Poor Credit

Your credit score will play a part in your chances of being accepted or refused car finance. There is no set number that is best, but generally the higher the better. There are many companies out there, such as Experian, Transunion or Equifax which can help you see your credit score and suggest things that you can do to help improve it.

What can affect your credit score?

There are many factors that can affect your credit score. Generally, these can be split into finance and non-finance factors.

Financial Factors

Financial factors that explore how you manage your finances can have an impact on your credit score. This includes outstanding debts, late payments on your mortgage, credit cards or bills. It also includes any previous or outstanding County Court Judgments (CCJs). It's important to note that some of these can stay on your credit file for up to six years, although the older they are, the less impact they are likely to have on a lending decision.

Non-Financial Factors

These are factors beyond your money. These can include a change of address, not being on the electoral roll or simply not having a credit history (not having a credit card or mobile phone contract for example).

If your credit score is a factor in why you have been refused car finance, options are available. Some lenders, such as Advantage Finance, have processes in place to offer car finance options to those with lower credit scores.

Your Age - More Than A Number

Some lenders take your age into consideration when assessing your eligibility for car finance. If you were eager and managed to pass your test at 17, then unfortunately it's likely you are going to have to wait it out. Legally you have to be at least 18 to enter into a finance agreement for a car.

If you fall into the age bracket of 18-21, you may find that you fall outside of the age limits set by the lender. Each lender has different criteria, so if you are young and have been refused car finance, it is worth speaking to the lender to find out if your age was a factor. If age did play a part in an otherwise strong car finance request, then look around. Some lenders will cater for younger drivers. At Advantage Finance we require our applicants to be 22 years old or above.

Employment Status

When considering you for car finance, each lender will examine your individual situation. The main thing they are trying to determine is the level of risk you pose. One thing they consider very closely is your ability to pay back the car finance once it is given to you, and your employment status is one of the factors they use to measure the perceived risk.

Just starting a new job or having a job history with significant lengthy gaps for example, imply uncertainty around repayment and could mean that some lenders could reject your application.

Only Finance What You Can Afford

Lenders have a duty of care to only supply car finance to individuals who have the financial stability to be able to make repayments. They'll examine the in's and out's of your accounts so be sure to get them organised before applying for car finance to increase your chances of being approved. This doesn't mean you should lie to make your records more appealing to pass the process. It means you should examine your finances and make any changes to improve them. It is important from a personal perspective to carefully consider if you can meet the payment requirements so you don't run into issues down the road.

What Can You Do If You Have Been Rejected For Car Finance?

Spread Out Your Applications

If you are refused car finance, it can be tempting to reapply straight away. After all, you want to get the car you've fallen for. However, if you don't first explore ways to improve your chances of being accepted for car finances first you could be doing yourself more harm than good. Being rejected multiple times over a short period of time can appear on your credit file and multiple, rejected applications can indicate desperation which could increase your perceived risk, so it is best to take a break between applications.

Here at Advantage Finance, we'll do a "soft search" first over your credit history, so that if you are refused car finance, it won't show up on your credit file for other lenders to see. If you're successful, you can then submit an official application.

Improve Your Credit Rating

As mentioned above, your credit rating will play a part in your eligibility for car finance. Exploring methods of how to improve your credit score can go a long way to helping you be approved for car finance in the future.

Some things to consider :

  • Search online and sign up for a free credit check account to diagnose your credit score.
  • Read through your information and ensure your details are correct. If they are not, contact the credit agency and get them amended.
  • Register on the electoral roll.
  • If you don't have a credit score, explore other ways of growing your credit.
  • Meet, or exceed the minimum payments required on credit cards.

Research Into Different Lenders

Each lender has different expectations and requirements, so if you are refused car finance, take a look elsewhere. It is important to look for lenders who will explore your unique needs and requirements. At Advantage Finance, we make decisions based on Intent and Ability.

'Intent' explores your past and takes into account your credit history and overall attitude toward credit. 'Ability' focuses on what you can afford, and takes into consideration your income and outgoings.

Contact Advantage Finance

If you have been refused car finance, we would love the opportunity to help you. We can look beyond your previous credit problems and explore your intention and desire to recover your credit profile, through entering the habit of regular payments. We also pay attention to your ability to manage your finances so that you can afford not just this debt but all of your other debts too.

Visit our website today to get started on your quick and easy car finance application. For more information, call 01472 233200 to speak to a member of our helpful and friendly team.

If you have found this blog helpful, you may wish to read our previous blogs.

© Advantage Finance Ltd 2001 - 2022. All Rights Reserved

Representative Example: Hire Purchase Agreement repayable over 48 months. Rate of Interest: 14.0% p.a. flat rate(fixed).
Vehicle Purchase Price: £7,500. Deposit: £0.00. Amount of Credit: £7,500. Acceptance Fee: £325.00. Interest Payable: £4,200.44.
Option to Purchase Fee: £200.00. Total Charge For Credit: £4,725.44. 47 Monthly Repayments Of: £250.53 Followed By 1 Final Repayment Of: £450.53
(Final payment includes Option to Purchase Fee). Total Amount Payable: £12,225.44. Representative APR:29.35%.
Hire Purchase. Terms and conditions apply. You will not own the vehicle until all payments are made.
Finance subject to status. Applicants must be aged 22 or over. Finance provided by Advantage Finance Limited.

Advantage Finance Ltd is registered in England and Wales with company number 03773673.Registered office: 2 Stratford Court, Cranmore Boulevard, Solihull, B90 4QT.
Advantage Finance Ltd is authorised and regulated by the Financial Conduct Authority (Firm reference No. 307864). www.fca.org.uk
Advantage Finance Ltd is a member of the Finance and Leasing Association www.fla.org.uk
Finance is available to UK residents only and is subject to creditworthiness and affordability assessment. Written quotations available on request.
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