If you’re looking to get a car but you’re in receipt of benefits, you may be wondering what your chances of approval are. In some cases, it can make it harder to get a car on finance when you don’t have a job or solely rely on benefits as your only form of income. However, the good news I that there are many lenders who can help you. The guide below looks at how benefit car finance works and also how to increase your chances of getting a car loan.
Can you get finance for a car on benefits?
The good news is, yes! There are many lenders who can provide benefit car finance and it doesn’t have to be as hard as you think. When car finance was first around, it was only reserved for those with the best credit scores and who were in full time employment with a steady income. However, for many people, benefit income is a regular income which will be paid each month. Lenders are now making car finance more accessible than ever, and it can be possible to get a car on benefit income. However, there are criteria that all applicants will need to meet before they can get a car on finance and a few factors you can consider to help get you approved.
How to increase your chances of getting a car loan.
1. Apply for what you can afford.
It may seem obvious but you’re more likely to get declined for car finance if you’re applying for loans that you simply can’t afford. It can be a good idea to set your budget before you start applying and only apply for loans which you could afford. This helps save time and can speed up the process. When you’re in receipt of benefits, you will need to prove your income so it’s good to know exactly how much you get each month and have a full breakdown of all the benefits you receive at the ready.
2. Use a car finance broker.
Applying for car finance can negatively impact your credit score if you’re making multiple hard search applications with different lenders. A car finance broker can help you to get a car on finance as they have access to multiple lenders at once and you only need to apply the once! Brokers work on your behalf to compare finance packages and get you the lowest interest rate possible. Usually brokers charge the lender a commission for the introduction, but it can be worth checking if you need to pay to a fee for using their service first.
3. Check your credit score.
If you’re struggling to get approved for finance on benefits, it can also be worth checking out your credit score first. Not only could it help you get approved, but credit score can also affect the interest rate you are offered. Usually, lenders reserve the best deals for those with good or excellent credit as they are less likely to default on finance based on their borrowing history. If your score is a, little on the low side, it can be a good idea to improve your credit before applying for car finance.
4. Consider putting down a deposit.
It can be hard to save for a deposit when your only income is benefits but having a deposit for car finance can be beneficial. By putting more down at the start of the agreement, you are lowering the loan amount. A smaller loan can be easier to get accepted for and also makes your monthly payments more affordable. From a lenders point of view, a deposit contribution can help to secure the deal and means they don’t have to lend out as much.