A car isn’t just a luxury in today’s world, whether you need to commute to work, nip to the supermarket for your weekly shop, or make the school run, a car is a necessity for many people. But what happens if you’re receiving benefits or Universal Credit? Can you still get car finance? In this guide, we will tackle how benefits and car finance work together in the UK, addressing your burning questions and anxieties, and helping you get cruising down the road to your new set of wheels.

Understanding Car Financing

Car finance means you spread the cost of a car through monthly instalments over a set time, usually around 2-5 years. You will borrow the money from a car finance lender and pay it back with interest. For those on benefits or Universal Credit, car financing may feel out of reach. However, it’s an option worth exploring.

Can You Get Car Finance on Benefits?

The short answer is yes! Receiving benefits or Universal Credit doesn’t disqualify you from securing car financing, contrary to popular belief. Rather than focusing on why you are claiming benefits, lenders are usually more interested in your affordability and take into account benefit type, income stability and creditworthiness.

Overall, lenders take a holistic view of finances so they can be confident you can afford your monthly payments without jeopardising your financial well-being.

Key Considerations for Benefit Car Finance

With all car financing, there are a few things that your potential finance provider will have to consider before agreeing to the loan. These may include:

1. Benefit Type

It’s often the case that different types of benefits are viewed differently by lenders. Understanding how your specific benefit type may be assessed by a lender is an important factor. At Ucan, we’re happy to chat through this with you on the phone.

2. Income Stability

One of the main factors that providers will take into account is a steady stream of income. Consistent income, whether from employment or benefits, demonstrates the ability to manage loan repayments reliably. Minimal fluctuations in your income may strengthen your application overall.

3. Creditworthiness

Your credit profile is a factor that providers will consider when assessing your car finance application. Whilst it’s not the be-all or end-all of your application, checking your credit report for errors and taking steps to improve your overall score could make your application seem more attractive in the eyes of the provider.

Preparing a Strong Car Finance Application

1. Gather the necessary documents

To get your application started you will need to pull together essential documentation that may be required by your lender. This may include:

  • Proof of benefit income such as benefit letters
  • Bank statements for the past few months
  • Valid driving licence
  • Proof of address

2. Check your credit report

Whilst your credit history doesn’t fully represent your current financial situation, it may be advantageous to check for any errors in your report to dispute and pay off any existing debts to help bring your score as high as possible before starting your car financing application.

3. Consider a joint car finance plan

If you feel like your application may not be strong on its own, you could submit a joint car finance application. Within a joint car finance application, two individuals’ income and credit history are evaluated and will split the cost. There are important considerations to making a joint application though so make sure you understand the responsibilities and implications before going ahead.

Ucan Get Car Financing on Universal Credit!

Owning a car whilst on benefits can be a reality. By carefully planning your finances and ensuring affordability, you could be cruising on your way to a new set of wheels. Ready to start your application? See what Ucan can offer you! It takes 30 seconds, and you’ll receive a simple quote instantly.