Here's Why You Might Have Been Refused for Car Finance

Have you recently applied for car finance but been declined by the lender? 😟 There are a number of reasons why might have  happened, though it can be different for every applicant.  Let’s look at some of the most common reasons why you might have been refused car finance, and help for the next time you apply. 

Poor Credit Score

Have you checked your credit score before submitting your application? If you’ve seen that you have a low credit score, that can usually tell you that the lender may well decline your application for credit. 

Your credit score might be low because of late or missing payments on your bills, credit cards, mortgage, and outstanding debts. The lender assesses how responsible you are as a borrower by checking your credit history and score. If they see that you haven’t been punctual with making payments, then they’d see you as high risk and would most likely reject your application for car finance. 

Apart from late payments, other factors may contribute to your poor credit score such as having a County Court Judgment (CCJ) or if you don’t have a verified address that the lenders can check. For that, you can easily register to vote and that can boost your credit score. (You don’t necessarily have to vote!)  Simply get on the electoral register so your current address can be on record. 

You Might be Too Young

If an applicant is 18 years of age or older, only then is it possible to apply for car finance. The reality is that there are some disadvantages to being this young when applying for credit. It’s not that the lenders discriminate, but the fact is that young applicants don’t have enough credit history for the lenders to make an assessment of. 

To strengthen your application if you are a young driver who wants to get car finance, it would be advantageous if you can start building your credit history as soon as possible. You can do this by getting a credit card and using it regularly and paying your bills on time every time. This can help in showing lenders that you are responsible when it comes to handling your finances. 

You Don’t Have a Driver’s Licence

Many lenders require applicants to have a driver’s licence. The idea behind this is simple. Apart from using your driver’s licence to verify your identity, car finance companies want to make sure that you are legally allowed to drive in the UK.

You’ve Made Multiple Applications

How many applications for car finance did you make? If you’ve made several, then that will hurt your chances of securing credit. Lenders will see in your credit record that you’ve been applying for finance from a number of financing companies and would assume you’re desperate for credit. You don’t want this to happen because you’ll most likely get declined.

Every time you apply for car finance, the lender will do a hard check on your credit report and that’s going to affect your score. Each hard check will knock off a few points, so imagine if you’ve made several applications - that’s really going to hurt your credit score. 

So, before you submit any finance application, do thorough research so you can choose the best car finance company that offers good deals and interest rates. Once you’ve chosen the right lender for you, make sure you know what documentation and information you will need,  and double-check that everything you submit is accurate and error-free.

Check all the small details like your address information which might be misspelt or have a missing street name for example. Any error or inaccuracy will affect the success of your application for car finance. 

How to Get Car Finance Successfully

If you have a poor credit score or don’t have enough credit history, you may want to give yourself a bit more time to build your history and improve your score. Note that this isn’t an overnight process and there’s no trick to boost your score immediately. 

Maybe you’re already a good payer and you handle your finances responsibly but still, you have a low credit score because you’re young and don’t have enough credit history. Don’t be discouraged because you’re on the right track. You only need to keep doing what you’re doing and you’ll see your credit score increasing gradually. Patience is key if you want to get a good car finance deal from a trustworthy lender. 

Another tip to keep in mind is to check your credit report regularly because there might be errors or fraudulent transactions made under your name. If you ever spot one, get in touch with the credit reference agency as soon as you can. You’ll be guided by their representative on how you can dispute the errors so that those details will be corrected. 

Finally, before you submit the requirements for the car finance application, take your time to check and recheck everything. You’d want to give yourself the best chance of a successful application so don’t rush this process. 

Read through the lender’s website for the frequently asked questions or you may even browse online for client reviews so you’ll have some idea of the experiences of other people in applying for credit from a particular lender. It’s also a good place to get some tips so be sure to include them during your research.  


It's really important that before you apply for car finance, you have assessed that you will be able to afford your car repayments comfortably, and don't forget to allow for all the other expenses of running a car! Then it's more likely that you won't be refused car finance, so long as all the other points made above don't apply to you. And if you are refused car finance, but feel your circumstances have been misunderstood by the lender you can of course appeal their decision within the first 30 days. 

And don't forget, while you’re still paying your monthly car finance instalments, the vehicle still belongs to the lender.  In the case that you can no longer make payments, they will repossess the vehicle.