Understanding Your Chances of Approval for Car Financing


Acquiring a new or used car is a significant milestone for many individuals and families. However, it often requires financial assistance in the form of car finance. Whether you’re dreaming of a sleek new sedan, a reliable family SUV, or a powerful truck, the question that looms large is, “Will I get accepted for car finance?” This article aims to shed light on the factors that influence your eligibility to apply now car financing and offers tips to improve your chances of approval.

A joyful individual stands beside a shiny, newly acquired car, their arms raised in triumphant celebration. A big smile lights up their face as they hold up the approval letter for their car finance. The sun's warm rays illuminate the scene, adding to the overall feeling of happiness and success

The Basics of Car Finance

Before delving into the factors affecting approval, it’s essential to understand the fundamentals of car finance. car financing typically involves borrowing money from a lender (such as a bank, credit union, or dealership) to purchase a vehicle. The borrower agrees to repay the loan amount, plus interest, over a predetermined period, often through monthly instalments.

Factors Influencing Approval

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  1. Credit Score: Your credit score is one of the most critical factors lenders consider when assessing your eligibility for car finance. It’s a numerical representation of your credit history and payment behaviour. A higher credit score typically increases your chances of approval, as it signifies lower credit risk. Lenders prefer borrowers with good or excellent credit scores, but they may still work with those who have fair or poor credit, albeit at higher interest rates.
  2. Income and Employment: Lenders want to ensure that you have a stable source of income to repay the loan. A steady job with a consistent income stream can boost your approval prospects. Self-employed individuals may need to provide additional documentation to prove their income stability. Lenders often calculate a debt-to-income ratio (DTI) to assess your ability to manage the loan alongside your existing financial obligations.
  3. Down Payment: Making a substantial down payment can significantly increase your chances of car finance approval. A larger down payment reduces the loan amount, which means you’ll need to borrow less money, making you a less risky borrower in the eyes of the lender. It can also result in more favourable loan terms, such as lower interest rates.
  4. Loan Term: The length of your loan term can impact approval. Shorter loan terms are generally more appealing to lenders because they carry less risk. Longer terms may lead to higher interest rates and potentially reduce your chances of approval, especially if you’re financing a used vehicle.
  5. Vehicle Selection: The type of vehicle you choose can affect your approval odds. Lenders may have restrictions on certain vehicle makes, models, or ages. Be sure to check with the lender about any specific criteria they have regarding the vehicles they finance.

Tips to Improve Your Chances

  1. Check Your Credit Report: Before applying for car financing, obtain a copy of your credit report from the major credit bureaus. Review it for errors or inaccuracies and dispute any discrepancies. Improving your credit score by paying down debts and ensuring on-time payments can boost your eligibility for car finance.
  2. Save for a Deposit: Start saving for a deposit well in advance. The more you can put down upfront, the more likely you are to secure financing with favourable terms. A substantial down payment can also help you avoid becoming “upside-down” on your loan, where you owe more than the car is worth. Some lenders do offer a no deposit car finance style of loan, and you can read more of this on our website.
  3. Shop Around for Lenders: Don’t limit your options to a single lender. Research and compare offers from different financial institutions, including banks, credit unions, and online lenders. Each lender may have slightly different approval criteria and interest rates.
  4. Consider a Co-Signer: If your credit is less than stellar, you might consider having a co-signer with strong credit to vouch for you. A co-signer agrees to be responsible for the loan if you default, providing added security for the lender and increasing your chances of approval.
  5. Budget Wisely: Before applying for car finance, assess your financial situation and create a budget. Ensure that you can comfortably afford the monthly payments, including insurance, maintenance, and other car-related expenses. This demonstrates responsible financial planning to potential lenders.


The prospect of obtaining car finance can be both exciting and daunting, especially if you’re unsure about your eligibility. While there’s no guarantee of approval, understanding the factors that influence the decision can empower you to make informed choices. By managing your credit, saving for a down payment, and exploring different lenders and loan options, you can improve your chances of securing the car financing you need to drive away in the car of your dreams. Choose My Car always tries to help readers with any questions they might have!

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