What paperwork do I need to apply for car finance?

When you buy a car with a finance agreement, it’s a bit like going for a job interview. You’ll need to prove who you are, where you live, and where you work. You’ll also need to (unlike any job interview I’ve been involved in) show the provider that you can afford to buy the car. On top of this there are various requirements specific to the finance you’re looking to take out including showing evidence that you will be able to keep up with repayments of the car. 

While it may seem a lot, given that you’re the one buying the car, these checks have to take place legally as the car finance provider isn’t allowed to agree to a contract if they don't carry them out first. That’s because it’s a credit agreement, and there are strict rules around lending to people to help protect the customer and lender.

Identification

First things first, a car finance provider needs to know you are who you say you are and that no one is trying to impersonate you. This means you will need to show proof of your identity. This is usually a UK passport and you’ll also need to show them your driving licence. As you’re buying a car, it’s a given that you’ll have a full UK driving licence, so this is a pretty standard requirement.

Proof of address

You will also need to give some evidence of where you live. This is usually a recent (in the last three months) utility bill, which could be an energy bill or council tax bill, for example. 

This is another check the finance provider carries out to make sure you are a genuine person, in addition to this they will check your name and address alongside a national register too. 

Some providers will ask for your address for the last three years, so if you have moved home, you will need to give details of your previous address too. It all depends on the provider, but it’s very common to ask for these details from the past three years.

What if I don’t have three years’ history for my application?

There are a few scenarios where you may not be able to show three years of living in the UK. This could be if you’ve recently moved from abroad, for example. This doesn’t mean you can’t get car finance, you may just have to jump through a few more hoops.

Some car finance companies will be able to run checks on addresses out of the UK, others may require you to have a guarantor if they are worried about lending to you. 

Lenders want to get a complete and honest picture of what kind of person you are so they can decide if they want to agree to give you this money or not. If you have multiple addresses or can’t prove where you’ve been living, the lender may unfortunately reject your application so it’s worth researching each lender’s specific requirements beforehand. 

Proof of earnings

As you are applying for a credit agreement, lenders will want to know if you can afford the repayments. They will ask you for your annual income, and may also ask about any expenses you make - and any people who are financially dependent on you.

You can usually show this via your payslips, if you’re employed, or through your annual tax return, if you’re self employed. 

Lenders vary so you should be told exactly what you need to show in advance. 

Why do lenders need these documents?

Lenders aren’t asking for all these details just for fun, they have a strict legal obligation to conduct these checks before making a decision over lending money or not.

Checking whether a person can comfortably afford to make repayments benefits both a borrower and the lender. If a borrower were to struggle to pay back a car finance agreement, this can cause a lot of stress and further costs to them. It can also cost the lender, in terms of chasing up the loan, or even in the worst-case scenario, arranging a repossession of the car.

What happens if I don’t have these available?

If you are struggling to find the right documents, speak to the lender you’re applying to. 

It could be a straightforward case of asking for another copy - if you’ve lost your driving licence, for example, you can order a new one. Or if it’s a bit more tricky, you may be able to use an alternative document - such as an overseas ID if you don’t have a UK passport, for example.