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Car Finance on Benefits: Everything You Need to Know

March 25, 2016

If you rely on financial support to keep your household up and running, you might be thinking that car finance for people on benefits simply isn’t an option. However, people who rely on benefits to live need to get around just like everybody else – so it’s only fair that car finance is made available to those struggling with their income. After all, car finance is meant to make car ownership more affordable – so it’s a logical option for those struggling to get enough cash together to buy a car outright.

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Can I get car finance on benefits?

In short, the answer is yes – however, as with anything in life, there are some conditions attached. The same rules apply for people with a steady stream of income and a good credit score – unfortunately, there’s no such thing as guaranteed car finance, on benefits or otherwise.

When processing an application for car finance, lenders and brokers look at a number of factors – including your credit score and income – to determine your eligibility for credit. Car finance lenders and brokers have a duty to check you’ll be able to repay the loan without getting into financial hot water. When it comes to car finance for people on benefits in particular, it depends on the type of financial support you receive.

Car finance for those on benefits: which benefits apply?

Typically, only permanent benefits will be taken into account as part of your income – giving the lender assurance that your income is unlikely to dry up over the course of repaying your loan. Generally speaking, the only benefit which will be taken into account as part of your income is disability allowance – due to its permanent nature.

What can I do if my benefits aren’t permanent or I’m unemployed?

While the majority of lenders won’t consider applicants without a permanent or steady source of income, there are still options available if you’re struggling to find car finance while on benefits. At The Car Loan Warehouse, we have great relationships with a number of specialist lenders and can offer a ‘guarantor loan’, whereby a friend or family member will co-sign as a guarantor – making them responsible for any missed payments.

If you’ve got a friend or family member willing to vouch for you, we can arrange a fuss-free guarantor car loan for you straight away – and can usually get the money into your account on the same day, putting you in the perfect position to buy your next car!

While 0% car finance or interest free car finance deals might sound like an appealing option if you’re struggling with your income, these offers can sometimes be misleading. In many cases, the dealership builds the interest into an inflated list price – allowing them to claim it’s ‘interest free’, as you’re simply paying more for the car overall. Where these deals are available, they tend to be reserved for potential buyers with a strong income and good credit score – unfortunately, cutting out a large portion of the market – so if you’re really struggling to get approved, a guarantor loan may be your best option.

Arranging car finance for benefits claimants

Call one of our advisor’s today on 0800 066 2888 to discuss your options – or if you’re happy to proceed, apply today to get started. We’ll get back to you with a decision on your application within the hour! Don’t forget – if you’re applying for a guarantor loan, we’ll need their details too as part of your application.

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About The Author

Jon Le Roux is co-founder and company director of The Car Loan Warehouse. Being a mad engineering and motorsport enthusiast, I spend more hours than is healthy, watching, reading or talking about cars, boats, motorbikes…..basically anything with an engine.