Have you been refused car finance? Here’s what to do next.
Getting turned down for car finance can be disheartening, but understanding why it happened and knowing your next steps can improve your chances of getting used car finance in the future.
If you’ve been turned down, it might be because of issues with the information provided on your application or because your credit history doesn’t meet the lender’s requirements. However, this doesn’t mean you can’t get car finance – you just need to need to explore other options to pay for your car.
It's important to understand why your application wasn’t successful, so you can take steps to improve your chances of getting accepted for car finance next time.
At AutoMoney Motor Finance, we specialise in helping people with various credit histories. Even if you’ve been turned down before, you might still qualify for HP car finance with AutoMoney Motor Finance. Continue reading to discover how we can assist you getting the car you need.
Things to consider before you apply for car finance
Before you start a car finance application, bear the following in mind:
Review your application
Take the time to check your car finance application. Make sure all details have been entered correctly. Simple errors, such as misspelled names, incorrect addresses, or other wrong information can result to your application being declined.
If you notice any mistakes, contact the lender immediately to explain and correct the information. Providing accurate details is crucial for increasing your chances of getting approved by any lender.
Do you hold a full licence?
Some lenders may refuse your car finance application if you hold a provisional, European, or international driving license. However, being turned down for car finance by one lender doesn’t mean you’ll be refused car finance everywhere.
For example, some lenders, like AutoMoney Motor Finance, accept European driving licenses. To avoid any surprises, it’s always a good idea to check with the lender before applying, to confirm what types of driving licenses they accept.
Don’t hold any driving licence yet?
It can be tempting to apply for car finance as soon as you start learning to drive, but you may need to wait until you have a valid, full driving license. Most lenders require you to hold a valid, full driving license before considering your application for car finance.
In the meantime, focus on building or improving your credit score, which may help you secure better rates on car finance in the future. You can also use this time to save money for a car deposit, making it easier to get the car you want.
Are you old enough to apply for car finance?
You must be at least 18 years old to enter into a hire purchase agreement, as it's illegal to do so if you're younger. However, even if you are 18 or older, getting approved for car finance can still be challenging.
Some lenders are less likely to offer finance to younger drivers, so it’s important to explore your options and understand what might improve your chances of approval.
Are you self- or unemployed?
When you apply for car finance, you’ll need to provide information about your employment.
If you’re unemployed: You may find it more difficult to get approved for car finance, as most lenders require you to have either a part-time or full-time job. However, some lenders might offer smaller finance options if you’re receiving benefits. Be sure to check the lender’s rules about unemployment before you apply.
If you’re self-employed: Getting approved can be more challenging compared to someone with a full-time job, as lenders often view full-time employment as more stable. You may need to provide bank statements or other documents to show the lender that you can afford the finance.
Why have I been refused car finance?
Lenders typically refuse car finance applications for one of three reasons:
Credit history
Your application may have been unsuccessful due to information on your credit file. You can check your credit report with these agencies:
Helpline: 0333 321 4043 or 0800 014 2955
Address: Equifax, PO Box 10036, Leicester, LE3 4FS
Helpline: 0344 481 0800 or 0800 013 8888
Address: CreditExpert, PO Box 7710, Nottingham, NG80 7WE
Affordability
Lenders need to make sure you can afford to repay the loan. Your application may have been unsuccessful if the lender thinks that the loan could be unaffordable or unsustainable for you.
Business rules
Lenders use certain rules to help decide if they can offer you a loan. Your application may have been unsuccessful if it did not meet these rules.
What can I do next?
1. Check your credit report: Look at your credit report to understand any issues.
To improve your score, please consider the following practical steps:
- Pay bills on time: Make sure to pay all your bills, such as utilities and credit cards, on time. Late payments can hurt your credit score.
- Check for errors: Regularly check your credit report for any mistakes. If you find any errors, report them to the credit reference agencies to get them corrected.
- Reduce debt: Try to pay down any existing debts, especially on credit cards. This can help lower the amount of credit you're using compared to your credit limit.
- Limit credit applications: Avoid applying for multiple credits in a short period. Each application can show up on your credit report and might lower your score.
- Register to vote: Make sure you are on the electoral roll. Lenders use this information to confirm your identity and address.
- Use credit responsibly: If you have a credit card, use it wisely. Try to pay off the full balance each month if you can. This shows lenders that you can manage credit well.
