Is it hard to get accepted for car finance?
If you opt to buy a car using Hire Purchase (HP) finance, there’s a credit agreement between you and the lender that allows you to pay for the car over a set period of time, with interest payable on the loan balance.
At the end of your contract, you’ll get to keep your car.
At the end of your contract, you can decide whether to pay the lump sum ‘balloon payment’ and purchase the vehicle outright, or hand it back and get something new.
To get approved for car finance, you’ll need to have a good credit history and should be applying for finance on a car that realistically suits your budget.
Having a lot of debt or no form of income will make it much harder for you to get accepted for car finance.
Getting approved for car finance
There are different types of car finance, including HP and PCP, so you can spread the cost in a way that suits your needs.
Once you’ve found your perfect car, you’ll apply for your chosen car finance and wait to hear if you’ve been accepted.
How to get approved for car finance
There are a few factors that might impact your ability to get approved for car finance:
A poor credit score can make lenders feel like they’re taking a risk by giving you car finance.
To be an attractive finance applicant, you should focus on improving your credit score by keeping on top of debts and registering on the electoral roll.
Having a stable income will make lenders more likely to accept your car finance application. This shows you have a way to repay the loan.
Even if you have a stable income, lenders will want to know that you earn enough to cover the car finance payments. It’s best to only apply for finance on cars that are within your budget.
Will I get approved for car finance?
If you have a good credit history and the ability to cover the payments, then you’re likely to be accepted for car finance.
If you have poor credit history, you might find that you’re accepted for car finance but on a contract that has higher levels of interest to be paid.
You’ll then need to decide if paying the extra interest is worth it, or whether it pushes the car out of your budget.
There are also lenders that specialise in car finance for people with poor credit. The good thing is that getting car finance will help your credit history improve if you keep up with the payments.
Why would I not get accepted for car finance?
You might not get accepted for car finance if you have poor credit history – but that doesn’t just mean ‘bad’ history.
If you’re someone who’s just starting out, you might no credit history at all.
This could make lenders less likely to accept you for car finance as they won’t have any evidence of how good you are at repaying your debts.
There are ways you can improve your credit score, so it’s a good idea to explore those and give yourself a head start.
You might also be turned down for car finance if the finance company believes you won’t be able to keep up with payments during credit checks and affordability assessments.
You should make sure that you’re applying for cars that fit within your budget to boost the likelihood you’re accepted.
How likely am I to be approved?
It’s impossible to know if you’ll get accepted for car finance without reviewing your specific case.
Each finance agreement and applicant are different, so it will always depend on your unique case and the lending policies of your chosen finance provider.
You’ll need to have a hard credit check to see if you’ll definitely be approved for car finance, and lenders will use a credit agency to take a look into your financial situation and history.
If everything looks good and you fit the requirements, the finance company will usually accept you for car finance.
You can check your own credit report by using an online checker, and this will give you a good idea of where you’ll stand when applying for finance.
Experian, Equifax, and TransUnion all have online credit checkers, and are the three main credit reference agencies that finance companies use.
What is the approval process for car finance?
To get approved for car finance, you’ll first have to send off your application. You may be asked to provide your personal details and the details of your income, as well as proof of your identity and your address history.
It’s important that these details are correct as the finance company will be checking them out before it accepts you for finance.
Once you’ve sent off your application, the finance company will carefully review it to see if you’re the right fit for the finance.
At this point, you can either be accepted, accepted with conditions, rejected, or asked to supply more information.
You may also be approved in principle before making the final application.
An acceptance with conditions might mean that you will have to agree to a higher payment than you first agreed to, or you might have some restrictions added to your agreement.