What To Do If You’ve Been Declined Car Finance


If you’ve exhausted every possible means of obtaining car finance and been met with nothing but refusal, it can be incredibly frustrating indeed.

However, it doesn’t necessarily have to been the end of the road as there are several other options you can explore.

From taking a guarantor loan to embarking upon a savings regime and subsequently paying for a car in cash, we’ve compiled a comprehensive guide to your options, and here it is.

1. Take a Guarantor Loan

Guarantor loans have been ladened with somewhat of a bad reputation, but when you consider the fact that obtaining one would enable you to buy the car that you have otherwise been unable to finance, they instantly seem worth a consideration.

A guarantor loan involves a friend or family member agreeing to guarantee the loan on your behalf.

Essentially, this means that if at some point you are unable to make the repayments, your guarantor would legally have to step in.

However, as with most personal finance products there are both pros and cons to consider before applying for a guarantor loan and we thought it only sensible to include the key ones here:

The Pros

  • The opportunity to buy a car that you would otherwise be unable to obtain – This can be a live saver if you need a car in order to commute to and from work, take the kids to school or live in a remote village and simply need a car to be able to do the weekly shop)
  • Could help improve you credit rating – Provided the lender that you use feed information on payment histories to the three key credit reference agencies and you make all payments on time, every time, a guarantor loan has the potential to help improve your credit rating over a period of time.

The Cons

  • Interest rates may be higher than with other types of finance – When lenders offer you a guarantor loan they are effectively taking a greater risk than if they were lending money on a standard loan to a customer with a good credit rating and this is therefore reflected in the interest rates that are charged. However, if you shop around you should be able to pick out the most reasonable option from the bunch.
  • You’ll need a willing Guarantor – This one is fairly self explanatory, but in order to stand a chance of obtaining a guarantor loan you firstly need to find a willing guarantor and given the fact that they will be chased for the repayments if you are unable to make them, finding one may prove tough.

2. Improve Your Credit Rating

If you have been unable to obtain the finance to buy a car, aren’t keen on the guarantor option and aren’t content with relying on public transport then your best option would likely be to improve your credit rating with a view to reapplying at some point in the future.

Of course, this isn’t an over night solution and repairing your credit rating can take many months and possibly even years depending on the severity of your financial mishaps.

However, regardless of how bad you know or think your credit history is, the best place to start is to obtain a copy of your report.

There are three key credit reference agencies in the UK and all of them should be able to provide you a a statuary one-off report for a fee of just £2.

Once you’ve obtained the report you’ll be able to see exactly what’s having a negative impact, pick up on any errors and overall, should find in much easier to improve things moving forward.

Here’s four key tips for improving your credit score:

  • Fix any errors – Given the vast number of records that are amended and updated daily by credit reference agencies, errors can and do happen so it’s important to scan through every single record on your credit file as to ensure all are correct. If you do spot an error, you can challenge it by contacting the company in question direct, failing that you can contact the credit reference agency.
  • Pay everything on time – This one goes without saying. If you want a good credit score you need to make sure that all the payments you have agreed to make are made on the day you have a greed to make them. Although many people don’t realise it, something as simple as a late payment can negatively impact your credit rating.
  • Don’t make multiple applications – Every time you make an application for finance and a full credit check is subsequently carried out, a record of that check will be added to your credit file and is therefore visible to other lenders. Unsurprisingly, a high number of credit checks within a short period of time is often viewed as a sign of desperation and it is therefore important to avoid making multiple applications all at once.
  • Make sure you are on the electoral roll – Little known is the fact that registering on the electoral roll is likely to have a positive impact on your credit score, mainly because it makes the process of identity and address verification much simpler. If you aren’t on the electoral roll and have been refused finance, you should register as soon as possible.

3. Save For a Car and Pay in Cash

Now this might not seem like the quickest or even the easiest option, but saving up and paying cash for a car is likely to be the most sensible option if you have struggled to get finance.

However, saving enough to buy a decent set of wheels will require some serious dedication.

For example: you may have to cut back on the luxuries such as nights out, take aways and impulse buys.

When you consider the fact that saving just £100 per month will result in you have a balance of £1200 after just 12 months and that that £1200 could buy you a reasonably reliable second hand car, it might be worth the short-term sacrifice.

Of course, not everyone is in a position to be without a car for months on end so this option isn’t likely to suite everyone.

4. Stick With Public Transport

You might not be the biggest fan of public transport, I most certainly am not, but when you consider all the costs that you are likely to incur when financing and running a car, it begins to stand out as one of the most sensible options.

This is even more so if you have been declined finance, don’t have any savings to buy a car, don’t have a willing guarantor and don’t feel that you will be bale to save a reasonable amount of money up every month in order to enable you to pay for a car with cash.

If you do opt for public transport as an alternative then it is important to investigate the different ticketing options in order to ensure you get the best value travel.

For example most bus and train operators offer season tickets, which in some cases can account to savings of in excess of 50 per cent when compared to single daily tickets.


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