If you have bad credit, or perhaps if you’re applying to borrow more than you can afford, you may have previously been turned down for vehicle finance. But that doesn't necessarily mean you’re not eligible for a car loan.

Why Are People Refused for Car Finance?

There are various reasons as to why someone could be turned down for a car loan. And it can be incredibly frustrating if you’re not sure of the cause! While some lenders will give detailed reasons for a refusal, most won’t. It’s therefore a good idea to go through a list of possible explanations for loan refusal, and see whether any apply to you. We’ve listed the most common reasons for a declined application below:


When a lender assesses your application, they’ll look at your income and expenses to determine whether you’re able to cover the cost of the vehicle finance agreement. They’ll also make sure you’re able to pay for any car upkeep costs, such as fuel and maintenance. Not to mention having money left over each month for life’s emergencies! 

When it comes to affordability, your choice of vehicle and how much you’re looking to borrow will also play a part in a lender’s decision making process. If you’re after the latest sports car, your chances are probably slimmer than if you only want to borrow a small amount to get a family runaround.  

Credit History

Perhaps the most common reason for refused car finance is an individual’s credit profile. Lots of factors can impact your credit score, and a low score will often lead to a declined application. Things like missed payments, becoming insolvent, having an outstanding CCJ, or declaring bankruptcy can all lower your credit rating, as can mistakes on your credit file.

You may not be aware that a lack of credit history can also affect your chances of getting car finance. If you’ve not taken out credit previously, there will be no record of repayments. Lenders therefore can’t see how you manage your money. For some people, it’s important to borrow money before applying for larger loans.


How much you earn could make a big difference to whether you’re approved for a car loan. But so can your job stability. Maybe you’ve changed jobs several times within the last year, or you’re self-employed. This can mean you receive an inconsistent income and could then be less likely to be approved. People on a zero hour contract may also struggle to get car finance. 

You may be asked to provide a few recent payslips in order to verify your income too. Responsible lenders wouldn’t accept your application if making the due payments would put you in any difficulty, so need to have a clear idea of your income.

What Should I Do If I’m Turned Down for a Car Loan?

If you’ve previously had a car loan declined, there are a few ways in which you can improve your future chances of approval. One of the simplest ways is to use a broker service. Brokers like us can compare lenders for you, and put you in touch with a finance provider who is likely to approve your loan, even if you’ve been refused in the past. We’ve outlined a couple of other tips below: 

  • Speak to the Lender: You can get in touch with the car finance provider to ask why your application was rejected so that you can try to rectify any issues
  • Build Your Credit Score: You may be able to boost your credit rating through making payments on time, registering on the electoral roll, and making sure the information on your credit file is up to date
  • Consider a Cheaper Vehicle: You may be able to improve your affordability simply by opting for a cheaper car, such as a second-hand vehicle 

You should also bear in mind that too many applications in a short period of time can mean a lot of hard credit checks, which can damage your credit rating. This is another reason for applying through a broker - we’ll only undertake a soft credit search, which won’t impact your credit score. And when you’re matched with a lender, they’ll just perform the one hard check on your credit report. 

Will Refused Car Finance Increase My Rates?

The interest rates for car loans will often depend on things like your credit history and the size of your deposit. Unfortunately people with a bad credit score will often be offered worse rates, as they’ve previously had difficulty making repayments. However, every one of our applications is assessed on an individual basis, and we’ll take into account your personal circumstances to try and find a solution that works for you.

You may be able to improve the rates offered too. Check out our tips on improving your credit score to see whether you’re able to get a better deal! You may be surprised by the difference a few of these techniques could make. 

Can I Get a Car Loan After Being Turned Down Elsewhere? 

The simple answer is yes! Many customers who have been refused car finance just haven’t come across the right lender yet. Many of our lenders are refused car loan specialists, and may be able to help even if you have bad credit or a less reliable income. 

You can increase your chances of approval too - for instance, if you’re able to put down a larger deposit, lenders are often more likely to pay out the loan. If your car is for family use, or if you add a spouse or partner to the agreement, this can also improve your approval rate.

When it comes to applying for a car loan, this can seem like a scary process at the best of times, let alone when you’ve been turned down by lenders in the past. That’s why we do our best to make car finance simple and straightforward. Our online application should only take a few minutes to complete, and you should get a quick decision on screen. Once you’re matched with a lender, you can search for your new vehicle and get on the road in no time!