While we work hard to get the best car finance deal for everyone who applies, there are a number of reasons why you may be declined for car finance. Unfortunately this is something that can’t always be avoided. We’ve gone over the reasons you may be declined car finance below.

1. Poor credit history or a bad credit score

While bad credit may not necessarily be a barrier to getting car finance, there are some lenders who may be wary of approving you for a new credit deal. If you have a poor credit history that shows missed payments or an inability to pay off credit, a lender may think twice before approving you.

There are a number of ways to improve your credit score, but these may not be quick. If you want more information on bad credit car finance we’ve gone into more detail elsewhere, but essentially, with a bad credit score you can still be approved under certain criteria.

If you have a CCJ or an IVA currently live this may also prevent you from getting approved.

2. You don’t meet the lender’s criteria

While you may have a good credit score or credit history, some lenders may have particular criteria they need you to meet before they approve your application.

For instance, you may have asked to borrow more than the lender feels you can pay back. Or other financial checks, such as your monthly income, may have made them wary of your ability to pay off the loan.

3. Your employment status

There are a couple of instances where your employment status could be an issue:

  • You’re unemployed: If you’re unemployed a lender may refuse you car finance. With no regular income it can be hard to prove to a lender that you can afford to make repayments. They may still accept you if you can prove you have the money available, but this will be on a case by case basis.
  • You’re self employed: While being self employed doesn’t necessarily stop you from getting approved for car finance, some lenders may not. If you can’t show your earnings over a three year period they may need to see further evidence that you can afford it. They also may not approve you if you are intending to use the vehicle for work.

4. The type of driving license you hold or the status of your license

Lenders won’t approve you for car finance while you’re still on a provisional license. While you may want to get a headstart on buying a car before you’ve passed your test, you’ll not get approved for finance.

Some lenders may also not approve you for finance in the UK if you have an EU license rather than a UK license.

It’s also worth noting that if you are currently serving a ban from driving you’ll not be approved for car finance.

5. Your age

As we mentioned in our car finance for young drivers guide, there can be some limitations on being approved for car finance for young people. If you’re under 18 you’ll not be approved for car finance. Once you turn 18 it’s possible to apply for car finance, but lenders may turn you down due to a lack of credit history, even if you’re in regular employment. A guarantor may help your chances here.

It’s not just young people who may be refused car finance. Some lenders may not approve older people as they are concerned about the status and ability to make repayments.

6. Previous rejections

If you have been refused car finance in the past, or been refused for other types of credit agreements, some lenders may refuse you again. Make sure that you apply when you are confident of getting approved by that lender.

Getting approved for car finance

Take the time to read through all of our car finance guides to make sure you understand what you’re applying for and the reasons you could be declined car finance. It could be worth working on your credit report and getting together any financial proof you may need to show a lender ahead of applying.

Try out our car finance calculator to check what you can afford before you apply for car finance.