What do I need for car finance? A quick checklist

Oct 12, 2021 | All About Cars | 0 comments

Car finance is a great way to purchase your car on a budget that suits you. However, if you want to get approved, it’s important to be prepared so you can get the best low rate finance deal. Having the correct documentation and understanding your budget and credit score can put you in a great place when applying, and speed up the buying process.

If you’re unsure about what you need and need to consider to get a car loan, keep reading.

1) Your Budget

First and foremost, it’s important to consider your budget. Be honest with yourself about how much you can afford to spend on monthly repayments. To get a clear idea of your remaining funds for each month, we recommend noting down all your outgoings, from essential bills to recreational activities.

Of course, your outgoings may vary every month, so try and calculate an average. Once you’ve done that, you can use our free finance checker to find out if you’re eligible. 

  1. Type of Loan

There are so many different types of loans out there, which is great to be flexible to your needs but can be difficult to choose which one is right for you.

You need to consider your credit score, credit history and budget. Lenders use these aspects when considering if you’re a viable customer that will pay back the money lent to you.

Hire purchase is a great option if you would like to own the car at the end of your finance agreement, whilst Personal Contract Purchase offers cheaper monthly payments with different options to do with your car at the end of the agreement and a lease-purchase is a good option if you never want to own the car and are always looking to upgrade to a newer car. 

  1. Your Credit Score

When applying for any type of car finance, your credit score/rating has a significant impact on your eligibility. Your credit score is based on your information such as employment, and previously borrowed credit. For instance, if you’ve previously missed making payments on time, this will have a negative effect on your credit score. 

Having a good credit score when applying for finance is important as it will not only improve your chances of being accepted but will also help you gain access to more attractive interest rates. 

While having a poor credit score will mean you are considered higher risk by the lender, meaning they’re worried the money lent to you by them won’t be paid back and as a result, you will likely be charged a higher APR. 

As a broker and not a lender, LMC is proud to work with a wide range of lenders, including those who specialise in creating bad credit car finance deals and could accept you even if you have been refused elsewhere.


It’s also worth taking into consideration what documents to bring with you. When you apply for a new car loan you’ll need certain documents to prove things, such as your income and your address. So we’ve put together a checklist of the documents you need to get a car loan:

1)Proof of identity – Driving licence, Passport

The most widely accepted form of identification from finance lenders is your driving licence. Both sides of the ID will need to be shown. In some circumstances, lenders do accept your passport but it depends on the lender in question.

2)Proof of Income

Lenders like to see you’re actively earning an income to ensure you can afford to make your loan repayments. The easiest way to do this is to provide the lender with 3 months word of payslips. 

If you’re self-employed, they’ll accept bank statements and tax returns. The bank statements should be from the last 3 months and prove you have a regular income, while with tax returns they expect 2-5 years of evidence, again depending on the lender. 

If you’re in a position where you can’t provide payslips, car finance providers may need to call your company to verify your employment. This is only a confirmation call; they are not allowed to give your employer any information about your application.

Even if you’re on benefits, as long as half of your income can be shown to come from employment, this is usually acceptable. 

3)Address History

Companies can use your address, along with other information, to identify you and link you to your financial behaviour. This can assist with avoiding identity theft while also allowing you to obtain the credit you desire.

If you’ve been living abroad and have recently moved into the country,  unfortunately, credit reports are not usually available to lenders across national borders. So if you’re moving back to the UK after a spell abroad, you may need to start building your UK credit history again. Alternatively, if you have been away for less than 6 years, your credit history should still be available. 

At LMC you’ll be assigned your very own finance expert who will go through all these aspects with you in more detail if you’re looking to apply for finance. In the meantime, if you have any questions, don’t hesitate to contact us.

It’s worth taking these steps into consideration before you apply for finance as this will help smoothen and speed up the process for you.