Why has your car finance application has been refused?


Getting a car on finance is a really exciting time and there are many benefits to financing a car. Car finance typically enables you to get a better and newer car than you first thought you could afford and spread the cost into affordable repayments. Sounds simple, doesn’t it?

Car finance is never guaranteed and usually you have to pass a few security, credit and affordability checks to get approved for car finance. But what happens if you are refused car finance? How do you know why you got refused? There are a number of common reasons why your car finance deal may have been declined.

Credit history

Car finance lenders will usually provide a soft search credit check on your credit file. This enables them to take a quick look at your credit file without harming your credit score and can’t see your full credit history. They get access to the information provided on your credit file and then they decide whether to accept or decline you for finance. Each lender has their own criteria that you need to meet but generally having a good credit score increase your chances of getting approved. 

Bad credit is usually due to missed or late repayments in the past and lenders may be wary of lending to you again. If you are applying for car finance with bad credit, you could consider improving your credit score in the run up to applying for finance. Having bad credit doesn’t mean you can’t get finance; it usually means that you will be limited to the number of lenders who can help you. Similarly, if you haven’t taken our any form of credit in the past then lenders can predict what type of borrower you will be and can reduce the number of lenders who will approve you. 

Employment status

It is typically easier to get approved when you work full-time, part time and even if you don’t work as many lenders accept benefits as a form of income. Lenders usually ask for bank statements to prove steady income. You could be more likely to get refused for car finance if you are self-employed as your employment can change month on month and can also get paid cash in hand. Having proof that you can afford to pay back car finance is key to getting approved for self-employed car finance. If you get paid cash in hand, you can deposit it into a UK bank account to prove how much you earn and take it out straight away if you need to! 


Many bad credit car finance specialists want to make car finance more accessible, even if you do have bad credit. They do this by also taking into account your affordability. If you can prove that you can afford to pay back your car finance, then it can help you get approved. You could also consider putting down a deposit to support your affordability. This also helps to reduce your monthly payments and make it more affordable for you. 


In the UK, you can pass your driving test at the age of 17 but you can’t get approved for finance at the age of 17. Car finance is a legal agreement, and you must be over 18 years old to take out car finance. Some more specific lenders require you to be 22 years old, but this is more uncommon. There is also restriction to how old you can be later in life. Many lenders offer finance to anyone over 18 but under 65 years old. 

Type of driving license

It may seem obvious to many applicants but many people, but many lenders only accept people who have a full UK driving license. Applicants who have a provisional, European license or out if date licence can struggle to get approved for finance. If you have a European license, many lenders require you to have lived in the UK for 3+ years to get approved. First time and learner drivers can also apply for finance with a provisional, but they may be accepted by a limited number of lenders and can increase their options when they receive their full driving license. 


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