First time financing a car? What you need before you apply
Financing a car for the first time is mostly about being prepared. Lenders need to see proof of who you are, where you live, and that you can afford the repayments, and having this ready before you start makes the whole process faster. This guide covers exactly what you need, how credit scores fit into the picture, and what to check on your agreement before signing.
Most lenders ask for similar information when assessing a car finance application:
Having these ready before you start your application means fewer delays. Mistakes or missing details are one of the most common reasons an application takes longer than it needs to, not because the information itself is a problem, but because gathering it after starting the application slows things down.
Credit reference agencies (Experian, Equifax, and TransUnion) each have their own scoring system and their own idea of what counts as a "good" score. You do not need to hit a specific number to get car finance, different lenders look at different things, and a lower score with one agency does not automatically rule you out with every lender.
What matters more than the number itself is what is behind it: a history of late payments, defaults, or CCJs will affect how a lender views your application more than the headline score. Equally, having no score at all because you have never used credit is a different situation to having a low score because of past problems, and lenders treat these differently.
AutoMoney Trust looks at affordability and your overall circumstances rather than relying on a single credit score figure. We consider applications from people with poor credit or part-time income. For more on this, see our guides on car finance for new drivers and applying for car finance with poor credit.
Car finance lets you spread the cost of a car over fixed monthly payments instead of paying the full price upfront. The two most common types are hire purchase, where your payments cover the full cost of the car and you own it outright at the end, and PCP, where a portion of the cost is deferred to a balloon payment at the end of the agreement.
If you are not sure which suits you, our guides on how does hire purchase (HP) car finance work? and what is PCP? How does Personal Contract Purchase work? explain each in full, or see HP vs PCP: what's the difference and which one should you choose? for a direct comparison.
Before signing any car finance agreement, take the time to read through the key figures rather than just the monthly payment:
For more on how APR works and what affects it, see our guide: car finance and interest rates explained.
Yes, under the Consumer Credit Act, most car finance agreements come with a 14-day cooling off period, known as the right to withdraw. This starts from the day you sign the agreement, or the day you receive a copy of the signed agreement if that is later. Within this window, you can change your mind and cancel the agreement without needing to give a reason.
If you cancel within the cooling off period, you will need to repay any amount the lender has already paid out on your behalf, for example if the dealer has already been paid for the car, but you will not be charged for cancelling itself. If you have already taken the car, you will usually need to return it as part of cancelling.
This is separate from voluntary termination, which applies later in an agreement once you have paid 50% of the total amount payable. The cooling off period is a short window right at the start, intended to give you a final chance to reconsider before the agreement is fully underway.
Once you have an idea of your budget, our guide on the best second-hand cars to buy on finance covers what kind of car suits different budgets. Use our car finance calculator to see what monthly payments would look like for different loan amounts and terms.
AutoMoney Trust is a direct lender, regulated by the FCA under firm reference number 912573. We offer hire purchase finance from £4,000 to £25,000 over 36 to 84 months with no deposit required. The initial check is a soft search that will not affect your credit file. Check your eligibility on our apply for car finance page, or see our step by step guide on how to apply for car finance for what happens next.
Late or missed car finance payments with AutoMoney Trust may be reported to the main UK credit reference agencies and could remain on your credit file for up to six years. This can have an impact on your credit score and may make it more difficult to access credit in the future.
A missed payment may affect future borrowing decisions, with lenders potentially offering different terms, higher interest rates, or declining an application depending on your overall financial circumstances. The impact can vary depending on how late the payment is, whether the account returns to good standing, and if arrears continue over time.
If you are experiencing difficulties keeping up with your car finance payments, it is important to contact AutoMoney Trust as soon as possible. Speaking to us early gives the opportunity to understand your situation and discuss what support or options may be available before payments are missed.
Managing your finance agreement responsibly and keeping up with payments can help maintain a healthier credit profile. For more detail on how lenders review applications, see our guide to credit checks for car finance.
Yes, car finance can affect your credit score in both positive and negative ways. Successfully managing a car finance agreement by making regular, on-time payments can help build a positive credit history. This sows future lenders that you can manage credit responsibly and may improve your credit profile over time.
However, missed or late payments can have the opposite effect. 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 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.
A fixed interest rate means your interest rate and monthly car finance payments stay the same throughout your agreement, giving you certainty over what you'll pay from start to finish. This can make it easier to budget, as your repayments won't change during the finance term.
A variable interest rate, on the other hand, can rise or fall over time. It is often linked to the Bank of England base rate or a lender's standard variable rate, meaning your monthly payments could increase or decrease during the agreement.
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 out guide on What Is Car Finance APR?.
