Car finance loan: What can I borrow?

Taking out car finance can be complicated and you may be unsure just how much you are allowed to borrow.

When looking to buy a car, it's only natural to wonder just how much you could be entitled to borrow to help fund the purchase.

You will likely have at least a small deposit to play with that will assist in reducing the monthly payments; it will also help the lender decide how much they should loan to you.

However, each person's situation is different based on a number of factors that will be taken into consideration by the lender.

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There are three main factors that will need to be considered before you are approved for a loan.

There's the financial consideration and what your current situation is. There's the budget consideration based on how much you are able to afford. Finally, there's the consideration of what you actually want and need out of the car.

Let's dive into each consideration and give a clearer understanding of what they each mean.


Lenders will assess a number of factors when working out how much they feel they should lend to you.

This includes financial information such as credit history, credit score, the amount you're prepared to deposit, and your annual income.

The information you provide allows them to get a good understanding of where you are at financially, and how easy it will be for you to repay the loan over time.

Your historic financial information will affect how much you could be able to borrow and if you have a poor history, you may not be offered the amount you desire, or at all.

This should not deter you from applying for loans, though just be careful that if you bounce from lender to lender and are constantly refused, it could hurt your credit score even more.

If you aren't in the best of positions, it's certainly worth delaying your loan application and trying to rebuild your score and overall situation.

For more information and advice, you can read our previous article about credit scores and credit history.


One of the most important things to do before buying a car is working out exactly how much you can afford and how much future monthly repayments may cost.

It's easy to get caught up in wanting an expensive car when you're paying it back at fixed monthly payments, but if that would leave you short or scraping by financially, then it's going to be a miserable few years for you.

Create a monthly budget with every outgoing you have and that should help you get a better idea of how much disposable income you have to play with.

You don't want to put yourself - or your family - in a position where you don't have the money to afford other luxuries such as holidays or home improvements because your car is taking up a bulk of your budget.


What do you want?

Rather than choosing a specific make and model beforehand, have a think about what you actually want out of your car.

Create a list of its most ideal features and go from there. You may find that everything you want is in a make of car that you hadn't even considered.

Other costs associated with your car should be well thought out too, such as how much it'll cost to run, including fuel, insurance, and servicing.

Do plenty of research before you make a final decision to ensure that you get the most out of your purchase, both in terms of what you require, and your overall budget.

Affordability Calculator

The next step is to utilise Car Credible's Affordability Calculator.

This will allow you to price up your next car finance deal by entering exactly what you wish to pay for your new car.

We will then provide you with a clear breakdown of what you can expect to budget.

Keep track and monitor your car finance deal on a monthly basis by signing up to Car Credible for free. Follow the banner below to stay on top of your deal and know exactly when your car gets into positive equity.

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