If you have a car finance agreement in place and have also begun a mortgage application, your car finance may affect whether or not that application is approved, and what rates you may be offered.

This is particularly the case if you have missed any of your repayments for your car finance, as this will negatively impact your credit score, and will therefore impact your mortgage application. On the other hand, making all of your repayments can actually improve your chances of mortgage approval. Read on as we take a closer look.

How does car finance affect your mortgage?

When you apply for a mortgage, the lender will scrutinise your finances. Whether you have an active car finance deal, or a previous one that has been fully repaid, will impact their decision for your mortgage application. This is because car finance is a form of debt. As such, your mortgage providers will look to see how conscientious you’ve been in repaying your car finance.

Remember, if you have defaulted on your car finance, or missed any payments, then this will impact your credit history. This will in turn affect your mortgage application, as you will appear less financially responsible and therefore of higher risk to your speculative provider. Thankfully, there are still ways of securing car finance even with poor credit.

On the other hand, a history of timely repayments and problem-free car finance can actually improve your credit score. Put simply, it shows that you are capable of making regular repayments as agreed and staying within your budget – as is required with a mortgage.

Does car finance impact affordability assessments?

The short answer is yes, if you have an active car finance deal in place, this will affect mortgage applications because of the affordability assessments that your prospective provider will perform.

Any mortgage provider will scrutinise your finances before offering a mortgage – this is actually a legal requirement, and involves looking at your credit score, employment status, debt, and history of loan repayment. If you’re currently repaying any loan such as car finance, this will be factored into your mortgage affordability assessment.

As a general rule, the higher the debt remaining for you to pay back on your car, the lower you’ll be lent for a mortgage – though this may vary depending on the provider. The theory is that the more you have to repay on other loans or assets, like your car, the less you’ll have to put towards your mortgage.

As such, if you do have a way of clearing the balance on your car finance before applying for your mortgage, this would be a sensible course of action, as your car finance won’t impact the application to such a degree.

Car finance made easy

At My Car Credit, we pride ourselves on our customer service, and will work hard to find you a car finance deal that suits your needs and circumstances – so you can help rather than harm your credit score and any future mortgage applications. If you’re wondering how to make a car finance application work alongside a mortgage application, talk to us today on 01246 458 810 or email enquiries@mycarcredit.co.uk.  

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating


  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed


  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs


  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit


  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past


  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan

X monthly repayments of

Typical rate

Loan amount

Total payable




*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!