Car finance
on benefits

Can you pay for car finance with benefits?

Yes, it’s possible to pay for car finance with your benefits. Many lenders accept benefits as part of your income, but your eligibility depends on key factors such as your credit history and the type of benefits you receive. For example, benefits like PIP, DLA, and Universal Credit are often considered when assessing applications.

Lenders evaluate your total income, including benefits, to ensure you can manage monthly payments. At Carboom, we offer car finance tailored to people on benefits and connect individuals on benefits with flexible finance options. Use our finance calculator to check your eligibility today.

What type of benefits do we accept as income?

Lenders often count benefits as part of your income when you apply for car finance. The table below lists accepted benefits, divided into primary and additional sources.

Lenders review your financial situation, including these benefits, to decide if you qualify for car finance. Combining benefits with other income, such as part-time work, may increase your chances of approval. At Carboom, we partner with lenders who consider various income types, offering flexible options. Use our finance calculator to see what suits your needs.

Bad credit car finance on benefits: Is it possible?

Getting car finance on benefits with a bad credit history or past financial issues like bankruptcy can be challenging, but it’s not impossible. Specialist lenders offer solutions for individuals with bad credit by assessing affordability over credit scores.

To improve your chances, consider:

• Providing a larger deposit: A higher upfront payment reduces the amount you need to borrow, making lenders more likely to approve your application.
• Accepting higher interest rates: Bad credit may result in higher APRs, but choosing a shorter loan term or a larger deposit can lower the total cost.

How does car finance for people on benefits work?

Car finance for people on benefits works by allowing you to spread the cost of a vehicle through a monthly payment plan. While qualifying can be more challenging than for those in regular employment, some reliable lenders specialise in offering car credit to benefit recipients. At Carboom, we partner with lenders who provide transparent agreements tailored to your financial situation, ensuring manageable payments and clear terms for a stress-free experience.

What will affect your eligibility for car finance on benefits?

We conduct a soft credit check for every applicant. A soft credit check reviews your financial profile without affecting your credit score and helps you explore your car finance options. However, several factors can influence your eligibility for car finance while on benefits:

Income

Lenders assess your total income, including benefits, to confirm you can meet monthly payments. A lower income compared to someone in full-time employment may limit your options.

Credit score

A poor credit score can reduce approval chances or result in higher interest rates. You can boost your credit score by paying debts on time and resolving outstanding issues.

Employment status

While benefits do not disqualify you, some lenders prefer applicants with stable employment. Adding part-time work to your income may strengthen your application.

Expenses and financial history

Lenders evaluate your debts and other financial commitments to determine if you can afford additional repayments.

Late repayments

Missed or late payments on past agreements may harm your eligibility. Keeping a consistent payment record can improve your chances.

IVA, bankruptcy, and CCJs

• IVA (Individual Voluntary Arrangement): Ongoing IVAs disqualify applications, but settled IVAs are generally accepted.
• Bankruptcy: Current bankruptcies are ineligible, but discharged ones may qualify.
• County Court Judgements (CCJs): A CCJ reduces approval odds but does not automatically disqualify you.

How much can I borrow for car finance if I am on benefits?

The amount available for car finance while on benefits ranges from £3,000 to £50,000. Lenders decide the loan amount based on your income, expenses, credit score, and the cost of the vehicle you wish to purchase.

Your ability to meet monthly payments is a key factor. If benefits form your primary income, lenders may approve a smaller amount than they would for someone with additional earnings. Providing a deposit or selecting a more affordable car can help increase approval chances.

We provide personalised quotes tailored to your financial situation. With access to a panel of lenders, we aim to find car finance options that suit your needs. Use our finance calculator to see how much you could borrow today.

Who is eligible for car finance on benefits?

How can people on benefits get car finance?

If you receive benefits, you can still apply for car finance by following a clear and simple process. Here are the key steps:

1. Check eligibility: Ensure you meet basic loan requirements, such as being over 18, holding a valid driving licence, and residing in the UK.
2. Prepare documentation: Lenders may ask for proof of income (including benefits), ID, bank statements, and details about your marital status and living situation.
3. Select a vehicle: Choose a car that fits your budget and aligns with the approved loan amount.
4. Submit your application: Use the Carboom website to complete a simple online form. Include all required information to avoid delays.
5. Review offers: Once approved, compare offers from lenders and select a plan with manageable monthly payments.

Do we offer guaranteed car finance on benefits?

No, guaranteed car finance is not legally possible, as lenders assess financial situations individually. However, we help people receiving Universal Credit, PIP, or disability benefits find tailored solutions.

Our panel of lenders evaluates various income sources, including benefits, to offer tailored finance solutions. Approval depends on factors such as your income, credit score, and expenses. Use our finance calculator to check your options today.

How can I boost my chances of approval?

You can improve your chances of car finance approval with these practical steps:

1. Join the electoral roll: Registering on the electoral roll confirms your address and makes it easier for lenders to verify your identity. This step increases your credibility during the application process.
2. Improve your credit score: Pay bills on time, clear outstanding debts, and check your credit report for errors. A higher credit score reduces risk for lenders and increases approval odds.
3. Consider a joint loan: Applying with a partner or family member with a stronger credit history can help. A joint loan allows lenders to consider combined financial stability.
4. Use a guarantor: If your credit score is low, a guarantor with good credit can provide added security to lenders, improving your chances of approval.
5. Explore pay-as-you-go finance: This flexible option allows you to make smaller, regular payments, reducing the upfront financial burden.