Car Finance on Benefits
Representative example:
Borrowing £6,500 over 48 months with a representative APR of 21.4%, an annual interest rate of 21.4% (Fixed) and a deposit of £0.00, the amount payable would be £196.24 per month, with a total cost of credit of £2,919.52 and a total amount payable of £9,419.52
Car Finance for people on benefits
Cars are an essential part of many people’s daily lives. They enable people to get to work, shops, hospital, family and all kinds of other important places. For those currently claiming benefits, owning a car outright can be difficult, which can make these day to day tasks particularly tricky to perform. Being on benefits doesn’t mean that you still don’t need to do them though, and owning a car could be a key part of enabling an individual to get to and from work. Car finance on benefits may seem unobtainable, but there are places that can help.
ChooseMyCar is here to help. Car finance for people on benefits may be tricky, but we work with specialist lenders who take everything about an individual’s unique position into account. These lenders will look at a borrower’s profile before they make a decision, so even if you’re after car finance when you’re unemployed, there may well be a car finance deal available for you.
How to get car finance on benefits
The key to being accepted for a car finance deal when you’re claiming benefits generally comes down your credit history. Just because you are on benefits it doesn’t mean you have a bad or poor credit history. If you can pass the credit check, and can prove that you can make the repayments, you may well be accepted for car finance. ChooseMyCar have relationships with specialist lenders that can help people claiming benefits to obtain car finance, who may have different credit-related criteria than some lenders.
Applying for car finance when claiming benefits
If you’re claiming benefits or unemployed, but want to see what car finance you may be able to afford, try using our calculator. If you have worked out your budget and know you can afford car finance while on benefits, then you can apply for car finance through Choose My Car.
ChooseMyCar accepts applications for people on benefits as long as you are:
- Over the age of 18
- Have lived in the UK for at least 3 years
- Hold a full UK driving licence
- Can prove that you can meet the repayments
During the initial application, we will only conduct a soft search credit check, which means your credit score will not be affected. A soft search credit check is a quick way to ensure that you meet the affordability criteria before we move on with the full application process.
If you do have poor credit, but still prove that you can afford to make repayments, there’s still a good chance you’ll be approved for car finance too. Being on benefits really isn’t the barrier that some may see it as. Another option for those in this situation is to use a guarantor for car finance. This is where someone vouches for your ability to afford the payments and makes them if you can’t.
Car Finance for unemployed people
Being unemployed is another scenario that shouldn’t stop you from being able to enter a car finance deal. If you are unemployed but have good credit, then you should be in a situation where ChooseMyCar can work with you to find the right lender that will be understanding of your circumstances.
Being unemployed you may need to prove that you have the means of affording car finance in an ongoing capacity, which is another situation where a guarantor may be useful.
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It is possible to get car finance with bad credit. Many lenders provide loans and finance options specifically for people with bad credit.
Personal loans can be a great car finance option if you have bad credit. And a guarantor loan may help you avoid higher interest rates; this is where a friend or family member co-signs the loan, agreeing to meet payments if you’re unable to.
With pre-approval on a personal loan, you can walk into the dealership like a cash buyer. You can be in a better position to negotiate on price. And you can avoid the stress of the finance office.
While you won’t need a good credit score to flat out buy a car, it can affect things if you want to get car finance. Overall the better your credit rating the better deal you’ll get on your car finance.
A poorer credit score may mean you are either denied car finance altogether by some lenders or else face higher interest rates or monthly repayments. That shouldn’t put you off though, at ChooseMyCar we are experts in bad credit car finance and can even help people with CCJs or IVAs get car finance. For more information on raising your credit score, check out our guide.
Having a guarantor can help you to get a loan when you otherwise may not have been able to, i.e. when you are a young driver, self employed or have bad credit.
Lenders may look more kindly on someone in one of these situations if they have a guarantor so they know that there’s less chance of a missed payment.
Read our guarantor loan guide.
Your car finance may have been refused for a number of reasons. These are generally one of the following:
- Poor credit history or a bad credit score – read our tips on improving your credit score
- You don’t meet the criteria for qualifying for that lender’s finance
- Your employment status – some lenders won’t approve you if you are unemployed or self employed
- Type of driving license
- Age – this could be because you’re too old or a young driver.
For more information on why you may have been declined, please read our guide on being refused car finance.