Depending on where you live, a car may be essential to your lifestyle. Inner cities with great public transport networks are great for reducing your need for a car but let’s face it, the majority of our country is filled with rural towns and country roads – a definite need for a car. In some cases people won’t be able to get to work and earn money if they don’t have a car, which can be a real sticking point if you don’t have a car or a job in the first place.
You can’t have one without the other and they sort of depend on one another. So, can you get car finance without a job and if you’re unemployed?
It’s important to note now, that there are many ways of getting a car on finance. But you have to be aware that it’s more about affordability than achieving the finance. You could end up with high premiums, high deposit requirements, low yearly mileage options or large balloon payments. There are multiple ways that your car finance plan can scale depending on your situation so be prepared to adjust. Let’s look at the different ways you can get car finance.
Getting car finance without a job
It is possible to get a used car on finance if you don’t have a job. Like we mentioned earlier, you just have to be prepared to jump through a few hoops. If you have no job, but you have a good credit score then your application should be relatively simple to get through, it will just be approved by fewer lenders and in some cases, you’ll need a guarantor.
While it is possible to get a car on finance without a job, expect your repayments to be higher than usual. But also, expect your options for a car to be restricted. It’ll be hard enough to find a lender, let alone find one that is willing to give you a high spec expensive car. We’ve done some research into the matter and these are the types of vehicles you can expect to get on finance:
You’ll be pleased to know that while these options are great for finance while you have no job they are also relatively inexpensive to run and the insurance prices on them are quite low. Meaning that any increase in your monthly repayments due to your lack of employment can be balanced out with lower running costs of the car itself.
What should you be aware of before getting a car on finance?
While having access to a car might seem essential for you in order to get to work. There are a few things you need to consider before entering into an agreement. Whoever acts as a guarantor for your agreement, they will be legally responsible for any payments you do not make. They will need to be aware of the consequences that can occur by your failing to make any repayments. We emphasise this because typically guarantors are close friends and family and the last thing you want is a strained relationship with them.
You will also need to prepare a lot of documentation in order to enter into the finance agreement. This is fairly typical of most financial agreements and loans. Things such as a proof of address, proof of identity, and a proof of income. We know you don’t have a job. But proof of previous income, any type of income, even Universal Credit will be required.
Once you’ve considered all the legal areas of your application you’ll need to start thinking about logistics.
What type of car finance agreement should you consider?
There are two types of car finance plans that are commonly sought after. One is called a PCP and the other is a Higher Purchase. If your finances are restricted, then you might find that the PCP is a better option for you, that being said, if you can afford to go for a Higher Purchase initially, it will help in the long run.
A PCP is a monthly payment that is slightly lower because you’re not paying the entire car off. You will be left with a payment at the end of your agreement. You either pay off the final payment or renew your agreement and start paying off the payments on another car. It’s great for keeping your monthly payments low, however you’ll be paying them for a while if you can’t afford the payment.
A Higher Purchase agreement has been less popular in recent years with more and more people living life with multiple finance deals. Whether it’s monthly subscriptions to magazines, tv platforms or their clothes shopping habit. Paying monthly is popular and physically owning something is becoming less important. That being said, if you can afford the higher purchase, it might be beneficial to opt for it. Slightly higher monthly repayments, but no balloon payment at the end. That means when your agreement comes to an end, you own the car outright. You can either keep it and only pay for the upkeep, which is far cheaper. Alternatively, you can sell it in order to purchase a much cheaper car – this is a perfect idea if you only need a cheap runaround car to get you to work.
Once you’ve got all your ducks in a row, sorted out all your documentation, decided on what type of agreement works best for you the next step is to approach a lender. You might know you want a Ford Puma on a Higher Purchase agreement and your spouse as your guarantor, but your decision may be restricted by what your lender is prepared to give you.
