When you apply for car finance, you will be required to meet the car finance lenders criteria first before you can get approved. There are certain checks that lenders put in place before they decide whether to offer you a finance deal or not.
These checks are in place to make sure applicants can afford to pay back their finance and what the likelihood of them paying back on time is. Each lenders have their own individual requirements that you will need to meet before you can get approved but in general, the guide below looks at the most popular checks.

How does car finance work?
Unfortunately, car finance can never be guaranteed. Due to the structure of finance, it’s hard for lenders to promise to give anyone and everyone a car finance deal without checking their details first. When you get a car on finance, a lender gives you the money, either to your bank account or secured against a vehicle of your choice to purchase a car. You then make monthly payments till the end of an agreed term that covers the value of the loan. Usually interest is also included in your payments and reflects the rate of borrowing. Lenders put in checks in place to assess the likelihood of getting their money back on time and in full and helps them to decide if they want to offer you a finance deal or not.
What checks are in place for car finance?
When you apply for car finance, lenders can check car finance eligibility through a number of checks that will usually be performed to assess your affordability and creditworthiness.
- Credit check.
Finance lenders can assess your ability to pay back your loan on time and in full by checking your credit score when you apply. Your credit report reflects your history of borrowing and based on past behaviour, lenders will decide whether they want to offer you finance or not. If you’ve missed payments in the past or have a bad credit score due to no previous history of borrowing, lenders may decline you as you’re more likely to default on any finance in the future. It can be harder to get accepted for bad credit car loans and a good credit score can make it easier to get approved and also can get you a better interest rate offered from the lender as you are less of a risk to lend to.
- Affordability.
Lenders not only assess the likelihood of being able to pay your loan back by checking your credit but also need to know how much you can afford to pay for finance each month. Your car finance budget is really important as it will affect the cars you could get and the loan amount you could be offered. A quick affordability check can be performed by lenders when you apply for finance. They will usually ask what your monthly income is, your employment status, how long you’ve worked there for and can be verified by requesting bank statements or payslips.
- License type.
Lenders will also usually ask you which type of driving license you currently hold. It can be hard to get a car on finance with no license as most lenders will automatically reject you. There can be options for provisional and European license holder sin the UK but usually having a full UK license is most favourable. Lenders will also check your licence with the DVLA to verify your details.
- Proof of address.
When you’re accepted for finance, it’s important for lenders to be able to trace the car that they have financed. A secured loan means that the lender owns the vehicles until the final payment has been paid and the agreement has ended. If you fail to meet repayments, lenders have the right to take the car off you so it’s important that they know where the car is being kept. Lenders also favour those who don’t move around as much and will ask how long you have been in your current property for. A fixed address for a long time shows stability and it can help you to get approved.