2. Use benefits calculators: Websites like Turn2us and Entitledto can help you find out if you can get any financial help:
Helpline: 0808 802 2000
3. Get free advice: Organisations like Citizens Advice, StepChange, and MoneyHelper can help you with free advice and support:
Helpline: 0800 144 8848
StepChange Debt Charity website
Helpline: 0800 138 1111
Helpline: 0800 138 7777
Other options to consider
Look for specialist lenders
If you have been declined car finance for any of the reasons mentioned above, consider looking for lenders who specialise in financing young drivers or self-employed applicants.
Each lender has its own criteria, so it's important to research and find one that aligns with your situation before applying. Doing so will help avoid multiple searches, which negatively affect your credit file, and reduce the risk of being refused car finance again.
Consider other options
If you’ve been unable to get finance from a lender, considering other options may help you get a new car. Some options include:
Joint applications: Adding a second applicant from your household, such as a partner or relative, may improve your chances of being accepted for car finance. While not all lenders accept joint applications, some do, so it’s worth exploring this option.
Saving money for a car: If finance isn’t currently an option for you, you might think about saving up for a car instead, depending on your financial situation. This could you give you more flexibility and avid the need for credit altogether.
Leasing: Leasing a car may be an alternative to purchasing one on finance. Leasing often requires a lower upfront commitment and can be a more affordable way to drive away in your new car.
Consider a cheaper car: If you’ve been accepted for finance but weren’t offered as much money as you expected, consider looking at more affordable cars. This way, the loan remains manageable and you can always upgrade your car in the future if your circumstances improve.
Revisit at a later date: If you’ve been refused car finance, you try reapplying at a later date. Lenders usually recommend waiting at least three months before applying again. In the meantime focus on improving your credit score to boost your chances of approval.
Will a declined car finance application affect your credit score?
When you apply for car finance, the lender will do either a hard or soft credit search on your credit report:
- Hard search: A hard search leaves a visible mark on your report that future lenders can see. However, the outcome of the check—whether you were approved or declined—won’t be recorded, so lenders will only know that you applied. Keep in mind that having too many hard searches on your credit report can lower your credit score. Multiple hard searches for different types of finance can also create a negative impression, potentially leading to your application being declined.
- Soft search: A soft search won’t affect your credit score or leave a visible mark on your report. At AutoMoney Motor Finance, we start with a soft search when you apply. A hard search is only conducted once your application is approved and ready to be paid out.
Could you get HP car finance with AutoMoney Motor Finance?
If you've been declined car finance by other lenders, AutoMoney Motor Finance may still be able to assist you. We've successfully helped many customers secure the finance they needed.
Interested in applying for car finance? For more information, speak with one of our friendly and dedicated Sales Agents today on 0800 980 6424, or apply for HP car finance online.
Representative example
You could borrow £10,000 over 60 months with an initial payment of £490.66 (including £199 Admin Fee) followed by 58 monthly payments of £291.66 with a final payment of £490.66 (including optional £199 Option to Purchase Fee).
Total amount repayable will be £17,897.60.
29.3% APR, annual interest rate (fixed) 24.7%.
This example uses the representative APR. This is the rate at least 51% of customers are expected to get.
Lending is subject to status and additional affordability checks. Rates quoted are subject to change and will depend on lending amount and personal circumstances.
Be careful of illegal money lenders
Please do not borrow money from illegal lenders (loan sharks). They charge very high interest rates and can be dangerous. If you need help or have been approached by an illegal money lender, you can contact:
Helpline: 0300 555 2222. Available 24/7.
Or click here to send an email.
FAQ
If you find errors on your credit report, it’s crucial to get them corrected as soon as possible. Contact the credit reference agency to dispute any mistakes. Correcting these errors can improve your chances of getting accepted for car finance in the future.
It’s usually a god idea to wait before reapplying for car finance. Lenders often recommend waiting at least three months after a decline. This gives you time to address any issues that led to the initial decline, such as improving your credit score.
To improve your chances of getting car finance in the future, make sure all your application details are correct, work on improving your credit score, and consider waiting a few months before reapplying. During this time, you can also explore alternative financing options or save for a larger deposit.
If you think your car finance application was declined unfairly, you can ask the lender to investigate why the application was declined. It’s also a good idea to review your credit report to ensure there are no errors.
Many lenders use automated credit decisioning systems to assess applications. These systems evaluate your credit history, income, and other factors to make a decision. If your application was declined by an automated system, you have the right to request a review of the decision. This means you can ask for a human review of your application, giving you the opportunity to explain your situation in more detail.
Knowing your rights and taking these steps can help ensure that you’re treated fairly and that any mistakes are corrected, improving your chances of securing car finance in the future.
