How to get accepted for a car loan

Car finance is a great way to help spread the cost of owning your next car. Taking out a car loan means you can usually get a better car than you would with cash and pay for it in monthly installments.
1st May 2022


Car finance is a great way to help spread the cost of owning your next car. Taking out a car loan means you can usually get a better car than you would with cash and pay for it in monthly installments. Sounds great, right? But car finance is never guaranteed and ultimately, it’s up to the lender to decide whether they want to offer you finance or not.  But what sort of factors can affect your chances of car finance approval? The article below explores the ways in which you can increase your chances of being accepted for car finance. Let’s take a look at each in more detail. 

Improve your credit score

Many finance lenders will require you to pass a credit check before you get accepted for finance. They do this because they want to see how you’ve handled credit in the past and if you will be able to make their repayments on time and in full. Your credit score can reflect which type of borrower you are, and the best finance rates are usually reserved for those with better credit scores. It can be possible to get accepted for bad credit car loans but you may face higher interest rates set by the lender. You should try to increase your credit score in the months before you apply for car finance to help improve acceptance rates and get you a better deal. 

Review your finances

Car finance is a legal agreement and when you sign on the dotted line, you agree to meet all your repayments on time and in full each month. That’s why it’s really important that you know you can afford your payments. Many car finance agreements can last a number of years so you need to consider whether your circumstances will change in the future or not. You should review your current finances and make sure you can afford to pay for your finance deal. You could also consider reducing any existing debt to improve your credit score, increase your chances of approval and also make your finance deal more manageable. 

Build a credit history

Many people assume that having no credit history is a good thing. However, credit scores are all about future planning and lenders can’t predict which type of borrower you will be if you haven’t got any credit history. Financing a car with no credit is possible but just like having bad credit, you may be offered higher interest rates. Higher interest rates mean you pay more back overall and can make car finance more expensive than it should be. You can start to build a credit history by having a mobile phone contract in your name and paying it off each month or using a credit building card to make small purchases and repay them on time. 

Be realistic

When it comes to car loans, it’s important that you can meet the payments each month. The smaller the loan you take out, the more affordable it can be. When it comes to choosing your car, new cars tend to be higher in purchase price but can sometimes benefit from lower interest rates. Buying a used car on finance can be affordable as the loan will usually be much smaller than buying a brand-new car. However, some APR rates can be higher on used cars so it’s worth exploring each option before you commit to one. It may be easier to get accepted for used car finance if you have a lower credit score. 

Have a steady job

Lenders tend to prefer to lend to people who have a full-time jobs and have lived in the UK for more than 3 years. This is because they are less likely to move around as much and can show that they can pay back their loan on time. Having a consistent income in a UK bank account can be more favorable to finance lenders. Upon application, many lenders will require 3 months’ bank statements or payslips to prove your income and affordability. 

Save up for a deposit

Having a deposit to put down for car finance can work in your favour. Putting more in for your chosen car means you don’t have to borrow as much from a lender. This can make you more attractive to a finance lender as it can indicate that you are financially responsible. A deposit can also help t lower your monthly payments and make your finance deal more manageable. If you need a car in a hurry though, there are many car finance deals you can get with no deposit required and affordable monthly payments.


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