What should I do if I have been refused for car finance before?

When you apply for car finance, the decision a lender comes to is always based on your personal circumstances. However, there are some common reasons why you might have been refused car finance which we want to make you aware of.

Having a bad credit score is the most likely reason for being refused car finance.

There are lots of reasons why you may have a poor credit score, which can lead to refused credit. It could be down to something simple like not being on the electoral roll, because you’ve been made bankrupt in the past, or have defaulted on a payment.

Having a bad credit score doesn’t mean you’ll always have applications for car finance declined, however; it just means your options will be more limited than those with a better score. In fact, Zuto works with a large panel of lenders who help thousands of customers find car finance with bad credit.

You may have tried to borrow more than the lender thought you could afford.

As Zuto works with such a large panel of lenders, we can work with you and the lender to discuss how much you are able to borrow based on your personal circumstances.

This might mean a compromise on the car you’ve seen, or could mean a bigger deposit is required, but we’ll work with you to find the best deal possible from our panel. To get a quick idea about how much you may be eligible to borrow, check out our handy, free car finance calculator.

The lender may have required a deposit.

A lot of customers look for 0 deposit car finance, however, some lenders require you to pay a deposit to secure the vehicle you’re looking at. Being unable to pay this deposit might be one of the reasons you’ve had applications for HP finance or PCP declined in the past.

Zuto works with approved dealerships across the UK and can help you find the right car based on your individual needs and the lender’s requirements.

What can I do to not be refused car finance again?

If you’ve been refused car finance in the past, this may have left a mark on your credit file that lenders will be able to see.

Being repeatedly refused car finance will negatively impact your credit rating and lower your chances of approval further, so it’s best to stop applying until you’ve taken steps to improve your position.

There are a few things you can do to improve your chances of being approved for car finance:

Improve your credit score

Lenders look carefully at your credit score and financial history when considering you for a loan, because it helps them predict how reliable you will be as a borrower.

Lenders want to know you will be low-risk to lend to, so improving your credit rating will significantly help your chances.

Offer a bigger deposit

Paying a bigger deposit can also make you more favourable to lenders. As you will be paying less money back.

Request a lower loan amount

Similarly, you can also help your chances by requesting a lower loan amount in the first place. Lenders will look at your current financial situation and assess your income vs your outgoings and your current income to debt ratio. If you request a smaller amount, this might make the affordability of the loan more favourable.

Get a soft search with Zuto

A benefit of applying for car finance with Zuto means your credit score won’t be impacted upon initial application. We offer a soft search, which means the check on your credit file won’t leave a mark and won’t be seen by lenders in the future.

Once we search our panel of lenders, if we can find a car finance product for you, we’ll take you through the details. If you’re happy to proceed at this stage, only then will your credit score encounter a hard search.

Mike has worked at Zuto since 2018 and uses his experience within the industry to help customers understand the ins and outs of car finance.