Can you get car finance on a low wage and income?

If you’re looking to buy a new car it’s more than likely that you’ve considered financing one. It doesn’t come as any surprise to us – cars are becoming more and more expensive and even second hand cars are in their thousands. Many years ago, you used to be able to find a used car for less than £1,000 quite easily. But as technology has advanced, their durability has increased, meaning that even when they’re 10 or 20 years old, they’re still worth a fair amount of money. So much so, that when it comes to buying one, it’s rare to be able to buy one outright. It’s why finance options have become so popular.

Years ago, getting a car on finance wasn’t as popular. But now, it’s almost as common as buying a phone contract. It’s more accessible than ever, but still there are questions for many of us as to whether it’s possible including if it’s possible with bad credit for car finance or if you’re self-employed

So in this article we’re going to talk about accessing car finance no matter what your financial status is.

How to make your car finance affordable

There are only two things you need to get car finance on a low income. A lender who will agree to lend to you and the monthly income to afford car finance. It’s really that simple. Now, it’s important to note that your car finance is dictated by a few things and isn’t at a set cost. That’s why it can be affordable even when you’re on a low income.


Adjusting the cost of your monthly finance happens in three different ways. The first one is putting a deposit down – as big of a deposit as possible. Why does that help your monthly bills? Well, you’re borrowing less. and the less money you borrow the smaller payments you’ll have to make. But that only happens if you compare like for like durations. Which brings us swiftly onto the second way to reduce your car finance.

Extend the duration of borrowing. Many car finance deals start at two years but can last for four or even five years. When you enter into your car finance agreement you’re borrowing a set amount, naturally there will be some interest added, but by spreading the payments over a long period of time, you’ll make them as small as possible. That’s how car finance becomes affordable, not by looking at the big number, but at the small monthly number that you’ve got to pay each month. Paying £10,000 for a car on finance is no good if the monthly repayments are £500 and out of budget. However, if you can pay £12,000 in total and just £250 a month, it’s suddenly affordable.

The final way is to buy a car as cheap as possible. It’s similar to putting down a large deposit. But of course, collecting a large deposit isn’t always easy – especially as those of us on a low income rarely have spare money to save each month. But if you need to finance a car, there’s nothing to say you need to buy the most expensive car on the forecourt. 

Ask yourself what is essential. Do you need a low mileage car if you’re only driving 10 minutes to work five days a week? Do you need heated seats and a built-in sat nav? We doubt it. Remember you’re looking to make car finance affordable – it’s the priority. Therefore, financing the most affordable and suitable car is the only goal.

What type of finance is best for low income?

Affording a car on finance with a low wage and income is also more accessible if you select the right type of finance option. The first thing you need to do is take a look at your monthly income and determine how much of that can be put towards a car finance deal. Now, this doesn’t mean looking at your wage and subtracting the rent and claiming that’s what you have leftover. There are plenty of bills to come out each month, plus food and extras. What you need to do is find a number that’s affordable, but more importantly, comfortable.

You want to be paying this bill each month without worry. The items that should be ‘breaking the bank’ so-to-speak should be the Friday night pizza treat, not the essential car finance bill. Once you know what this figure is (and of course you’ve found your car) you can look at finding the best finance deal.

The first, and possibly highest monthly payment option is the hire purchase (HP). A hire purchase finance agreement means that you will pay off the entirety of the finance during the agreement. Each payment is split evenly and after a few years (or however long your agreement is) you’ll own the car, meaning no more monthly payments! This is a great option if there isn’t a lot of wear and tear on the car, it still has a respectable amount of mileage in it, and you don’t require an upgrade.

The second is a personal contract purchase (PCP). In this type of agreement, you won’t pay off the entirety of the finance. Instead, when the agreement comes to an end, you’ll have an optional lump sum to pay. If you pay it you own the car outright just as above, if you don’t then you trade the car in for another one and continue paying monthly payments – potentially at a higher rate – for another agreement length. That being said, because you’re not paying the entirety of the agreement, your monthly repayments will be significantly less.

The final option is taking out a bank loan and paying for the car outright. This method of financing can give you a great reduction on your monthly repayments. This is because typically a bank loan can be extended significantly longer than a car finance plan with a dealership. This is a good option for people with a severe restriction on their monthly income.

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