For many people, buying a car is one of the biggest purchases they’ll ever make. When you come to apply for car finance, it’s natural that one of the first questions you’ll be asked is how much you are looking to borrow. Whilst this might seem like a simple question, there are actually a number of variables that can influence the total amount available to you. Here’s our guide, so you know what to expect.



Financial factors


Lenders consider various financial factors to determine how much they are willing to lend you. Things such as your credit profile – including your credit score and financial history (i.e. how you have dealt with previous loans and funds) – will all be considered.


They will also take your income into account, as well as the deposit you have available at the start of the process (although a deposit is not mandatory) to assess whether you can afford the repayments.


Essentially, lenders are looking for reassurance – from this information – that you will be able to afford the finance you are applying for. If you are sure that all these factors are in order, you are ready to begin your application.




One of the best ways to start your car finance application is to figure out your budget. Working out how much you can afford to spend on your monthly car loan payments, relies on being realistic. You need to ensure that the payments will not overstretch you in order to protect your future financial security. You’ll need to bear in mind all the running costs of the car, including the insurance rates, the rate of miles to the gallon (MPG), and the general upkeep, such as MOT and service costs. The Money Advice Service provides a useful budget planner on their website, which will help you to understand these incomings and outgoings.


When applying for car finance it is crucial that you can meet the monthly repayments comfortably and on time. Depending on your credit history, you may have to prove that you can do this. This can be done by showing three to six months’ worth of bank statements and/or payslips.


One way to make payments more affordable is to opt for a longer payment term. This does mean that you will pay more interest on the overall amount, but it will make the loan more manageable on a month-to-month basis. Bear in mind that the payment term can be affected by your credit profile and will also be subject to the lender’s criteria.


Your car


It’s important that you are realistic with the car you are looking to finance. You may have a dream car in mind but the finance cost – including running costs – may not be feasible on your budget. You must avoid committing to more than you can afford – missing payments can cause problems in the future, such as your ability to obtain finance of any sort moving forward. This is especially true if you do not have savings or your income reduces.


Also, if you try to apply for finance on a car that is outside of your budget, you are more likely to be turned down for car finance, which can impact your credit profile.


To help you in this area, Money Advice Service has a Car Costs Calculator, driven by CAP data, that will help you work out the yearly running costs on the car you have in mind.


Once you’ve found the car you want, the amount you can borrow will be determined by the value of the car. Some lenders will finance 100% of the value whereas others will lend for more than the value of the car, allowing you to purchase things like insurance, extras, and add-ons.


At My Car Credit, we’re lucky to have an extensive and diverse panel of lenders who offer a variety of finance options, including loaning up to 120% and catering for credit profiles that range from excellent to poor. We are also committed to helping people across a variety of situations, including retired people, young people, self-employed people, and so on.


The calculations


If you think you’re ready to begin the initial stages of your car finance application, our Car Finance Calculator will provide a monthly repayment figure, an APR, total cost of credit and total amount payable. Whilst your Car Credit Specialist will tailor a car loan deal for your circumstances, the Car Finance Calculator is great for getting a good indication of what you will be able to borrow.


Ready for the first stage of your car finance journey? Access our online Car Finance Calculator here.


My Car Credit will look at your personal circumstances and make sure that the finance agreement offered to you is one that you can afford. Your interests are always at the heart of what we do. If you need any more help or advice about how much you can borrow, our Car Credit Specialists can advise you.