Car Finance if Retired

It may be more difficult to get car finance if you don't have a monthly income.

Buying a car on finance can be overcomplicated. From filling out your details to getting approved, the process isn't as simple as it should be.

It can be even more challenging if you are recently retired. One of the main things lenders look for when approving people for car finance is their income and ability to afford to make repayments.

While in retirement, you will likely have some funds you've been saving, as well as what you built up in your pension pot. A lender will see that you don't have a steady income and no employment history for however long since you retired.

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Even though you know you'd be able to make the monthly repayments, lenders may not physically be able to see the more you have available to make them, thus making you 'higher risk'.

It could be argued that if you have retired, you could buy a car outright with cash to save the hassle of applying, but that's not always possible for some, while others may not want a big lump sum to exit their savings accounts in one go.

Is car finance possible if you're retired?

Car finance is possible if you've retired. Buying a car - especially a brand-new one - is considered a luxury, and if you've worked all your life, you deserve to treat yourself after a long career.

If you don't have the savings to splash out on a car, car finance is a good option to help make things more affordable, as you make fixed monthly payments across an agreed time.

It can be more difficult for retired people to get car finance due to the checks lenders make to ensure you can borrow and make repayments.

However, some lenders work specifically with retired folk; therefore, you should research those lenders before applying, as you could get turned down if you apply to the wrong lender, which could impact your future loan applications.

Common misconceptions of car finance

Lenders will review your monthly income when determining whether to approve your finance application. However, you don't necessarily need a job to have income available to you.


If you are retired and have a personal pension pot that provides your monthly spending, lenders will more than likely deem that as acceptable proof that you could make repayments.

Not only will lenders want to ensure you can make repayments via the amount of money you have available, but also that you have a decent credit history and have made previous loan repayments in full and on time.

If you have a good credit score, you should have no issues with being approved. Even if you have bad or no credit, there are some lenders out there that can help with specific cases.

How to improve your credit score

If you currently have a bad credit score and are anxious about getting approved for a loan, there are several things you could do to improve your score and reduce your chances of being rejected.

If you have outstanding loans, you could ensure you have made all your repayments before applying for a new one. At the very least, you should continue to make them on time and in full.

You can do this by setting up a direct debit so that the funds come out on the same day each month, so even if you forget about them, they will still come out of your bank account and back to your lender.

If you're not already, get yourself on the electoral register. This is a simple way to show lenders that you have a fixed abode and that you're either able to make monthly payments, or you've historically already paid them all off.

If you get refused a car finance loan, it can be demoralising. You can reapply elsewhere, but be careful not to apply for too many loans in a short space of time, as this will show on your credit history and could deter other lenders from approving any loan applications.

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Car Credible's affordability calculator 

We have our affordability calculator at Car Credible, which helps you understand what you can expect to borrow, based on the cost of the car, the deposit you put down, the length of the term, and the interest rate you could be offered.

Not only that, but we have advice based on your selection to help you reduce the overall cost of the car or your monthly payments, to make the purchase as cost-efficient to you and your budget.

What else do you need to know?

When you make a car finance application, ensure that the information you provide is 100% correct. Falsifying information could lead to being refused or in worst case scenarios, prosecuted.

Have your driver's license, proof of address and proof of monthly income (this can be from your pension rather than employment) to hand to make the process as swift and easy as possible.


Is there a maximum age for car finance?

If you are retired and have a pension, you can take out a car finance loan. However, you may be refused if over the age of 75. The reasons are not quite clear, but you could be more high-risk in terms of causing damage to the car out on the road.

Can you get car finance on a used car?

You can buy a brand-new or used car on finance. You can visit Car Credible's car search feature to find and finance a used car securely, and at a good price.