Applying for car finance in 10 steps

Buying a car on finance is exciting, but it’s a big job.
The key to success is finding the finance agreement that works for you, reading those terms and conditions, and making sure you can make the monthly payments. We’re covering all stages of the finance journey – from working out what it is to paying with ease – and in this article we’re focusing on the application process. It can feel like a mountain of paperwork and a lot of questions, so let’s work through it together. Grab a pen, grab a brew, and we’ll get started.

First up: make sure you’ve found a type of finance that works for you.
There are a couple of finance plans to choose from. They all let you pay monthly for a vehicle, but they work slight differently. Some will require you to hand the car back at the end of your contract, or make a final balloon payment to keep the car. With PCP you have the option to choose to buy or hand back at end of term. Read up on the different types of finance and think about how much you’d pay a month, how far you drive, and what you want to happen when the contract ends. Here’s a quick summary of the main types: • Hire Purchase (HP): You pay a deposit upfront and then make monthly payments until you've covered the full cost of the car, including interest. Once all payments are made, and you’ve paid the option to purchase fee (this can be usually from £10 to £100+), you own the car outright. • Personal Contract Purchase (PCP): Similar to HP, but with lower monthly payments. At the end of the contract, you have the option to return the car, trade it in for a new one, or pay a balloon payment to own it outright. • Personal Loan: You borrow a lump sum from a lender to purchase the car outright. You then repay the loan, plus interest, in fixed monthly instalments. The key difference between this and the other two is that a personal loan isn’t linked to the vehicle (it’s an ‘unsecured’ loan) whereas with PCP or HP the finance is tied to the car. There are other options too, like leasing. You won’t own the car you lease, but you can pay monthly and swap it for a new one once the contract ends. Once you know what you want and need from your finance plan, you’re well on your way.

Now you’ve found the right finance plan, you need to check you’ll be approved.
Lenders will use your credit score to work out how likely it is you’ll be able to pay them back. This can determine how much you can borrow, and the interest rate you’ll be offered. If your score is low, you may have to pay higher interest rates, or may be refused from some deals. We’ve put checking your credit score high up on the list because you can improve your credit score over time by paying off outstanding debts or correcting any errors on your credit report. Checking your credit score, or asking a provider like Clearscore to send a monthly update, gives you an idea how likely approval for finance may be. Just note that applying for finance results in a ‘hard check’. Multiple hard checks on your file can bring your rating down. Learn more about your options in our guide to bad credit car finance.

A better credit score tends to unlock better finance deals – even the elusive 0% finance deals.
But interest rates are just one thing you need to factor into your monthly budget. Some finance plans have additional charges at the beginning or end of the contract. Others may require a final balloon payment to buy the car, though you could choose to hand the car back or re-finance it. You can learn more about your options in our guide to PCP. So don’t budget based on the monthly payment alone. Keep a note of the cars you like, and their total monthly cost so you can pick the one that’s best for your budget. You’ll need to make payments on time every month, so work out how much you can afford. Start your budget by listing your income, expenses, and any financial commitments you already have coming in and going out every month. From here, work out how much you can put towards a car every month.

So know you know how much you can borrow and afford to repay every month, it’s time to find your car!
We act as a credit broker which means we don’t offer finance ourselves, but we make it easy for you to apply directly with the retailer. You can ask them about the monthly price, just click “Get monthly price” on the advert and fill in the form, then they’ll get back to you with a quote. Start your search.

While you’re looking for your car, we recommend you get your paperwork together. It saves the stress of trying to find old bills while you should be getting excited about a new car.
You'll typically need the following to help fill in your finance application: • Proof of identity (e.g. driver's license or passport) • Proof of address (e.g. utility bill or bank statement) • Proof of income (e.g. recent pay stubs or tax returns) • Details of the car you intend to purchase (e.g. make, model, and the vehicle identification number) Keep them safe and to one side.

Once you’ve got everything together, it's time to apply!
You can do this online, or pop into your dealership and work through it all with someone in person. You’ll need to fill in an application form with personal details like your full name, any address you’ve lived at for the last few years (usually three years). You’ll also need to share financial details about your job, income, and what you spend money on. Don’t lie or fudge details to try and get your application approved. You could end up with the loan being declined. Worse: it could result in negative impact on your credit rating, or be seen as fraud, which is a criminal offence. Take your time, make sure you don’t make any mistakes, and be honest when you fill the form in to avoid delays or complications. The documents you gathered before, like your ID and payslips, can help prove everything should there be any questions, though many approvals can be done online without the need for these checks.

You’ll be handed a fair bit of paperwork when you sign up for finance.
You’ll get a contract which will outline the fees and interest you’ll pay, your terms and conditions of use, the mileage limits and other details including what could happen if you fall behind with payments. It can be a lot to read, but take your time to read it and ask any questions. It’s your car and your money, and you deserve the time to make sure it’s right for you. There are no stupid questions when it comes to car finance. It can be very complicated and buying a car isn’t something we do every day. Don’t be embarrassed if you don’t understand what the dealer is saying. Just ask them to explain it again, and keep asking until you do understand. If you still aren’t clear, ask them to put it in writing so you can look it up later. Never be pressured into making a decision there and then. If you are not comfortable, walk away.

Once you’ve read your contract and you’re happy that a) you can afford it, and b) it’s the right agreement for you, you can send your finance application off for approval.
This goes to the finance company, who will check your credit history and also check the details on your application. There might be delays if it’s not accurate – so check for errors before you send it off. Under the Consumer Contracts Regulations, you have a cooling off period in which you can cancel the contract. This normally lasts 14 days after you’ve signed the contract.

Every case is different. If you have a good credit history and prove you can cover the payments, you will usually be accepted for car finance.
It’s If the finance company isn’t sure you’ll be able to cover payments, you may be asked to supply more information. You may be rejected – in which case we cover your options here. You may be approved in principle before a final application, or accepted with conditions. If you have poor credit rating, you might find that you’re accepted but on a contract with higher levels of interest. You have the option to decline this if the extra interest pushes the car out of your budget. Free, impartial sites like MoneyHelper or Citizen’s Advice can offer advice should you be rejected, or offered a deal you don’t think you’ll be able to afford.

If your application has been approved, you’ll receive an offer from the lender you approached. If you applied via a broker, you might receive quotes from various lenders.
Remember multiple applications can result in multiple hard checks, affecting your credit score and potentially making it harder to get approved until your score builds back up – so be mindful when applying and reviewing offers. Compare your offers carefully, comparing interest rates, loan terms, monthly payments, and any additional fees or charges. Choose the offer that best fits your budget and goals. Then, it’s time to finalise the purchase! Review your final contract carefully, paying close attention to the terms and conditions, including any fees, charges, or penalties. If you’re happy, sign the necessary paperwork and arrange payment for any upfront costs, such as a deposit or down payment.

Once that’s done, you can take the keys of your new car and begin making monthly payments on your car finance loan.
Once your application is done, you can still turn to your provider for support should you face any issues. You can learn more about your consumer rights here.