What Criteria Poor Credit Car Finance Lenders Look for in an Application

How to Choose the Right Used Car for Your Budget

It’s important to stay realistic when applying for car financing with poor credit. Yes, we’d all love a flashy sports car or a luxury SUV. But sticking to budget-friendly models can help keep lenders on your side. Why? It shows you’re mindful of your financial limits.

There are lots of great used cars out there that won’t break the bank but will still get you where you need to go. For instance, buy used and you could score a British bestseller like the Nissan Qashqai or Kia Sportage for a fraction of the manufacturer’s suggested retail price (MSRP).

Compact cars can also be a great option if you have your heart set on a new set of wheels but don’t want to break the bank. Models like the Dacia Sandero, Citroen C3 and Renault Clio aren’t just affordable but are great on fuel, cheap to insure and easy to park. These are all huge perks if you live in expensive, traffic-choked cities like London or Birmingham.

Your Credit History – What Can Lenders See?

Your credit history is like a financial CV. It offers lenders a look at the whole picture, warts and all. Some credit histories score an A+ with lenders and others aren’t quite as accomplished.

Hiccups like missed payments, defaults and lots of debt can drag down your score. The road starts to look a bit rougher when terms like ‘bankruptcy’ and ‘County Court Judgements’ (CCJs) start to pop up. CCJs are a formal recognition by the court that you’ve failed to repay a debt, and they can impact your ability to secure car financing with poor credit.

Most lenders will take a good look at your history report before deciding, regardless of your credit score.

Don’t panic if you’ve had a few bumps along the way. Lenders understand that life happens. What they’re really looking for is your current financial behaviour. Making an effort to pay off debt or stay on top of bills recently can go a long way.

Positive changes like reducing your credit card balance or paying off small debts can also work in your favour. Think your credit score could use a leg up? Check out our article on credit score advice for more tried-and-tested tips on how to improve your credit score.

Proof of Your Income

The next thing lenders will want to know is whether you can afford the monthly payments. This is where your personal income comes in. Documents like recent payslips or bank statements are the best way to prove you’ve got a steady cash-flow. Lenders might ask for tax returns as proof of income if you’re self-employed.

The goal is to show that you’ve got enough regular income to cover your loan payments without leaving you struggling to meet other financial commitments, like rent or bills.

Not quite sure if your income is up to snuff? Why not have a chat with a My Car Credit advisor? Our team is always more than happy to go over the income side of car financing with poor credit and help you understand what’s needed.

Gain the Lender’s Confidence With a Down Payment

Don’t underestimate the sway of a healthy down payment for car financing with poor credit. Not only does a nice sum reduce the amount you need to borrow, but it also shows lenders that you’re serious about the deal. By putting some of your own money upfront, you’re taking on some of the risk and showing commitment to the purchase, which lenders really like to see. A bigger down payment also lowers your monthly payments and makes the loan more affordable overall. Who doesn’t want that?

Use our handy car finance calculator to play around with your numbers and help you get a clear picture of what to expect. We also recommend having a chat with your lender to discuss how different down payments will affect your monthly budget, and to make sure a larger sum makes sense for your car finance application.

A Car Finance Affordability Assessment

Lenders factor in a lot of different things when assessing car finance affordability, but ultimately, they’re looking at the bigger picture. This means your income won’t be the only factor under the microscope. Lenders will also want to see if the loan is realistically affordable for you.

This is where an affordability assessment comes in.

Lenders will go over your monthly expenses with a fine-tooth comb, looking at everything from rent or mortgage payments to utility bills. Even your regular spending on groceries and other general living expenses are on the radar. They want to make sure that by adding car finance to the mix, you’re not stretching yourself too thin.

If your financial commitments are already weighing you down, lenders might think twice about offering you a loan. This is why it’s important to review your budget before applying and make sure you’re comfortable with what’s left over after your essential outgoings. Current debts will also be considered. This includes credit card balances, personal loans and overdrafts.

Being upfront about your financial situation during this stage is key.

Lenders are detail oriented but they’re not running a vendetta to catch you out. They want to help you secure a car financing with a poor credit loan that you can comfortably afford.

And that’s exactly what we aim to do here at My Car Credit.

Knowledge Is Power: Know What Lenders Look For

The bottom line? It helps to know what’s on a lender’s checklist when aiming to put your best foot forward in a finance application. Use this quick summary of the key areas they’ll focus on to strengthen your application:

• Credit history – Basically your financial track record. Lenders will look through your credit report and check for things like payment history, any defaults or County Court Judgements (CCJs). Recent positive actions (like paying down debt or consistently meeting payments) can make a good impression.
• Proof of income – Lenders need to see that your income can comfortably cover your monthly payments. Payslips, bank statements or tax returns (if you’re self-employed) help show that your finances are steady.
• Down payment amount – A solid down payment can be a big confidence boost for lenders. By putting more down upfront, you reduce the total amount borrowed, lower monthly payments and show you’re serious about the loan.
• Current financial commitments – Car finance application lenders want to understand your current financial commitments to be sure a new loan won’t push you over the edge. They’ll also look at other debts, like credit card balances, personal loans and overdrafts, to make sure everything adds up.
• Affordability assessment – Be ready to disclose the details of your monthly budget. Lenders will consider your debt-to-income ratio and essential expenses, like rent, utilities and general living costs. The goal is to make sure you can comfortably add a car payment without overstretching your finances.

We get it. These checks might seem thorough and maybe even a bit invasive at times. But they’re designed to help both you and the lender feel confident about your loan.

Secure Poor Credit Car Finance With My Car Credit

Understanding what auto finance lenders look for in an application is half the battle won. By focusing on your credit history, proof of income, offering a down payment and making sure you can comfortably afford repayments, you’ll give yourself the best shot at approval.

This checklist applies to all car finance applications but is especially important for car financing with poor credit, as lenders are that little bit more cautious.

Teamwork Makes the Dream Work

Everyone knows challenges are easier to overcome with teamwork. This is where My Car Credit rides shotgun. We pride ourselves on making car finance as easy as possible, no matter what your credit score.

Whether your credit score has had a few knocks over the years, or your standing is low because you’re new to the borrowing game, we’re here to help. Our team offers personalised finance options and expert guidance, tailored to your individual circumstances.

Apply now to get your car finance application rolling! It takes just a few minutes and won’t affect your credit score as we use a ‘soft search’ for initial applications. When you’re ready to advance to the next stage some lenders might perform a hard search on your credit file, but that’s just part of making sure you’re set up with the right finance plan.