How to Apply for Car Finance Online

Discover the hassle-free approach of financing your next car - we'll guide you through the simple steps of buying a car online. 

Apply for Car Finance

The application process is the first step towards securing finance for your new car. 

Traditionally, applying for car finance can be confusing and frustrating, because you can go through the whole process only to find you’ve not been accepted...

But don't worry, We’ve got your back! At Carmoola, applying for car finance is quick and painless.

It often takes 60 seconds or less. In this article, we’re going to walk you through everything you need to know about applying for car finance.

Understand your budget

When seeking your next car, understanding how much you can spend is a vital part of the journey.

At Carmoola we believe understanding your budget at the first step puts you in control when you're looking to buy. 

Thanks to the Carmoola Car Finance Calculator, you can have a budget in minutes without affecting your credit score.

This process is all online, meaning you can wave goodbye to ‘old-school’ as well as all the paperwork, phone calls and the wait for applications to be reviewed (which can take weeks). 

Credit score

Another step you can take for added peace of mind is to check your credit score. 

Websites and apps such as  Experian and ClearScore, are very simple and easy to use.

The higher the score means, the more likely you are to get car financing.


Finance is subject to status and is only available to UK residents aged 21 and over, Carmoola is committed to responsible lending.

Amount of monthly residual income

Money left over after your monthly outgoings have been paid for, such as housing and utility payments.

Applying for Car Finance with Carmoola 

We have resources that explain everything you need to know when you apply for car finance should you want to dive deeper.

Essentially, there are three simple steps when partnering with Carmoola:

  • Find out how much you can borrow: By answering a few quick questions, you’ll find out how much you can borrow on car finance, so you can shop with confidence.
  • Check your car's history: Run a free history check and have complete peace of mind that you’ve chosen a great car.
  • Pay with your Carmoola card: Pay for the car with your Carmoola card online or in the showroom. Accepted on all online car-buying websites and thousands of reputable dealerships.

At Carmoola, we are on a mission to make car financing easy for everyone! There’s no waiting around for a car finance decision or painful paperwork. Carmoola is great on your back pocket, too, with no broker commissions that bump up the cost unnecessarily.

Understanding Car Finance - the Nitty Gritty

Carmoola offers a hire-purchase agreement (HP). We want to make financing feel effortless and empowering.

Hire-Purchase (HP)

HP is a car financing plan that allows you to spread the cost of your next car over a set period of time by making monthly payments. 

You'll likely pay slightly larger monthly payments than with a Personal Contract Purchase (PCP) deal.

You can discover more about the difference between PCP and HP - but with HP, you'll own the vehicle outright at the end of the term.

What’s also great is that there are usually no annual mileage restrictions, so you have the freedom to drive the car as much as you want.

Benefits of hire purchase (HP):

  • The contract term is usually between two and five years.
  • For the term of your loan, you'll make fixed monthly payments.
  • Begin your financing with or without a down payment.
  • Once all the payments have been made, you will own the car outright.

How to Make Car Finance Affordable

Our free auto finance calculator is a great place to start. It will give you an idea of how much you can borrow, but it can’t help you with how much you can afford to pay. Only you know how much extra income you have to invest in your new car. 

Here are some pointers to help you figure out how much you can comfortably afford to spend on financing without stretching yourself too thinly.

Step 1: Calculate your monthly income

How much money do you earn per month? Is it a consistent amount? If not, try averaging the previous six months.

Step 2: Tally up your monthly expenses

How much money do you personally spend on a monthly basis? The important word is "personally". Many people share costs with a partner or housemates, but car finance will be your burden solely. With that in mind, note down all the expenses you need to cover before you can even consider a car finance application.

Step 3: Determine how much residual income you have each month

Now that you have your monthly revenue and monthly expenses, you can subtract the expenses from the income to get a reasonable estimate of your monthly disposable income. For example, if you earn £1,600 per month but only spend £1,200, your residual income is £400.

Step 4: Examine your credit report

You have a good idea of what you can afford to spend each month, and now it’s time to look to see if lenders will lend you money.  There are numerous credit score tools that will give you everything you need to know about your credit score and what finance you’re likely to be offered. Experian and ClearScore are great places to start.

Step 5: It's time to use the calculator!

To discover what kind of budget you're working with and how much it would cost to finance a used car, try our handy hire-purchase auto loan calculator. Don't forget that you might have some cash on hand or an old auto to trade in as part of the deal.

Step 6: Use Carmoola to create an accurate budget

If you are ready to upgrade your car, you need to set a realistic personalised budget. It’s time to use Carmoola. The app takes 60 seconds to complete, and it helps you understand your budget when filled in correctly with your personal details.

The great thing is once you’ve used Carmoola to calculate your budget, there’s no need to fill out any additional paperwork. You only need to verify your ID, and you’ll be ready to go car shopping!

Benefits of getting a car with Carmoola Car Finance

  • Super quick, get an instant decision on how much you can borrow with Carmoola.
  • Own the car outright - after the loan has been paid off, it is yours to keep - only a £1 transfer fee.
  • How much can you afford? Well, it helps if you can spread the cost - and Carmoola will calculate an amount you can comfortably afford. And set monthly payments make it easier to budget and keep on top of your personal finances  - and you get to hang on to your savings for a rainy day!
  • Fixed rates of interest - with loans term between 24 and 60 months.
  • Carmoola allows you to increase, decrease or make overpayments at any time.
  • It’s an app (no small talk, you won't have to discuss the weather).
  • Once you're approved, you will receive a virtual Carmoola card on your phone. You can use this at any reputable dealership or online seller to snap up that dream car. 

How to get the best car finance deal

Online car finance can be a smart option, depending on your financial position.  

At Carmoola, we take our responsibility seriously, which is why we created the budget calculator as part of our app.

This way, our customers can be sure they can afford the finance they're looking to secure. 

If you're having trouble getting accepted for car finance, a smaller loan for a less expensive car can be a good option.

Alternatively, you might want to save for a higher down payment and in turn, minimise the amount you need to borrow. 

Don't forget that making multiple applications for finance can further damage your credit score.

So you might want to check your score first for yourself before making the actual application.

You may need to work on improving your credit score, as this will improve your chances of approval in the future.

The lender and the borrower are protected by an auto finance affordability check.  So you will only be offered an amount you can comfortably afford based on your circumstances.

If the lender determines that you will not be able to repay the loan you are requesting, don't take it personally.

They're simply trying to keep you from becoming entangled in a financial responsibility that could bring you stress and difficulties in the future. 

Always continue to improve your credit score in order to increase your chances of obtaining car financing. It will also go a long way toward minimising the amount of interest you have to pay. That can only be a good thing 😀