Have you been refused car finance? Find out why!

Have you recently been knocked back for finance and don’t know why? You may be asking yourself why have I been refused car finance? But don’t worry, there are a number of simple explanations. It can be disheartening if you have your heart set on getting a car but can’t secure the finance deal to do so. Many people also assume that only people who have bad credit get rejected for finance, however there are actually a number of things that financial lenders look at. If you have already been declined, you can ask your lender why this was the case. Let’s take a look at the top reasons why you may have been declined.

Bad credit

One of the main reasons you may be declined for finance is your credit rating. It is possible to get car finance bad credit, but some lenders may think you are too much of a risk. You usually have a bad credit score due to missed or late repayments in the past and lenders may think you won’t pay back their finance. If you want to improve your chances of getting approved, you could consider working on your credit score before you start applying. You can help to improve your credit score by paying all your bills on time and in full, clear any existing debt you have, keep your credit utilisation low and check your credit file for any mistakes.


Car finance is a legal contract which means you need to be at least 18 years old to secure finance. Some lenders advise that you could have more chance of approval if you are 21 years or older and have built up a little credit history first. There are also many lenders who don’t have a maximum age you can be to apply for finance but each lender criteria are different and its best to check first before you start applying.


Employment status is important to lenders because they want to know how you will pay back your loan and also how much you can afford to pay each month. You may be declined for finance if you don’t earn above a certain amount. You could be declined if you are unemployed or how insufficient income.

Multiple applications

Whilst it can help to shop around for the best finance deal, making multiple applications in a short space of time can harm your credit score. It can indicate to lenders that you are desperate for credit, and you have been declined elsewhere already. If you want to apply with a finance lender, you should try to stick to soft search applications only. A soft search credit check isn’t recorded on your credit file and doesn’t harm your current credit score.

License type

The type of driving license you have can affect your ability to get finance. Most finance lenders will want to see proof of a full UK driving license but there can also be options for provisional license holders and European licenses. You will need a full UK license if you intend to drive the car you are looking to finance but you can also use a passport as form of identification.


You may be declined for finance if you don’t pass a lenders affordability check and its always best to know your finances before you apply. An affordability check is usually performed by lenders to see how much you can afford for finance and also how you will pay it back. It can also affect how much you can borrow from a lender. They take into account your monthly income and your outgoings to determine how much you can comfortably afford to spend on finance. You can prove your affordability through the use of bank statements.


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