Credit checks for car finance
When you apply for car finance, lenders will check your credit history to help assess your application and whether the finance is affordable. They may use a soft or hard credit search depending on the stage of your application. A soft search does not affect your credit score, while a hard search is recorded on your credit file and may have a small, temporary impact.
There is no single credit score to finance a car, as lenders use different criteria and consider your wider credit history, income and affordability. This guide explains how car finance credit checks work, the difference between soft and hard searches, what lenders look for and how applying for finance can affect your credit score.
Car finance companies may use both soft and hard credit checks.
With AutoMoney trust, your initial application uses a soft credit search, so checking your eligibility will not affect your credit score. A hard credit search is carried out if the soft search is positive and you wish to continue with your application. Not all lenders follow this two-stage approach. Some run a hard search immediately on application, which is why it pays to understand a lender's process before you apply
A soft credit search is a limited check of your credit file that does not affect your credit score and is not visible to other lenders. It gives a lender enough information to help assess whether you may be eligible for finance without carrying out a full credit search.
A hard search is a full check of your credit file. It is visible to other lenders for 12 months and is recorded on your credit report. Multiple hard searches in a short period signal to lenders that you have been actively seeking credit, which can make them more cautious about approving a new application.
A single hard search has a relatively small impact on your credit score and the effect fades over time. The concern is accumulation: if you apply to five lenders in quick succession and each runs a hard search, the cluster of inquiries can affect your score and your chances of approval with subsequent lenders.
This is why using soft search eligibility tools before committing to a full application is worth doing. It lets you filter out lenders unlikely to approve you before any hard searches are involved.
Car finance lenders look at your credit history alongside your wider financial circumstances and affordability.
Lenders look at a combination of the following:
Different lenders use a different criterion, so your credit score alone does not determine whether you will be accepted.
A credit checks shows lenders about your identity, credit accounts, payment history and previous borrowing.
This helps them understand how you have managed credit in the past and assess your car finance application. Your credit report may include:
Lenders use this information alongside other checks, including your income and affordability, to decide whether car finance is suitable for your circumstances.
The application itself does not affect your score. The hard search that the lender runs as part of processing the application does leave a mark, but the impact of a single hard search is small and temporary.
Where it becomes a problem is multiple applications in a short period. Each application that triggers a hard search adds another visible inquiry to your file. Lenders looking at a file with five or six hard searches from the past two months may conclude that you have been struggling to access credit, which makes them less likely to approve.
The practical takeaway is: use soft search tools first, apply to one lender at a time, and give it a few weeks between applications if you are declined rather than immediately trying elsewhere.
While applying for car finance can result in a hard search, managing the agreement afterwards can also influence your credit profile. If you're wondering "does car finance improve credit score?", making your repayments in full and on time can contribute to a positive payment history. However, taking out car finance does not guarantee that your credit score will improve, as your score if influenced by a range of factors.
For more on how your credit file is affected by car finance, see our guide on how car finance can affect your credit score.
No, as car finance lenders need to carry out the appropriate checks before agreeing to lend, but you may be able to check your eligibility without a hard credit search.
Any regulated lender is required to conduct a credit check as part of responsible lending obligations under FCA rules. A lender offering finance with no credit check at all is not operating within FCA regulations and should be treated with caution.
What some lenders offer is finance without a hard search at the eligibility stage, using a soft search instead. This is what AutoMoney Trust does. The soft search does not affect your score, but it is still a credit check. The full hard search happens when you proceed to a formal application.
Searches described as "no credit check" in advertising usually mean no hard search at the initial stage, not that no check is run at all. Read the small print carefully.
Yes, you may still be able to get car finance with bad credit, although approval is not guaranteed.
There is no single minimum credit score to finance a car, as lenders use different criteria and may consider your wider financial circumstances alongside your credit history.
If you have poor credit, lenders may look at how recent any missed payments, defaults or CCJs are, as well as your current income, outgoings and whether the proposed repayments are affordable. If you have little or no credit history, lenders may have less information about how you have managed borrowing in the past and may place greater emphasis on your current circumstances.
AutoMoney Trust considers applications from people with a range of credit histories, including those with poor credit, CCJs and defaults. For more information about how adverse credit can affect an application, see our guide on car finance with a CCJ.
