Can Pensioners Get Car Finance?

Do lenders offer car finance for pensioners in the UK? If you’re thinking of getting a new car so you can travel more now that you’re retired, you may still be able to get car financing. This way, you don’t have to use your cash and spend a bunch of your savings just to make a purchase. 

Being in retirement means you now have more time to do the things you’ve always wanted to do. 😀 You can visit your family and friends or just drive to the best destinations in the UK. If you have a great car, you will definitely enjoy the freedom it will give you. You can go anywhere you want and just have a wonderful time as you drive your new set of wheels.  But can and should pensioners get car finance?

Why Get Car Financing as a Pensioner?

As a pensioner, you may have already received your lump sum of pension and you can choose to buy a new car with it. However, you don’t have to spend it all just so you can purchase your dream car. Applying for car finance is another option because the payment is spread over a period of months, so you only have to allow for the monthly repayments, not the whole cost of the car. 

Even if you’re retired, you can still get car finance with some lenders. It’s because it doesn’t really matter whether you’re still working or already retired. What matters are your credit record and score, your income, as well as your outgoings. Being retired doesn’t necessarily mean you no longer have income. You may have your pensions, maybe some unearned income or part time work, plus the interest you get on your savings. 

When considering an unsecured loan and a secured one, it may be better and easier to get the latter. With a secured loan, the money you’ll borrow will be linked to the car you want. If you look at it from the perspective of the lender, they’ll be more confident in lending you money with a secured loan. It’s because, in the event that you can no longer make payments, they can repossess the vehicle and recover the cost. 

Preparing for Your Car Finance Application

Your credit history is important if you’re applying for car finance. Lenders check your credit record so they can assess whether to grant you financing or not. The record will show your personal information such as your full name, address, and other details including whether you’re a registered voter or not, and any CCJs or county court judgements you may have. 

The credit record holds information regarding any existing loans, loan defaults, current account overdrafts, and also how many times you’ve applied for loans recently. Make sure that you check your credit record before you apply for car finance so that you can see if there are any errors recorded there. If there are, the incorrect information can be easily resolved. You may not have checked your record for a while, or maybe not at all, so definitely worth a look to check it's as you would expect. 

You may notify the credit reference agency if you find any errors in your credit record. The agency will review them and if they find that there is indeed a mistake, they will amend the record. This will also then increase your credit score once it's sorted out. There are also deals for car finance for pensioners with bad credit history, but the interest rates might be a bit higher. There are some lenders who specialise in providing car loans to borrowers with poor credit, so should be possible to find one that's right for your needs.  

Paying Your Existing Debts

Do you have any existing loans that you haven’t paid in full yet? It would be highly recommended to settle those first before if you can, before you apply for car finance. It’s a good way of freeing up your credit space so the lenders will be more willing to lend you money for your car purchase. By paying off your existing debts, it’s more likely that you’ll be able to get more credit at a good rate, so you can buy that dream car. 

Having other loans is not always entirely bad, especially if you’re responsible when it comes to paying them on time. It will demonstrate that you’re reliable in making payments. Lenders will see your record and be more confident in lending you credit for your car purchase. So long as you have the required disposable income and can afford a second loan.

Assessing Your Financial Situation

Before your retirement, your main income source is probably your job. But now that you’re in retirement, you may have planned it well and now have a good number of income sources. For example, apart from your pension, maybe you have investments and savings that are earning interest. 

Evaluate your income and know how much money comes in every month. Also, assess how much you need to spend on a monthly basis. This way, you’ll know what you can afford to pay for the monthly repayment for the car. You want your life to be as comfortable as possible so make sure that you don’t overspend on the car purchase. Try using our online calculator to give you a good idea of how much you can afford to borrow and what it will cost. 

Making a Deposit for the Car

If you want to reduce the amount you need to pay for the monthly repayments, you can do so by paying a substantial deposit upfront. By doing so, you’ll borrow less money from the lender and consequently, you will also pay less for the interest. 

Paying a deposit will also increase your chances of getting car finance. Lenders will be more confident in providing credit because your monthly repayment amount would be more affordable for you. This means you’re less likely to miss payments. 

Choosing a Shorter Contract Term

Car loans can vary from one to seven years. If possible, aim to get a shorter contract term for your car finance. The monthly repayment amount would be higher but you’ll be finished paying for the car faster. And if you make the computation, you’ll be paying less interest since you’re not borrowing money for such a long time. If you can afford the higher repayments then this is a better deal for you, compared to choosing a longer contract term. 


So, can pensioners get car finance in the UK? Absolutely! 👍 Aim to check your credit record first so that you’re sure that there aren’t any errors there that might affect your car finance application. Pay off your existing debts if you can, so that you will have a better chance of getting a new loan. Make a deposit for the car too if you can so that you can reduce the amount you have to pay every month. And lastly, choose a shorter loan term so that you can fully enjoy owning your dream car for the minimum cost! 🚘