How Much Car Finance Do I Qualify For?

Buying a car is among the major purchases you’re going to make. Now that you’re planning to get a new car, you might be thinking, “how much car finance do I qualify for?” That’s an excellent question to ask because you first need to know if you can afford to buy the vehicle you want. 

How Lenders Assess Car Finance Applications

The amount that you can borrow from a car finance company depends on a number of factors. When the lender evaluates your car finance application, they will look into your credit history, income, and financial situation. 

Some of the things they’ll check are your payments to other financial institutions and whether you pay them on time. Lenders will also assess your income, the value of the vehicle you want to buy, how long it will take for you to pay them back, and whether you’ll make a deposit upfront for the car purchase. 

Car finance companies consider all these things when they’re assessing your application. It helps them a great deal in determining the amount that you can borrow so you can buy a car. Let’s take a closer look into these factors. 

Checking Your Credit History

Your credit history is a record of your financial transactions such as loans, bills, mortgage, and other lines of credit and whether you pay them on time. If you miss payments or if you’ve applied to several kinds of financing within a short time, then those can affect your credit score negatively. 

Car finance companies check your credit history to see how you’ve managed your finances previously. It helps them decide if you’re low-risk or high-risk, as well as how much you can afford to borrow from them. If you have an excellent record and a good credit score, lenders are more likely to approve your car finance application and provide substantial credit. 

Assessing Your Monthly Income

Another significant factor in your car finance approval is how much you’re earning. You may think that you need a big pay check before you can apply for financing but this is not true. It’s not just about the amount you earn but whether you’re responsible when it comes to handling your finances, can live within your means, and can afford the monthly repayments for the car. 

It’s important that you assess your lifestyle first and how you handle your income. Do you constantly spend more than what you can afford? Can you keep up with the payments? You need to be honest with yourself when answering these questions because getting car finance is a serious financial commitment. 

If you can’t make payments, it’s possible that the lender can repossess your car. And when that happens, it will hurt your credit score, making it difficult for you to get financing in the future. You may even get a county court judgement or CCJ if you stop responding to the demands for payment. Keep in mind that CCJs will stay on your record for six years. So be sure to evaluate your financial situation first before you sign a car finance deal. 

The Price of the Car

Car finance companies will also check how much the car you want to buy is worth and whether you can afford it. They will base their judgement on your income, your behaviour towards your finances, and your previous records based on your credit history. 

Maybe you have a dream car in mind. It’s good to aim for nice things, however, it’s crucial to remain realistic about what you can afford. You don’t need all the latest features of the newest model. Maybe you can even consider buying an older second-hand vehicle that performs just as well as a newer car. It’s more affordable and you might be more likely to get car financing.

The Length of the Car Finance Contract

How long will it take for you to repay the car finance company? Usually, contract terms are from one year to seven years, with many car buyers opting for three to five years. The contract term length will also be factored in by the lenders when they’re assessing your application. 

If you want to pay less interest, choose a shorter term. The monthly repayment amount will be higher but you’ll be able to finish paying off the loan faster. If you need a more affordable monthly repayment amount, you may choose a longer term contract but that means paying more overall. 

Will You Pay a Deposit?

You may choose to pay a deposit so you can reduce the amount you need to borrow to purchase a car. Some lenders offer zero deposit car finance deals. But it means you’re going to borrow more money, and therefore, pay more interest. 

If you can pay a substantial deposit, you’re more likely to get approved for car finance. So, if you can, it would benefit you to pay this initial payment. You don’t have to spend so much but about 10% of the car’s price is usually good. 

How Much Can I Borrow?

Now that you know the different factors that car finance companies consider when evaluating your application, it’s time to know how much you can borrow. Check out Carmoola’s car finance calculator. With it, you can adjust the contract term length and the deposit you’ll pay. You will then see the estimate of the monthly repayment amount. 

To know if qualify for car finance with Carmoola, simply download the app. It’s easy, fast, and simple. Enter your personal details and verify your identity using your driver’s licence. In a few minutes, you’ll know the result of your application. 


Car finance will make it easy for you to buy a car because the payments are spread over a certain period. You don’t have to spend all your savings on one big purchase. But before you apply, it’s important that you assess how much you can afford to pay. Lenders will consider your application even if you are receiving benefits - it's whether or not you can afford the repayments which is important. Even if you’re approved for a larger amount, if you know that it’s too much for your monthly budget, you’ll know the sweet spot that will allow you to buy a car and still have a comfortable lifestyle.