally frowned upon by lenders and may even be breaking their terms and conditions. Before going down the route of getting car finance in another person's name, you should check if it will be a problem with the lender.
Can I Get Car Finance if I'm Under 20 Years Old?
Technically, there's nothing to stop you getting car finance if you're under 20 years old. However, it's often tricky for legal teenagers to get car finance as they haven't yet had the chance to build up their credit score. It may be that you need a guarantor to secure car finance.
Can Students Get Car Finance?
There's nothing to stop a student getting car finance as long as you're over 18 years of age. It may, however, be difficult if you haven't had the chance to build up your credit score yet. Of course, students come in all ages, and if you're older, have built up your credit score, are on the electoral roll and can afford the repayments, it's unlikely that you will face too many barriers when it comes to getting car finance.
What Are My Rights if I Get Car Finance?
You have certain rights if you buy a vehicle with car finance. These include factors listed in the Consumer Rights Act, such as the goods being listed as described in the sale. Most car finance rights are based on the type you get, be it hire purchase, personal contract purchase, leasing or a personal loan and whether you bought the car from a dealer or privately.
How Many Months of Income do I Need to Get Car Finance?
Car finance companies typically require at least three months' pay from your employer on bank statements. This lets them see that you have a regular income stream and helps evaluate if you can afford the regular monthly payments. Other factors come into play too, such as planing your budget and having a good credit score. If you're self-employed, you usually need at least one year's tax return. However, it depends on the lender's requirements.
Can I Get Car Finance if I'm Self-Employed?
Historically, the process for self-employed professionals has been slightly more tricky. The nature of self-employed work means that your income can vary in amount, and can be paid at irregular times, and this made it difficult for lenders to predict the stability of income. With traditional lenders and brokers, you may need to provide your last few years of accounts, which feels a bit intrusive and can just be a bit of a faff to collate! Carmoola is changing that. Using credit data, information you provide and several data sets, we can assess your monthly affordability.
What Are Good Tips for Getting Car Finance?
Planning well in advance is one of the best ways to avoid disappointment when getting car finance. Think about aspects like your budget and the fact that the car is likely to be a depreciating asset. Look at interest rates from lenders and try to find one on the lower end of the scale. You can also negotiate with the car owner, wether it's a dealership or private seller – doing so could help bring the price down. A good credit score also helps, as does choosing a shorter loan tender and avoiding extra add-ons at the dealership. Finally, you should aim to lock in your financing so payments don't go up and make sure you always read the small print to avoid any unpleasant surprises.
Can I Apply for Car Finance Online?
The quick answer is - Yes! However, there's a big "but" coming... Most lenders and brokers only handle the pre-approval process online, but you'll need to speak to someone on the phone eventually to confirm details around the loan, review contracts and confirm your identity. The good news is that Carmoola is changing all that. Our process is 100% online and can be done from the comfort of your sofa, any time of day, any day of the week.
Can I Get Car Finance on Any Car?
This is a tricky one. Most used cars can be bought on finance, especially if you're going for a simple Hire Purchase agreement. However, many lenders will have in place some minimum criteria, which also helps to safeguard you against a dodgy car purchase. For example, it's unlikely to get finance on a car that's got more than 100,000 miles on the clock, or one that will be over 12 years old at the end of your finance agreement. You'll need to do a search on the car, to make sure that it's all legit. This search will help you to see if the car has been reported as stolen, has been subject to mileage clock, and can identify lots of other helpful things to save you from a bad purchase. You can do one of these for free on the Carmoola app!
How Many Cars Can I Get on Car Finance?
As long as you can demonstrate to the lender that you can afford the monthly payments, it's possible to get more than one car finance agreement. Families and businesses often need more than one car lease, and it's no uncommon for a person to have more than one agreement. Just make sure that you can afford the repayments on both cars before committing to multiple car finance agreements.
Can I Get Car Finance on a Second-Hand Car?
While plenty of drivers lease brand new cars, it is entirely possible to get finance on a second-hand car. Truth be told, many motorists finance second-hand cars, as they can prove to offer more value for money than buying a zero-mile option. Second-hand cars are also cheaper, and if you don't want to pay for it outright, car finance might be the best available option.
Can I Get a Warranty on a Used Car?
Brand new cars are known for coming with a warranty, but what about used vehicles? Fortunately, warranties are available for second-hand cars, meaning you can enjoy peace of mind when you buy a used vehicle. They're also known as extended warranties and can help you avoid unforeseen costs on your car. Several companies offer warranties on used cars, but they differ between companies and provide various levels of cover.
Can I Get Car Finance With 0% Interest?
It's possible to get car finance with 0% interest, especially if you're buying a brand new vehicle. Many dealerships compete for customers with attractive offers that appeal to drivers. One of those is 0% interest finance, which means you only repay the cost of the car – there are no interest payments. You will likely need an excellent credit score to qualify for 0% car finance.
Can I Get Interest-Free Car Finance?
