Wondering if you’ll get approved for car finance? It’s useful to understand what car finance checks involve so you can make a strong application and improve your chances of acceptance. Our guide explains how car finance checks work, as well as how to find car finance you’re more likely to get.
When you apply for car finance - such as hire purchase, personal contract purchase or car leasing — the provider will run credit and affordability checks to see if you’re likely to make the monthly payments on time. They also need to check your identity to make sure you are who you say you are.
A hard search happens when you apply for any type of credit, including car finance (also known as vehicle finance). It means the lender has looked at information on your credit report, such as your history of borrowing and making repayments. This can help them understand if you’re likely to pay them back. They may be less likely to approve you for car finance if your report includes things like late payments, county court judgments or bankruptcy.
A hard search will be recorded on your report, meaning other lenders can see it when you apply for credit. Your credit score will dip to reflect this, but should recover over time if you take care of it. A lower score means you’re less likely to get approved for credit, so it’s wise to spread your applications out over time.
A soft search happens when a company looks at certain information on your report but doesn’t do a full examination of it. Experian does a soft search when you compare car finance with us. This helps us give you an idea of your chances of being approved. Don’t worry — soft searches aren’t recorded on your report, meaning comparing car finance won’t affect your score.
On top of doing a credit check, car finance providers need to see if you can afford the monthly repayments. They typically look at your monthly income and spending. This includes any repayments you’re currently making — such as on a mortgage, loan or credit card.
Car finance checks vary between providers, but they’ll generally look at the following:
Car finance companies need to see proof of identity such as a driver’s licence or passport to check that you are who you say you are. This helps them make sure you’re not committing identity fraud, like taking out credit in someone else’s name.
When you apply for car finance you usually need to give your full name, previous names, date of birth, marriage status, residential status, and address history for at least the past three years. Make sure your address history is recorded accurately on your credit report and you’re registered to vote at your current address — this should help your credit check go more smoothly. You may need to provide proof of address too, such as utility bills or bank statements addressed to your current home.
Car finance checks often require proof of income such as payslips or bank statements. Some lenders may ask for your employment history, including a current job contract showing your title and salary. If you’re self-employed they may want to see several years’ worth of stable income.
Lenders usually calculate your credit score as part of a car finance check. Each lender has their own way of doing this. Typically, they use information from your credit report, your application, and their own records if you’ve been a customer before.
The information they get from your report may include things like:
Information stays on your report for up to six years, although lenders may see certain records as less important as they age. Check your free Experian Credit Score to get an idea of your report’s health.
Car finance checks typically take one or two days although some can take longer. You may be able to prevent delays by making sure the information on your application and credit report is accurate and complete.
No, unfortunately you won’t find car finance without credit checks in the UK. All lenders are required to do a credit check when you apply.
Having a ’bad’ credit score limits your options, but you may pass a car finance check with the right lender. Consider looking for bad-credit car finance — it’s designed for people with poor credit meaning it’s usually easier to get approved. You may have to accept a higher annual percentage rate (APR) though.
There’s no guarantee you’ll pass a car finance check but there are things you can do to improve your chances, including:
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