Refused Car Finance

Why Have I Been Refused Car Finance?

Bad Credit

Having a poor score the most common reason that you may be refused car finance. When you apply for car finance, lenders will run a credit check to view your credit score and financial history. If your credit score is deemed to be too low, a lender will reject your application. This isn’t to say that all lenders will reject you for car finance, so it’s important not to be disheartened. If you approach a car finance lender with poor credit, looking for a soft credit check is key. A soft credit check is when a lender looks at your credit report without registering a check on your file. This avoids future lenders seeing this, which can put some companies off from lending. Some lenders will perform a hard credit check, which logs a check on your file, hurting your chances of future finance.

Thankfully, Marsh Finance offers free soft credit checks, giving you an instant idea of your car finance eligibility. Get a quote now!

Affordability

Lenders also check your affordability when you apply for car finance - basically, how much money you can afford towards a car payment. They look at your income and expenses to see what you can realistically afford. If the loan seems too much for your budget, they may decline your application, even if your credit score is good.

This isn’t to be harsh, it’s to protect you from struggling with repayments later. To avoid being refused for affordability reasons, take time to plan your budget. Work out what you can comfortably afford each month and avoid stretching yourself too thin.

Eligibility Criteria

Think of eligibility criteria as a checklist: every lender is different, so being refused car finance by one doesn’t mean you’ll be refused by another. Here’s what lenders usually look for:

• Minimum age: Some lenders only accept applicants over a certain age, often between 18 and 22. If you’re refused car finance at 18, it could simply be due to age, so always check first.
• Proof of identity: You’ll need valid ID, such as a passport and driving licence.
• Car age and mileage: Many lenders won’t finance cars over a certain age or mileage. If your chosen car is too old, your finance may be declined.
• Fuel type: Not all lenders offer electric car finance yet. If you apply for an EV with a lender that doesn’t, it’ll result in a car finance refusal.

Checking these details before applying can save you time and improve your chances of approval next time.

Incorrect Details

A car finance application is like a jigsaw. All the pieces have to come together and match to process and assess affordability. One minor error, whether a wrong letter in your postcode or the wrong house number, will lead to your finance application being rejected. You might have just got married, and put the wrong surname on your application. Little things like this can cause your application to fail.

Take the time to comb over your application and double-check that there are no issues before clicking submit.

Employment History

Your employment history plays a big part in whether your car finance application is approved. If you have a short or limited work history, it can make things a little harder. Lenders like to see a steady job because it shows you have a regular income and can keep up with repayments. Your actual job role can have an effect too. Some lenders will reject delivery and Uber drivers. 

If you’re self-employed, don’t worry, getting car finance isn’t impossible. While your income might change from month to month, providing clear proof of your earnings can help reassure lenders that you can afford the finance.

At Marsh Finance, we understand that not everyone works the same way. That’s why we consider applications from self-employed customers too. Learn more about self-employed car finance with Marsh Finance.

Missing From The Electoral Roll

The electoral roll is a register for all people able to vote in the UK. This register records your address and name, and is a great way of boosting your credit score and chances of car finance. For many, not being on the electoral roll can be the main reason for refused car finance.

What Happens If I’ve Been Refused Car Finance? 🤔

If you have been refused car finance, don’t panic! Car finance refusal can happen and knowing what to do next is key.

Refused car finance usually comes about due to problems with your credit history, or details like the size of the loan you’re looking for. Finding out the reason for your refused car finance is important to make sure you’re not declined car finance in future.

What Can I Do If I’ve Been Refused Car Finance? 💭

If you’ve been refused car finance, don’t panic! It’s more common than you might think. The important thing is to understand why it happened and take a few steps to improve your chances of car finance approval next time.

📈 Improve your credit score. Your credit score plays a huge role in car finance decisions. Check your credit report for mistakes, pay bills on time, and try to reduce any outstanding debt. Even small changes, like registering on the electoral roll, can make a difference. Want more tips? Read our guide to improving your credit score.

💷 Manage your money wisely.
Lenders want to see that you can manage your finances responsibly. Create a simple budget, cut unnecessary spending, and pay off existing loans where you can. Building up a small savings pot also helps show financial stability. 

Read: How to set a savings goal and stick to it.

💪 Strengthen your next car finance application. Show proof of on-time payments, add your name to household bills, and try to save for a deposit, even a small one can help boost your approval chances. Don’t worry if that’s not possible though, no-deposit car finance options are available. 

🔎 Choose a car within your budget.  When reapplying after being declined for car finance, focus on affordability. A cheaper, more manageable car can make approval easier and help you build a positive payment history and credit score for future applications. 

How Does Refused Car Finance Affect My Credit Score?

Being turned down for car finance won’t harm your credit score if only a soft credit check was carried out. Soft checks are visible only to you and don’t affect your score.

However, if the lender performed a hard credit check, this would appear on your credit file and may cause a small, temporary drop in your score. That’s why it’s worth checking what type of search a lender uses before applying.

At Marsh Finance, we only carry out a soft credit check when you apply, so you can explore your finance options with confidence, knowing your score is protected.

👉 Complete our quick online form today and get a same-day decision without impacting your credit score.

Refused Car Finance FAQs 🔎

What happens if I get rejected for car finance?