Interest free and 0% interest car finance are the same thing. You can purchase your car with interest-free finance if the lender offers the option. Car finance without interest is more common on newer cars than it is second-hand ones.
Can I Get Car Finance Through a Private Sale?
You can still get car finance from lenders, even if it's for a private car purchase. Just make sure that you do your due diligence, as private sales don't typically come with the same guarantees as buying at a dealership.
Can Young Drivers Get Car Finance?
A credit check is one of the primary drivers (excuse the pun!) for determining finance. Of course, not all young people have the chance to build up their credit score and may find it hard to get car finance as a result. Even so, as long as you're 18, it is possible to get car finance. You may, however, need a guarantor to secure finance, and you should probably set your sights on a practical car.
Can Disabled Drivers Get Car Finance?
Having a disability should not be a hindrance when it comes to buying a car. Essentially, the decision primarily centres around finding a car that accommodates the disability, which is your choice to make rather than the lender's. The only issue could be if you're unable to work as a result of your disability. In this scenario, you might find it hard to get financing without a steady income. However, you can explore options like getting a guarantor. Or, if you can provide proof of disability benefits, the finance side may not be an issue.
Can I Get Car Finance if I Don't Yet Have My Licence?
Lenders ask for your driving licence before deciding whether or not to offer car finance. Without a full driving licence, you will need a provisional one. Some lenders may decide to lend if you only have a professional licence and are preparing for your test, although many don't offer the option unless you have a full driving licence.
Can I Get Car Finance With Zero Deposit?
You sure can! There are several providers who offer zero-deposit car finance and allow you to take a 100% loan on your car. These loans are usually an HP agreement, and the lender will need to make sure you're buying the car at the right price, and from a reputable dealer. There's lots more to know about this topic, so head over to the full blog to find out more
Will Having Car Finance Stop Me From Getting a Mortgage?
In short, getting car finance won't stop you from getting a mortgage as long as you can afford the repayments for both the car and the house. However, it might be worth applying for both separately. This is because lenders perform a credit check and if they see that you have more than one application in progress, it might put them off lending to you.
Will Getting Car Finance Affect My Mortgage?
Again, having car finance won't affect your mortgage application. Indeed, it could actually help if you're making regular payments. This will show the lender that you're responsible and don't default on payments. Regardless of your car finance, you will need to meet the lender's affordability requirements to buy a house. As long as you fall into their criteria, it should be possible to buy a house.
Can I Get Car Finance for 12 Months?
Historically, people get car financing that lasts for between two and five years, though there are shorter options with lower interest rates. One of those is a 12-month loan, which is especially helpful if you only need the car for a short period. A short lease won't tie you down for a long period of time.
Can I Get Car Finance of £6,000 Over 3 Years?
Length and amount are the key drivers behind car financing decisions. Many people opt for longer lengths, such as five and even seven-year leases. However, there are shorter options, such as a three-year lease, where it's possible to borrow £6,000 to purchase a new car.
Can I Get Car Finance Over 5 Years?
Five years is a popular length of time for many drivers who take out car finance. Payments tend to remain relatively low (depending on how much you borrow), and there are several options for securing the funds. It's always worth thinking about the car if you plan on keeping it for around five years. Eg, how much will it depreciate during that time, can you afford the repayments and what is the interest rate? Ideally, you'll want to get a flexible loan that allows you to overpay if you'd like to reduce the amount owed.
Can I Get Car Finance Over 7 Years?
It's possible to get car finance over a seven-year period, though most lenders can their offering to five years (60 months). It's best to check with the lender before applying to see if they offer seven-year loans, which amounts to 84 months. If you do get car finance for seven years, you will likely need to pay higher interest rates.
Can I Get Car Finance for £350 Per Month?
The amount you pay for car finance largely depends on the deal you have – eg, how much you borrowed and the amount of deposit put towards the vehicle. For many, £350 per month is a suitable figure to pay off a car while still maintaining a suitable lifestyle.
Can I Extend My Car Finance Repayment Term?
It's possible to refinance your car over a longer term, although you need to consider all the variables before doing so. Extending the term can reduce your monthly payments, but it also means you'll likely end up paying more over the long run. Moreover, you'll probably pay higher interest rates, too. Whether or not you can extend your loan is down to the lender's discretion, so it's important to check with them and discover the feasibility of extending the term of your car finance payment.
Can I Get Car Finance 24/7 in Manchester?
The short answer is yes, you can absolutely get car finance in Manchester. You can get it in London, Leeds, Sheffield and just about any other major city or town in the UK offering car finance. As long as you meet the requirements of the lender and have proof life your identity, income and address, you should be able to get car finance in Manchester and anywhere else.
Is Getting Car Finance a Good Idea?
There are plenty of advantages to getting car finance, such as the ability to spread payments over several months and years. You can also sell the car at any time, meaning you're not tied to the vehicle or the loan as long as you pay it back in full after the sale of the vehicle. Getting car finance can help many people who may not otherwise be able to buy a car outright. Of course, it's essential that you keep up with the payments and can afford to pay back the amount borrowed.