You’ve found the new car of your dreams, and you can’t wait to hit the open road - now there’s just the small matter of paying for it. The idea of spreading the cost, rather than coming up with all the cash upfront, may be tempting, but are you confident you know how to finance a car? How do you know if you’ll be accepted? Good news - you’re in the right place!
Getting a car on finance is a big deal, and crossing your fingers and hoping for the best is a risky strategy, so here’s everything you need to know to help make sure you avoid the dreaded ‘declined’ message.
That’s the million-dollar question, isn’t it? It all depends on your individual situation. Every lender has their own specific list of requirements, and they’ll look at each application to see how it matches up to their particular criteria.
Most lenders will take these things into consideration:
On the plus side, the fact that different lenders are looking for different things means there’s a decent chance you’ll find a car finance deal that suits you.
It’s hard to say for sure, but that’s where our eligibility checker comes in! Just put in your details and boom - we’ll tell you if you’re eligible for car finance with Carmoola. Not only that, we’ll also tell you how much you could borrow, what APR you qualify for and how much interest you’d pay.
It only takes 60 seconds, and you’ll know where you stand before you go ahead and make a full application. Plus, it doesn’t affect your credit score, so you’ve got nothing to lose by checking your chances before you go for it.
A note that our eligibility checker will help you understand whether you’d be eligible for a loan with Carmoola, other car finance lenders will have other eligibility checks and criteria that will vary.
When you apply for car finance, you’ll have to typically give a lender these details (please note this list is not exhaustive):
The lender will use this information to find your credit file and run a soft credit check, to see whether you’ve got a history of managing your finances well or not.
They’ll look at your income and outgoings to see if they think you’ll be able to afford the monthly repayments. And, they’ll check your identity to make sure there’s no potential fraud or money-laundering going on.
If all this looks good to the lender, then you’ve got a good chance of being approved.
If you do decide to continue with an application the lender will undertake a hard credit check which will be recorded on your report. Too many of these hard checks within a short space in time might affect your score and make it more difficult to apply for credit in the future.
Your chances of getting approved for car finance depend on a few different things, including the lender’s specific wish list.
If you’ve got a good credit score and you don’t have any debt, you stand a pretty good chance of being approved. If your credit score isn't looking so hot, that’s not the end of the world - you might still be accepted, but you may have to pay more interest. If this is you, there’s tons of stuff you can do to help build up your credit score, so you can get better deals in the future.
Our handy eligibility checker will give you a clear idea of where you stand before you jump in and apply for car finance.
Some lenders can be picky, and will reject applications from people based on their own specific reasons. But, in general, the biggest barriers to getting accepted for car finance are credit history, and affordability.
If your credit history is less than ideal - perhaps you’ve missed a few payments, or made some poor decisions in the past - a lender would see this as a higher risk, and would be less keen to lend you money. The same goes for people with no credit history - if you’re starting out and haven’t yet built up a track record of managing credit and paying your bills on time, then the lender doesn’t have any evidence of how reliable you are. This means they’ll likely come to the conclusion it’s too much of a risk to lend to you, and turn down your application.
Another thing lenders take into account, is whether you can afford to pay back the money they lend you. This is why they ask for your income, and your major outgoings - so they can get an idea of how financially comfortable you are, and how much room there is in your budget for car finance repayments. If the lender thinks your finances are looking a bit tight, they might turn you down because they think you might not be able to keep up the payments. This is why it’s important to make sure you’re applying for cars that realistically fit your budget.