What to Do if You're Refused Car Finance?

It can be disappointing to be refused car finance but don't be disheartened and follow these steps.

Buying a car is one of the most expensive purchases anyone can make in their lifetime, so it's unsurprising that over 90% of new cars get bought using a financial plan.

The great thing about car finance is that it doesn't only apply to new cars. There are plenty of used car dealers and brokers that are prepared to offer you car finance when you are looking to purchase your next dream motor.

Car finance deals can be tailor-made to suit your need and budget. You can decide how much you want to borrow and how long you want to make your repayments, and sometimes even control the interest rate you repay at.

Do you have a car on finance and would like to reduce your monthly repayments? Sign up with Car Credible today; we could help you save money on your deal.

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However, for many people, applying for car finance isn't that simple and can often lead to disappointment if you are refused car finance. It can also be difficult to understand why you have gotten rejected.

While it can be disheartening, we're here to help you understand why you might have gotten refused and what to do next with your application. Hopefully, you'll be in a much better place to know your next steps after reading this article.

Find out why you've gotten refused car finance

There are several reasons why you may have been refused car finance, but often the finance lender will not let you know why. Understandably, this can cause confusion and irritation for those applying for finance.

It may be as simple as missing information from your application or entering a particular detail incorrectly. If you believe you have a good credit score but still got refused, it's worth doing something about it.

Contact the finance company

If you know the lender or the car finance broker to whom you applied, you could ask them why you got rejected. You should be able to find an email or contact telephone number for them.

If you are using a broker that works with a panel of lenders, they may not have anyone that works with your particular circumstance or credit situation. However, it's still useful for you to know that before applying elsewhere.

Check your credit report

Before doing anything after a car finance application rejection, you should check your credit score and profile, even if you thought it was in good shape; you may find something that explains why you got refused.

In credit score platforms, you can see how your profile looks to prospective lenders, which can help you to identify if your credit score was the reason behind your refused application.

How your credit score impacts your car finance application

Your credit profile impacts all of your finance applications, so you must keep all current and future payments up to date to avoid being penalised or unable to apply for more finance.

Similarly, if you have never taken out finance before, it may be more difficult to get approved for finance because you have no history - or evidence - that you have been able to make repayments on time in the past.


If you have had credit issues in the past, they will be visible on your credit history, therefore, lenders may choose to decline any new applications because you have a history of missing payments.

Lenders need to be confident that you will be able to repay the money they loan to you, so the checks and processes they need to go through are vigilant, otherwise, they could end up being out of pocket.

Should I use a guarantor when applying for car finance?

If you have had difficulty being approved for finance before, whether due to a bad - or no - credit history, it could be worth involving a guarantor in your finance application to give you a better chance of approval.

A guarantor is someone you trust and have a close relationship with - usually an immediate family member - that can step in and make financial repayments on your behalf if you can't fulfil them yourself.

Having a guarantor on your application gives you a greater chance of approval, as the lender will know that if you can't make repayments for whatever reason, the guarantor can do that for you.

A guarantor must have an excellent credit record and agree to be your guarantor. You can't nominate someone on your finance application without their consent. If you can't make a repayment and they fail to do so on your behalf, their credit rating will be affected just as much as yours.

Stop applying for car finance

If you've been rejected for car finance and have identified the reason as your credit history, you should take some time out of applying for finance because it could continue to hurt your future chances.

If you apply for finance and get rejected, it will appear on your credit history and affect your credit score. On the odd occasion, this isn't the end of the world, but if lenders see multiple failed applications, it will further deter them from offering you finance loans in the future.

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Rebuild your credit score

If you discover that your credit score is the reason behind a failed application, it can be a worry. However, it is possible - and not too challenging - to rebuild your credit score back to the levels it needs to be to get approved.

Sign up for one of the online credit score platforms; they can help you identify areas of improvement, such as getting yourself on the electoral roll and keeping your address up to date.

If you have utility bills each month, setting up direct debits shows that you can make the repayments each month. You could also consider getting a credit card to make small payments that you pay off immediately or when you get your monthly statement.

If you have any outstanding debt, try to pay that off as soon as possible. Once you have done that, you can start rebuilding your credit and be more secure with your finances.

After following the above steps, allow your credit to build up again before making a new car finance application. You'll be shocked at the difference six to 12 months makes in credit and financing.


Can you appeal if you're refused car finance?

If you have been declined car finance and believe that there is nothing to suggest that it should have been refused, you can appeal the rejection and the car finance lender will review the appeal request.

Does cancelling car finance affect your credit score?

While cancelling your car finance may appear in your credit history, it's unlikely to affect your credit score unless you missed any payments in the time that you had the finance.