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Can you pay for car finance with benefits?

If you’re in receipt of benefits, you can still apply for car finance. You’ll just need to make sure you tick the rest of the boxes to be a good candidate for the lender

Car finance

You may be able to get a car on finance if you receive benefits, but before lenders decide whether they can offer you the credit, they will perform affordability checks to ensure you can afford all your existing monthly financial commitments and have a certain amount of income for food etc.

Not all lenders count benefits when calculating your income, but there are companies who consider benefits (like Universal Credit and PIP) when reviewing your application. These lenders may be more likely to approve your finance, as long as you fit the rest of their criteria.

How to get car finance on benefits

Find a car that fits your budget

If you receive benefits and want to get a car on finance, you’ll need to find a car that fits your budget and apply for the finance from a lender.

It’s important to only apply for car finance that you know you can afford and fits into your monthly budget, as lenders will want to know you can keep on top of the regular payments. If they see you can’t cover the monthly payments with your current income, they’ll be less likely to approve your application.

Car finance on benefits with a good credit score

When applying for car finance, the lender will take a look at your borrowing history to see how good you are at repaying your debts. If you keep on top of payments and your credit history is looking positive, you’ll usually be given a good credit rating. This is one of the things that makes borrowers attractive to finance companies.

Having a good credit score when applying for car finance on benefits is a good way to sweeten the deal. Lots of other factors impact whether you’ll be approved, but your credit rating definitely helps.

How to get car finance on benefits with bad credit

If you’re applying for car finance while on benefits and have a poor credit history, it might be harder to get accepted, or you may be offered a higher level of interest.

Bad credit is a result of many things – this could include missing payments on other debts, declaring bankruptcy, or having incorrect details on file. Some lenders will still offer loans to applicants with bad credit, so it’s possible to still get a car on finance if you’re in this situation.

You can improve your chances of getting approved by offering a larger deposit, or going with a finance company that specialises in poor credit loans.

Applying for car finance with bad credit could lead to higher interest rates. That means your monthly payments might be slightly higher, so you’ll need to consider if they’ll still fit your budget.

Low-rate car finance

Low-rate car finance means that the levels of interest and other fees (the APR) in your finance arrangement are smaller, so you won’t have to pay as much with your monthly bill. Getting a low-rate car finance deal can be beneficial if you are someone on a smaller budget, and may be helpful if you receive benefits as your sole income.

Getting a low-rate car finance deal is often easier if you have a good credit score, as this gives the lender reassurance that you will pay your loan back. Higher rates are usually offered to applicants with poor credit history, as extra reassurance for the lender that it’ll get its money back.

How to get low-rate car finance

It might be a good idea to spend some time improving your rating before applying for credit to increase your chances of securing lower rates. It can also be helpful to check the rates of a few different lenders, so you can find the best deals.

Bear in mind, however, your credit score might take a bit of a battering if you repeatedly go through hard credit checks with different lenders, so it’s a good idea to go through soft checks and get a provisional result before heading on to hard checks.

Can I get a car on finance if I’m unemployed?

If you’re unemployed but still have a source of income, such as benefit payments or another way to pay off your loan, you’re still eligible to apply for car finance. Lenders will want proof that you’re able to keep up with your monthly payments, so will need evidence of a steady stream of income.

The benefits of car finance

Getting a car on finance means you get to spread the cost across monthly payments that suit your budget, while still getting to enjoy your car. You won’t need to wait until you’ve saved up the full cost of the vehicle, but instead can put down a deposit and make your monthly payments until you own the car.

There are a few different types of car finance, with the most popular being Hire Purchase and Personal Contract Purchase.

Affordable car finance

We have a huge range of cars available for finance, including some really affordable models. If you’re looking for something that suits a smaller budget, a quality used model is a great way to cut those costs.

Learn more about car finance: