How long does car finance approval take?

When you’re counting down the days, hours, and minutes until you can pick up the keys to your new car, the last thing you want to worry about is a delay with your car finance approval. 

Fortunately, in most cases, you won’t have too long to wait. In fact, you could complete an online application form and receive your approval in principle in a matter of minutes (even before the kettle has time to boil!) 

Getting from that initial quote to the final approval stage can take a little longer, but it all depends on the lender, the checks required, and your individual circumstances. Even so, most of these processes can be completed within 24 to 48 business hours. 

Once your approval is confirmed, you’ll typically have up to five days to proceed and sign on the dotted line. 

There’s no need to wait that long if you’re in a hurry. With your documents ready to go and time set aside to read over the terms and conditions, you could go from submitting an application to picking up your new pride in joy in just a couple of days! 

Why does it take this long?

The car finance process can be complex. Behind-the-scenes, lenders will be carrying out a range of different checks and risk calculations to figure out whether they can offer you a loan. They also need to make sure they’re acting as a responsible lender, dotting the i’s, crossing the t’s, putting hearts over the g’s so they can be certain you end up with the loan that’s right for you and your circumstances. 

Not only will the lender need to run a hard credit check on your credit report to assess your eligibility, but they’ll also need time to review your paperwork and check your affordability. Some lenders might use technology and AI-powered algorithms to help speed up the process, but humans will need to complete manual checks along the way. 

You might also find that it takes longer to get a decision depending on the time of day you apply. If you click ‘submit’ early in the morning, the lender might be able to complete all their checks faster than they would if you were to apply later in the day when certain services start to shut up shop.

What are car finance lenders checking?

It’s the lender’s job to check they’re offering you an affordable loan that’s tailored to your circumstances. They also need to be sure the risk to them is worth the potential reward (otherwise known as your interest payments). If you’ve missed payments in the past or been involved in a debt management programme like an Individual Voluntary Arrangement (IVA), they might be concerned you’ll default on the finance and may reconsider their decision to lend. 

To help them make their decision, each lender will check several different things including: 

Your credit score

First, most lenders carry out a soft credit check to assess your eligibility which won’t affect your credit score. However, to get a final approval, they’ll need to run a hard credit check to look into your payment history in more detail. This type of check remains on your report for up to two years and will be visible to other lenders. 

Your identity

When applying, you’ll be asked to enter a few personal details like your full name and date of birth. At the approval stage, you’ll need to supply proof of identity to confirm this information such as a passport or driving licence. The lender will then check your documents are valid and the details match. 

Your address

Most lenders will ask you to supply at least three years’ UK address history and have paperwork available to confirm proof of address for where you live now. This could be something like a recent utility bill or Council Tax statement.

Your income

Depending on whether you’re employed full-time, or you work for yourself, income checks can also take time. You may need to provide recent payslips or bank statements to confirm how much you take home each month after tax. These will be compared to the details shared in your application form to make sure everything matches up. If you’re self-employed and have various forms of income, these checks can be more complicated - and so take more time - than if you’re paid a set amount by the same employer each month.

Your affordability

Affordability checks are increasingly becoming part of the car finance approval process. These help lenders understand how much disposable income you have available (the money that isn’t earmarked for paying your bills and other essential costs). The more you have left over each month after all these expenses are accounted for, the more likely it is that you’ll be able to comfortably afford a car finance payment. 

What about ‘instant decision’ lenders?

When you come across a lender promising an ‘instant decision’ this usually means you’ll get an automated decision within a few minutes (think of it as almost instant instead).
 
The lender or credit broker will usually employ a sophisticated algorithm to quickly review the details you provide in your application form and use these to run a soft credit check.
 
These technologies will be programmed to flag anything that might lead to a rejection such as less than three years’ address history or any fields left incomplete. They will then compare this data with your credit score to make an initial assessment.
 
The decision you get will usually be an approval in principle, rather than a guarantee that you’ll be eligible for a loan once all your details and documents have been more thoroughly checked.