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What Credit Score Is Needed to Buy a Car Hassle Free in 2022

Written by, Marija Petkova

Updated April, 18, 2022

Were you looking to learn what is the minimum credit score to buy a car in the UK as you’re in the market for a new vehicle?

This article answers questions like ‘What credit score is needed to buy a car?’ and ‘How can I improve my creditworthiness to get a better loan?’

Let’s crunch the numbers!

What Credit Score Is Needed for a Car Loan in the UK?

Naturally, the higher your credit score to finance a car, the more likely you are to get a loan. However, you may still be able to obtain some sort of financing even with lacklustre scores.

Unfortunately, we cannot provide you with an exact minimum credit score to buy a car in the UK as all three credit rating agencies follow different scoring models. However, if your score falls in their ‘good’ category, you’ll have a decent chance of getting a favourable loan.

While the ‘Good’ credit score to buy a car ranges between 531–670 and 604-627 for Equifax and TransUnion, respectively, Experian’s is 881–960. Moreover, only TransUnion utilises a maximum range of 710, while those of the other agencies extend up to 1,000.

Note: Before applying for a loan, you should also recheck your current score, learn how it is calculated, and review the current credit score ranges in the UK.

Car Finance for Fair Credit Score Applicants

If you are applying for car finance with a fair credit score in the UK, you may be able to get your loan, but the conditions may be less than favourable with greater fees and interest rates.

Some lenders may even reject your application outright, and those few that provide such risky loans approve limited sums and make it harder for you to pay out your debts.

Therefore, before applying for a credit for a car, consult with a credit broker who will help you understand the minimum credit score to buy a car in the UK, how to raise it, and connect you with the right lending institutions that will offer you a good deal under your circumstances.

What Else Is Considered in a Car Credit Check?

While your credit score is the main factor to be considered when you apply for a credit for a car in the UK, financial institutions will also evaluate criteria such as:

  • Current income—recent wage raises increase the chance of loan approval;
  • Employment status—loanees will be considered only if they are employed;
  • The loan amount—banks are less likely to approve larger loans to less creditworthy applicants;
  • Any inheritance—customers that are able to rely on other funds to repay their debt are considered before others;
  • Existing loans—borrowers without other loans weighing their finances down take precedence over any others;
  • Proof of age, identity, and residency—standard checks that must be completed prior to approving any loan application.

Candidates with a non-existent credit score needed for car finance, such as young drivers, may be disregarded as banks require additional data to assess their creditworthiness. To finance your purchase in such cases, look into other revenue sources, such as online sales.

The Main Types of Car Finance

If you are looking into lending or buying a car with a credit card or a loan in the UK, you may be offered one of several financing options, as explored below:

Hire Purchase

You can get a car with a hire purchase (HP) plan by paying an initial deposit and making monthly payments (including interest) until you repay the total car value. At that point, you become the vehicle’s legal owner.

Personal Contract Purchase

When you ask for a personal contract purchase (PCP), you will have to pay an upfront sum and provide monthly deposits after that. However, instead of repaying the full car cost, you are only covering the difference between the ‘brand new’ and the ‘used car’ price.

Note: Once your contract ends, you can either pay the remainder to get full ownership of the vehicle or return it to the dealership.

Personal Contract Hire

Similar to PCP, the personal contract hire (PCH) is a long-term rental scheme that requires you to pay an initial deposit along with monthly payments for the use of the car. However, you cannot purchase the vehicle once your rental term ends.

Personal Loan

If you opt for a personal loan with any financial institution, you can purchase the automobile outright with a single lump sum, but you will have to repay the borrowed amount to your lending institutions in regular instalments (with interest) over a specific time period.

You may be interested in: Personal Loan Statistics in the UK

Improving Your Chances of Getting Car Finance

So you’ve opted for buying a car with a loan, but your credit score leaves much to be desired? Fret not, as you can always improve your chances by following a few tips and tricks:

  • Work on your credit report—paying your bills on time, establishing your credit history, closing older credit accounts, and even registering to vote are actions that contribute towards a better credit rating;
  • Buy affordable and lend less—if you have your eye set on a specific premium model, but you need a larger sum that is less likely to be approved, consider buying a cheaper car that you can easily pay alongside your other costs;
  • Choose the right vehicle—if you are looking into exotic models that are difficult to service, your loan application will most likely be declined since your costs to maintain such a vehicle would be much higher;
  • Pay a larger initial deposit—if you spend some time saving up for the car purchase, you will be able to apply for a smaller loan that is more likely to be approved as it carries a lesser risk for the lender;
  • Shop around for the best deal—compare the lending products of several auto finance companies to find a loan that best fits your current needs.

Note: You might have to wait a while until you improve your credit score to finance a car purchase, so spend as little as possible until your reach your goals.

Bottom Line

Will I get accepted for car finance? What credit score is needed for car finance in the UK? These are questions that a lot of people have, and the answers vary depending on whom you ask. Generally, though, you’ll need a credit score in the ‘Good’ band of any rating agency, and even if yours is lower than that, you can always improve it with the above tips and tricks.

                           

Frequently Asked Questions And Their Answers

Does financing a car build credit?

While taking out any type of loan (including vehicle credit) harms your credit score in the short term, you will significantly improve your rating if you make your payments on time.

Can I buy a car using a credit card?

Yes, buying a car on a credit card is an acceptable payment form with many UK dealerships. However, before doing so, check your card’s interest rates to ensure you are not overpaying.

What is a good affordability score?

If you are wondering what credit score is needed to buy a car in the UK, note that the answer to that question may vary greatly depending on which agency estimated your creditworthiness and the requirements set forth by the car finance companies you approached. However, to get acceptable rates, you need to be in the ‘Good’ score range of any credit rating body.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.