If you’ve been rejected for car finance, you’ll have to look elsewhere for a new loan. It’s best to take some time after rejection to learn the reasons for refused car finance so that you can take steps to correct the issues and improve your chances of future acceptance.

What is the lowest credit score to buy a car?

There’s no magic number for car finance; each lender is different. In saying that, a lower credit score will reduce your chances of being approved for car finance, as lenders see you as less financially capable of making repayments. This doesn’t mean that car finance isn’t available for low-credit-score customers. Bad credit car finance exists, a financing option for people with less-than-perfect credit scores. Marsh Finance is a proud provider of car finance to customers with all credit scores. Take a look for yourself and see how we can help you.

Is it hard to be accepted for car finance?

Some people will find it harder than others to be accepted for car finance, due to varying personal circumstances. Car finance requires a financial commitment to make repayments and a credit score that meets the requirements of the specific lender. If you’re someone with a lower credit score and limited spare funds every month, you’ll find it harder than others to be accepted for car finance.

If you’re in this position and feel like car finance is an uphill battle, we can help. Apply for car finance without affecting your credit score and receive a decision the same day. No obligations, just an initial flavour as to whether finance would be possible.

What is the 50% rule on car finance?

The 50% rule states that you can legally end a HP agreement if you’ve paid at least half of the amount owed. This is mainly for customers struggling to meet payments and can be a good way to alleviate stress.

Why was I refused car finance?

There are lots of reasons that you could have been refused car finance, but here are the usual causes:

• Credit score. A lower credit score might see you rejected by certain lenders.
• A lender might see the loan as out of your price range, and reject you for finance.
• Minimum age to apply. Some lenders don’t finance people under 22, even if your credit score is good.
• Vehicle restrictions. Lenders have different rules for the cars they finance and approaching them with a car in mind that’s out of this range will see you rejected for car finance. This also covers fuel type, with some lenders avoiding electric car finance.
• Incorrect details. A really simple one, putting in the wrong details can see you declined for finance. Check over your application and make sure there are no mistakes before submitting.
• Employment history. Self-employed and unemployed applicants might be seen as less likely to meet regular car finance payments, as their incomes are unstable. In saying this, Marsh Finance provide self-employed car finance. See how we can help you Another job role that might lead to refused car finance is working as a delivery or Uber driver. If you’re one of these, you’ll need to get in touch with the lender up front and prove that the vehicle won’t be used for this purpose.
• You’re not present on the electoral roll.
• You’re recently married and the name on your credit report doesn’t match.
• Salary issues. Make sure you state monthly earning or yearly when it’s requested. Stating a yearly earning where it requires a monthly figure will cause you to decline.
• Negative equity. You might have existing car finance and are looking to switch, but the amount you owe on the existing car is worth less than the car is worth.

Can I get guaranteed car finance for bad credit?

No lender can guarantee car finance in any form, whether that be good or bad credit. If you see a lender that states they guarantee car finance, treat them with caution.

What’s black box car finance?

Black box car finance is a popular option for people with low credit scores. In black box car finance, a payment reminder system is installed in your car, and payments must be made on time to use the car. If you fail to make repayments, the car won’t be usable. In a black box car finance agreement, you’ll usually gain ownership of the car once repayments are made.

Can I get self-employed car finance?

You can! You can get self-employed car finance but will likely have to provide proof of income to be accepted. In a car finance application, lenders look for steady income, but self-employed salaries can vary monthly. This presents a risk to lenders but can be eliminated by providing extra proof of funds through interactive methods like open banking.

What’s a credit score?

A credit score is a number rating that marks how good you are with your finances. A credit score will look across your finances and see whether you meet required repayments, as well as how you handle money. If you’re deemed to be responsible financially and, in doing so, meet repayments, you’ll likely have a higher credit score. When it comes to applying for loans and car finance, a higher credit score will help your chances of getting finance, making credit scores a really important metric.

Is Your Credit History Too Poor To Apply For Finance?

If you’ve missed payments in the past, your credit score will be low. When it comes to applying for car finance, a higher credit score boosts your chances of being accepted for car finance, but that isn’t to say that a bad credit score eliminates you from finance.

Bad credit car finance exists for those struggling for approval elsewhere and tends to include higher interest rates to guard against the risk of missed payments. Marsh Finance provides car finance to people with all credit scores, and our dedicated bad credit car finance page is the perfect place to go if you’re unsure of your finance chances.

How can I improve my credit score?

• Pay your bills on time.
• Keep credit card balances low, trying to spend less than 30% of your credit limit.
• Take time to build your credit history.
• Check your credit report regularly for any mistakes or fraud.
• Don’t apply for too much credit at once.

Are You Old Enough To Get Car Finance?

Each lender has different eligibility criteria, and an 18-year-old customer might not get finance with one company but be accepted by another. Generally, you need to be over 18 to apply for car finance or 17 with a full driving licence.

Why was my car finance approved, then declined?

An initial approval then decline will likely be a result of a lender undertaking a more thorough check of your finances, credit score or many other factors. Here are the most common reasons for an initial approval then decline:

• Missing information. Everything for the initial application is in place, but a further check finds missing documents or information.
• A lot of lenders perform a soft credit check at the point of approval. This is then followed by a hard credit check, which is more detailed and may uncover missing payments or financial issues that mean you are now ineligible for car finance.