What to do if you are refused car finance

Getting your hands on the steering wheel of a dream car can be made all the easier if you secure finance to help fund your purchase. But what do you do if you’re refused car finance? While it may feel like a dead end, all is not lost! 

In this dedicated article for customers who have been refused car finance, here at Octane Finance, we explain your options if you haven’t managed to source the car finance you were hoping for. Read on to find out more… 

Why have you been refused car finance?

Having your car finance application rejected can be a demoralising feeling, but it’s important to stay positive. Before you decide what to do next, we’d recommend you initially understand why you’ve been refused car finance in the first place. We’ve listed some of the key reasons why you may have been refused car finance:

Check your credit score

Although we’d always advise our customers to check their credit score prior to applying for car finance, this should absolutely be the first thing you check if you’ve recently been refused a loan. Your credit score helps form part of your credit history and will act as your financial CV. 

Lenders will take into consideration your credit score when you apply for car finance, so that they can judge if you can make the monthly repayments, or if you are a risk to them. You can check your credit score for free by using one of three main credit reference agencies in the UK - head over to our dedicated ‘How to improve your credit score’ article to find out more.

Too many applications

When it comes to applying for car finance, less is more. If you’ve made a number of loan applications in a short period of time, then this can actually be detrimental to your credit success. Plus, multiple finance attempts that have failed will only further damage your overall credit score in the long-run.

An incomplete application

Have you filled in every question on your finance application? This may sound like a stupid question, but you’ll be surprised at the number of applications lenders receive that haven’t been properly filled in. Incomplete applications are a no-go for lenders, who will be instantly dismissive of your credit request.   

Consider your age

While you can pass your driving test at 17-years-old in the UK, you must be aged at least 18 to be approved for car finance. Some lenders will even refuse you for a car loan until you’re at least 21-years-old. We advise our younger customers to communicate their age with us so we can source the most appropriate lender, who may well be willing to make an offer.

Are you unemployed?

Your employment status is a key factor of consideration by lenders who will decide whether or not to loan you the money required to purchase a car. If you’re currently unemployed, are self-employed or in between jobs, you may be refused car finance. This is because you will need to prove you can meet the monthly repayments.    

What are the options when you’ve been refused car finance?

Once you’ve established the reason(s) why you’ve been refused car finance, the next step is to explore the options still available to you. Here, we explain more:  

Source a guarantor

If you struggle with a poor or bad credit score, then sourcing a guarantor could prove to be a good solution for accessing car finance. A guarantor will need to vouch that you can afford the monthly repayments and be willing to fulfil them if you fail to make payment for whatever reason. 

More often than not a family member or a very close friend, the guarantor will act on your behalf and become the nominated person for your car finance application. It goes without saying that you must firstly obtain full consent from the guaranteeing party before going ahead - failure to do so can result in fraudulent consequences. 

Improve your credit score

If time is on your side, then your best option is to improve your credit score. But how do you do this we hear you ask? Start by ensuring your name is on the electoral register and that your address is up-to-date on all your records. Repay your debts and set up direct debits for any outstanding finance to ensure you clear your loans and prove to lenders that you have made a payment plan.  

Having a good or excellent credit score will do wonders for future finance applications, so don’t overlook the opportunity to raise your score. It’s best to allow at least six to 12 months before checking your score and applying for credit again should you see an improvement. 

Find a specialist lender

Depending on your current circumstances, you may need to focus your finance application to a specialist lender. For example, if you’ve been refused car credit due to bad credit history, you will need the help of a subprime lender. Here at Octane Finance, we are fast-becoming the number one choice for customers who have a poor credit score and have struggled to secure finance elsewhere. 

As a trusted broker, we work with a variety of lenders to help applicants no matter what their financial circumstances. We also have the ability to gain approval for zero deposit finance on behalf of our customers, which can make all the difference as every penny really does count. 

Reassess your budget

It could be that your car finance application was refused because the amount you’ve asked for is far too ambitious. A punchy pitch can be off-putting for lenders, who may not be keen on lending as much as you’re asking for. In this instance, why not rethink the car you’ve got your eye on and opt for a more financially friendly option instead. 

Market leading car finance

Get the wheels in motion by enlisting our help when it comes to applying for car finance. Here at Octane Finance, we pride ourselves in achieving the best possible vehicle funding outcomes for our customers. 

Working with some of the largest lenders in the UK through to the smallest specialised lenders across the country, we seek out the best finance opportunities on your behalf. Get in touch and accelerate your journey to a new set of wheels.