Buying a car on finance in Ireland requires you to pass a few checks and assessments. Loan companies conduct certain checks to determine your affordability for the loan. The criteria may differ across the car finance providers.
They mainly check personal details, credit history, employment, income and current financial commitments. However, learning about these in detail may help you navigate things easily.
Will I get accepted for car finance with bad credit?
Yes, you may get car finance for bad credit scores. However, the approval depends on the number of missed payments, loan defaults and CCJs. It also depends on your income, deposit size, the respective loan provider’s terms, and the car’s price.
Usually, it is easier to get a used car finance for bad credit in Ireland than a new one. Moreover, individuals providing a high deposit with a bad credit score may get a car finance at affordable rates and terms.
What checks do loan companies perform to provide car finance?
You need to meet the basic criteria and checks to get car finance. The checks may differ according to the respective provider. However, here is the brief of what you may expect :
1. Credit history and score
Loan companies receive the updated credit reports from the Central Credit Register. It helps them check the current status of borrowing/debts, missed payments, CCJs and existing commitments. Most loan companies calculate their own score based on the credit file information.
Individuals lacking a credit history and income may be required to provide a guarantor. It helps the loan company gather some data to evaluate the affordability.
2. Proof of income and affordability
You must have a decent and regular income that helps you qualify for the loan. Individuals with a fixed and recurring income have better chances of getting a loan than those with a seasonal income. In that case, the latter one may need to provide a guarantor or a deposit.
Keep the documents like- payslip/ self-employed assessment/pension ready. Additionally, ensure 3-6 months of bank statements, ID proof, and address proof. Most loan companies require these documents to provide a loan.
3. Employment stability
Individuals with a long-term employment history may generally qualify for a better loan. It is because a consistent income reveals responsible financial behaviour. Therefore, it reduces the risk of default for the loan company. Individuals working in the same company for a good number of years may also prove beneficial. Here is how different incomes may qualify for the loan:
- Full-time income: Provide a salary slip, bonus
- Part-time income/self-employed: Provide tax statements, P60 form or accountant’s certificate
- Benefits income: You may provide a slip of benefits that you receive. It could be Job seekers Allowance, Child Benefit, Universal Credit)
4. Deposit and Loan-to-value ratio
A deposit is an upfront amount that you provide to get a loan. In car finance, it is not mandatory to provide a car deposit. However, the higher the deposit amount, the cheaper the loan. However, you must provide 10% of the car’s price as a deposit or more.
It reduces your interest and the overall repayment liabilities. You may get a loan without a deposit, too. However, that would mean paying the complete car price in instalments with interest. It may prove to be lengthier and more expensive for you.
The loan-to-value ratio is the amount of money that you borrow compared to the car’s current market value. If you have a high LTV ratio, you may get a high interest rate on the car finance. It may also mean high payments. Generally, individuals with a low LTV may fetch better interest and terms.
I am Unemployed. How can I get guaranteed approval on car finance?
There is no such thing as guaranteed approval. You cannot get a guaranteed approval on car finance if you are unemployed. It is because no legally operating car finance company would lend you if you cannot afford the payments. Unemployed individuals lack a fixed and valid income to prove affordability.
However, you can improve the possibility by involving a guarantor, providing a deposit or starting with a smaller loan. Here, one may get guaranteed car finance for the unemployed in Ireland only if they can afford the loan payments.
How to improve the chances of getting car finance?
If you are worried about getting accepted for a car finance, the following tips may help:
- Try to improve your credit score
Identify the credit mistakes and report them. Pay the bills and the outstanding credit card balance. It brings down the credit utilisation ratio. Avoid missing payments on the debts. Set direct debits to remain competitive. Use Ireland’s Central Register for free services like checking the credit report.
- Save for a large deposit
Saving for a higher deposit may be beneficial as it helps you reduce interest, monthly payments, and overall costs. Precisely, it makes the loan much more affordable. You can aim for 10-20% of the loan deposit on the car finance agreement. Use a new savings account for the exclusive purpose and save money by setting up direct debits.
- Choose an affordable vehicle
Determine how much you can afford to spend on the car given your current finances. Set a budget accordingly. However, choosing a cheaper car may be harder to finance.
Can you get car finance with no deposit or credit checks?
No, you may not get a car finance with no deposit and no credit check if you have a bad credit score. It is because every responsible loan company conducts a basic/soft credit assessment to gauge your affordability. It does not impact the credit score. You may get a loan only if you meet the criteria.
It is not mandatory to provide a deposit on the loan. However, individuals with bad credit may consider providing a higher deposit to qualify for the loan.
Bottom line
Thus, understanding the loan company’s requirements before applying for a loan is better. It may help you apply for the right amount, pre-qualify and analyse the quotes you may qualify for. Check how much you can get and the documents required. Preparing for one may help you get the loan the same day.
Caleb works as a senior content writer at Loanstopocket for the past 3 years. He is a writing enthusiast and invests a good time in exploring and writing about financial trends. His keenness in exploring a topic to create a research-based piece is simply unmatched. He believes in including a texture of authenticity with real-time examples and facts.
Caleb’s blogs and articles reveal deep-seated knowledge and expertise. His educational qualification forms the base of his excellent command over the industry and Jargon. He is a postgraduate in Finance and is currently involved in exploring the world of the stock market.