Before applying for car finance, it is worth pulling your own credit report. You can get a free statutory report from each of the three main credit reference agencies: Experian, Equifax, and TransUnion. You are entitled to one free report per agency per year, and checking your own file counts as a soft search so it does not affect your score.
When you check your file, look for:
Correcting errors before you apply can improve your chances. Disputed entries can be flagged to the credit reference agency for investigation and, if upheld, removed or corrected.
If you have been turned down previously and want to understand your options, see our guide on what to do if you have been refused car finance.
You can check your eligibility for car finance with AutoMoney Trust using a soft credit search that will not affect your credit score. If you decide to proceed with a full application, a hard credit search will be carried out as part of our assessment.
All applications are subject to status and affordability, and approval is not guaranteed.
We consider applications from people with poor credit, CCJs.
Finance is available from £4,000 to £25,000 over 36 to 84 months with no deposit required. Start on our apply for car finance page.
Car finance can affect your credit score positively or negatively depending on how you manage your agreement. Making regular, on-time payments can help build a positive credit history and demonstrate responsible borrowing, while late or missed payments can negatively affect your credit score and make it more difficult or expensive to access credit in the future.
If payments are not made on time, they may be reported to credit reference agencies, which can lower your credit score and make future borrowing more difficult or potentially more expensive.
When you apply for car finance, a lender may carry out a hard credit search, which appears on your credit file and can cause a small, temporary change to your credit score. This is a normal part of the application process and helps lenders assess whether finance is affordable and suitable for you.
For more information about how applications are assessed, read our guide on Credit Checks for Car Finance.
The main difference between fixed and variable car finance rates is whether the interest rate can change during your agreement. A fixed interest rate means your rate and monthly car finance payments stay the same throughout the finance term, giving you certainty over what you'll pay and making it easier to budget. In comparison, a variable interest rate can rise or fall over time, meaning your monthly payments may change.
AutoMoney Trust offers fixed-rate hire purchase car finance only, so you know exactly what your monthly repayments will be for the full term of your agreement. While fixed rates may sometimes be higher than an introductory variable rate, they provide protection against future interest rate rises and make it easier to plan your finances with confidence.
When comparing car finance options, it's important to consider not only the interest rate but also the APR, total amount payable, and the overall cost of borrowing. For more information read our guide on What Is Car Finance APR?.
The length of your car finance agreement can have a significant impact on both your monthly payments and the total cost of borrowing.
Choosing a longer finance term, such as 60 or 84 months, spreads the cost of the vehicle over a greater number of payments. This can make your monthly payments more affordable, but it may mean you pay more interest overall throughout the agreement.
A shorter car finance term, such as 36 months, usually results in higher monthly payments because the balance is repaid over a shorter period. However, paying the agreement off sooner can reduce the overall amount of interest paid, making it a potentially lower-cost option over the full term.
When choosing the right finance term, it is important to consider your budget, monthly affordability, and how long you plan to keep the vehicle. The best option is one that allows you to comfortably manage your payments without putting unnecessary pressure on your finances.
AutoMoney Trust offers car finance terms from 36 to 84 months, giving you flexibility to choose an agreement that suits your circumstances. Use our car finance calculator to compare different term lengths and understand how your monthly payments and overall costs could change before applying.
With an AutoMoney Trust hire purchase agreement, legal ownership of the car transfers to you only after you have made all of your monthly payments and paid the £10 option to purchase fee at the end of the agreement. Until then, the vehicle remains the property of AutoMoney Trust.
Although you won't legally own the car during the finance term, you are responsible for its day-to-day running costs, including vehicle tax, insurance, MOT, servicing, and maintenance. As the finance provider owns the vehicle until the agreement is complete, you cannot normally sell, transfer ownership of, or make significant modifications to the car without our permission.
It is also important to keep up with your car finance payments, as missed payments could lead to arrears and, in some circumstances, the vehicle may be at risk of repossession if the agreement is not brought back up to date.
Once you have made your final monthly payment and paid the option to purchase fee, legal ownership transfers to you, and the car becomes fully yours with no further finance obligations.
