If you’re thinking of getting a car on finance, you may be wondering what the likelihood is when you don’t have a job. Having no current employment can affect your chances as a lender is unable to predict how much you earn and also how you’ll be able to pay your loan back. When you’re currently not in employment or in between jobs, you may have money in the bank or be in receipt of benefits. Both of which could mean you can get approved, but the blog below looks at how you can better your chances.
Why is employment status important for car finance?
It’s worth remembering that car finance is never guaranteed and there are a few checks that lenders can put in place to check your eligibility first before you can get approved. Most lenders will ask what your current employment status is, whether that be part time worker, full time employment, retired or on benefit income, they will want to know how much you earn. Your affordability for car finance is really important and lenders have to make sure they abide by the rules of responsible lender too. Responsible lending is in place to make sure any car finance applicant can afford to pay back their loan and don’t borrow more than they can handle.
Can you get a car with no job?
You’ll be pleased to know that you can get a car when you don’t have a job, but it can be dependent on your own personal circumstances and even the lender that you apply with. It can be much easier to get a bad credit car finance deal on benefits as this can be a set income each month that you would be able to prove. It can also be easier if you have a pension in place and are retired as you will also receive a regular income but there may be limitations on your age so it’s worth checking out first. If you don’t have a job at the moment, it can be harder to prove your affordability but there are a few ways in which you could help to increase your chances of getting a car loan with no job.
How to increase your chances of getting a car when unemployed:
It can be disheartening when you need a car and don’t have a job and for many people, they may even need to have a job to get to and from job interviews. So, how can you improve your chances of getting a car loan?
1. Check your credit score.
Before you apply for any form of car finance, you should always check your credit report first and make sure all your information is accurate and up to date. If the information on your credit report doesn’t match that of your car finance application, lenders may be worried that it’s a fraudulent application. Lenders use your credit score to assess the level of risk and if you’ve missed payment in the past or don’t have any previous borrowing history, it can be a good idea to increase your credit score before you start applying. A better credit score can see easier acceptances and a lower interest rate offered.
2. Have a deposit ready.
It may seem silly to say when you don’t have a job but having a deposit to put forward for car finance can help to increase the likelihood of getting approved. A deposit for car finance can instil trust with a potential lender and it also lowers your loan amount A smaller loan can reduce your monthly payments and also make your car finance more manageable.
3. Consider a guarantor loan.
A guarantor loan is when you ask someone else to support your application. If you fail to meet the repayment schedule, your guarantor will be responsible for meeting the repayment instead. Having a guarantor can increase your chances of getting a car on finance without a job as the lender essentially has two opportunities for the loan to be paid so the risk is reduced. If you and your guarantor both fail to repay, the car can be taken away from you and both of your credit files can be impacted and will seriously affect your ability to get any credit in the future.
4. Look into hire purchase.
Hire purchase is a form of car finance that could be suitable for people without a job. If you were approved for hire purchase car finance, you make equal monthly payments to the value of your chosen car plus any interest or fees. Hire purchase agreements can be spread over 3-5 years and can be tailored to your budget. Choosing a longer loan term can reduce your monthly payments but does mean you will spend longer paying interest so it’s worth comparing different deals. HP can be suited to applicants with no job as it’s a form of secured loan. This means if you fail to repay, the lender has the right to use the car as collateral and take it away from you.