6 reasons why your car finance was refused and what to do next

Date Posted 4th May 2022
Read Time 7 min read

When you’re searching for a new car, unless you’re paying for the vehicle upfront, you’re likely going to apply for car finance. You’ll have to find out if you’re eligible for car finance before committing to the purchase. Most people will fill out applications thinking that they’ll get approved right away only to be told they’ve been rejected by a lender. There are many reasons why your car finance was refused.

At Hippo Leasing, we want to ensure that everyone has a fair chance of getting the car of their dreams. To help with this, we have created our Apply Now credit approval check. The best thing about this? We consider all credit backgrounds. Additionally, this is just a soft search so it won’t affect your credit score. But it will tell you if you’re likely to be accepted for car finance or not. It only takes a few minutes to fill in the Apply Now, get started below:

If you want to make sure that you are in the best circumstance to apply for car finance, there are a few things to be wary of. Whilst good or bad credit can affect your eligibility, there are certain factors that leave people with more probability.

To help with this, we’ve made a list of some of the main reasons why your car finance was refused. And the solutions to each. This should help everyone to understand the process and find the right lender to meet their needs.

1. Bad credit got you down

Many people believe that if you have poor credit, you won’t be able to get car finance. This is not always true. At Hippo Leasing, we offer both bad credit and zero deposit deals so that people from all walks of life have the chance to get the car they really want.

If your credit score is low, there could be many reasons behind this. You may have outstanding debts, or you may have missed or made late payments on your credit card, bills, or mortgage. These instances will be recorded and could stay on your credit file for up to six years!

Furthermore, if you’ve chosen not to be included on the electoral register, or if you have a County Court Judgement (CCJ), your credit score can be negatively affected. Even something as simple as having recently changed your address will impact your application.

You can find out if the reason why your car finance was rejected is due to poor credit. Use tools like Experian, Equifax, or TransUnion to check your current credit score. Read our article: Which credit reference agency should I use to check my credit report for more advice and information.

These agencies also offer more in-depth advice and tips on how to improve your credit score. However, don’t lose hope if your credit score isn’t where you want it to be. You can do things to start building up your rating. Here are our top five tips to boost your credit score. Alternatively, get in touch with a member of the Hippo Leasing team. We offer great deals for drivers with poor credit and can help you to navigate your car search.

2. Age is not just a number

When applying for car finance, you’ll find that lenders have a list of criteria to consider. Your age will play a factor in your application getting approved. Age also happens to be one of the most common reasons why your car finance was refused. Some providers might consider lending to drivers aged 18 to 21. Whilst others may have an age limit to adhere.

If your age is the only reason why your car finance was rejected, don’t be disheartened. Young drivers who have an otherwise strong application should spend some time shopping around. Contact a range of lenders and find out their conditions for finance. This will broaden your chances of finding an agreement that you could be accepted for.

3. Prepare for your car finance application

Car finance lenders will choose to accept or decline your application based on the risk level you pose. Your credit score is one of the first things that is checked. Here, a lender will check for your financial track record; are you in debt? Have you been making timely payments on what you owe?

You can boost your chances of being approved for car finance by tidying up your finances to be in the best possible shape they can be. Read our article on How to prepare your finances for a car finance loan for more information.

There may be some companies like us who will accept drivers with bad credit. It is worth stepping away from mainstream lenders and checking with a range of providers. Remember: Once you are accepted, you’ll be required to send over proof of income, including bank statements. This is used to work out how much you can afford to pay every month.

When it comes to car finance, make sensible choices. Lenders will take your application seriously and you’ll have the best chance of approval.

4. What’s your job status?

Proving your payment credentials is necessary for most lenders. They’ll want to know how long you’ve been employed. Whether you’re full-time, part-time, or self-employed, you must show stable income. Lenders will want proof that you have a good track record of staying employed.

Ensure that you have a few months’ pay slips and/or bank statements with you when you apply for car finance. If you’re self-employed, you may be asked to show up to six months of income. Read our article Car Loan Eligibility For The Self-Employed: Will I Qualify? for more information.

If you don’t have a steady income, or if you’re unemployed, you will find it more difficult to get approved for car finance. Students may also struggle to find a lender, however, there are ways to improve your chances of being accepted. Read our article: Can students get cars on finance for more information.  

In other instances, if you have a deposit sum upfront and a solid credit rating for always meeting your monthly credit card, mortgage, and/or bills’ payments, this can help your application get approved.

5. Show that you are road-ready

If you’re searching for a car, it’s because you’re ready to get out on the road. As obvious as it sounds, you should have a full, current, and valid UK driver’s license when applying for car finance.

Anyone who is waiting to take their driving test and is yet to pass as well as drivers with a ban from getting behind the wheel, will not qualify to get car finance.

Sometimes, drivers without a license who make a joint application for car finance, may get accepted. However, you can’t drive the car without one.

6. Credit game, not strong

If you’ve got an unused credit card or have opened a new one close to when you apply for car finance, this could negatively impact your chance of approval. Why? Because this is technically idle credit against your name.  

One way to improve your credit score would be to cancel and close any unused credit cards. On the credit cards you do use, make sure that you’re paying off outstanding balances on time. Read our article: Should I close my credit card account before applying for car finance? for more advice and information.

If you’ve been refused car finance elsewhere, get in touch with our team to see how we can help you. Use our Apply Now application to find out what you might be able to afford.

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