What impact does employment status have upon car finance?

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People assume that you have poor credit history when you are turned down for finance. There are many reasons why you might get declined. Your employment status may be one reason you have been declined for financing.

Your financial stability and affordability could be affected by your employment status. But what if you are in different types or employment circumstances? How do you get approved for finance? Let’s find the answer.

Why is it important that employment status matters?

Lenders will often look at your employment status in order to determine your financial ability. Lenders may be more inclined to lend to people who have steady income and are working full-time. This is because you can show that you can afford your car loans. The amount of loan available can also be affected by your employment status. This is because you may not be able to afford the finance you need if your income is low or variable.

Unemployed

Unemployment and applying for car financing can have serious consequences on your chances to get approved for a car loans. This is due not having enough income to repay the loan. If you have extra income, you might be able to get financing from some lenders. If you are applying for finance, it is a good idea to have some source of income.

Benefit income

Benefits don’t have to stop you from getting car finance. If you have regular income, it can be used to prove that your finances are feasible. It is not as difficult as you might think to get benefit car finance approved. Many lenders are open to accepting income from benefit programs such as carers’ allowance, disability allowances, universal credits, personal independent payment, etc. Aside from receiving benefits or working, you may also be eligible for car finance.

Retired

As you no longer have a steady income, it is considered unemployed by lenders. However, having a solid credit file and receiving a pension can help you to be approved. Keep in mind that lenders may not finance people older than a specific age. Be sure to look at the length of your credit contract as some lenders may not allow a borrower older than a certain age.

Self-employed

The benefits of being self-employed are numerous, but cash insufficient or with a fluctuating income could impact your chances to obtain car finance. If you do not have cash on hand, it is important to keep your wages in a UK account. This will allow you to show your financial ability. For self-employed drivers such as taxi drivers and delivery drivers, there is a requirement for high mileage. Taxi drivers can get car financing because they don’t have mileage limits.

How to increase your chances for getting approved

Deposit now and save!

If you feel your employment status is not good, you might be eligible for a deposit towards car financing. Even saving up for a few weeks before you apply can help you get finance approved. Lenders appreciate applicants who have a security deposit. This reduces the amount of money they need to lend. It can also lower your monthly expenses, which can lead to savings in the long term.

Get a better credit score

A high score is favorable to finance lenders. Many lenders will conduct a soft check credit check on you credit score before deciding whether or not to finance you.

Because they want you to have a history of timely payments and trustworthiness in repaying their loan, this is important. Repairing your credit score is possible by making regular payments, keeping your credit usage low, and fixing any credit errors.

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