Frequently Asked Questions | CarMoney

Looking for the answer to some of the most commonly asked questions in car finance? Then you are in the right place! Our ninjas know all about the industry they work in too, so feel free to ring one of our team to help to answer your queries! 

Can I get Finance with Bad Credit?

Poor credit history can severely affect your chances of securing any sort of loan/financial service. 

Those with a lower credit score are less likely to get competitive rates and may even be refused a loan by some of the lenders. There are, however, ways of getting approved for credit even with a poor credit score, and there are things you can do to improve your score too: 

1. Get a Credit Report

A credit report is a good place to start, as it will show you in detail your credit history including your overall score. It will give you an idea of where you’re going wrong and what you can do to improve your chances of getting  finance. You can access a copy of your credit report for free from Experian, Equifax or Callcredit.

2. Register on Electoral Roll

If you haven’t already, make sure you register on the electoral roll. Finance companies look at this when they perform credit checks to see if your name and address match up. If you’re registered on the electoral roll, it makes it easier for finance companies to carry out these checks. Being registered won’t transform your credit rating, but it does help and it’s easy to do.

3. Keep up repayments

This may seem obvious, I know but even making sure you pay a phone bill every month or pay off a credit card (if applicable). Small steps are the best ways to gain the trust of the lenders!

4. Keep Applications to a Minimum

The more applications you put in, the more ‘Hard Searches’ will be done on your credit score. If you have a low score and frequently get declined, this can severely affect your score in a negative way. Initially, an eligibility check, or ‘Soft Search’, is a much better idea than a formal application. While it won’t tell you for certain if a finance company will offer you a loan, it will give you a good indication, and it won’t appear on your credit history. 

If you wish to read more answers to common questions in this area, why not have a look at: Car Finance with Bad Credit | CarMoney

What is Bad Credit?

Bad credit is simply when you have a history of not paying bills, or perhaps you have not had time to build up a substantial credit score. 

Your credit score consists of five main factors:

  • Payment history
  • Total amount owed 
  • Length of credit history
  • Types of credit
  • New credit


If you have a history of not making payments, building up debt, and making multiple payment commitments you cannot afford then you will be considered higher risk and will have a lower credit score. Even just being under 21 puts you at a disadvantage, as you haven’t had time to build up a decent Credit Score, all of these will therefore mean you are less likely to be accepted by lenders for finance. 

If you wish to read more answers to common questions in this area, why not have a look at: Car Finance with Bad Credit | CarMoney

What is APR and how does it work?

Annual percentage rate (APR) is the official rate used to help you understand the cost of borrowing. It takes into account the interest rate and additional charges of a credit offer. All lenders have to tell you what their APR is before you sign a credit agreement. 

Representative APR:

It looks at the lowest APR that a particular lender will offer to 51% of people who are accepted. So let’s say you see an advert for a hire purchase loan that offers 9% APR, this means that 51% of people who are accepted for that loan can get it at that rate or better. The other 49% are accepted but are likely to be offered a higher APR. 

Exact APR:

With exact APR, what you see is what you get. So, when you apply for car finance, the APR that you see is what you’ll get when the loan is agreed. Exact APR is tailored to your personal finance and your credit score. 

While this rate can be higher than a lot of representative APRs that you might see advertised, it’s more accurate. There are no hidden charges, so you’ll pay exactly what you expect to pay.

Real APR:

‘Real’ APR is the interest rate you actually have to pay, rather than the advertised representative rate. This is calculated by the lender, based on how ‘risky’ a borrower they perceive you to be. They decide this based on various sources of information, including:

  • Your credit history
  • Your financial situation
  • Any dealings that you’ve had with the lender in the past.

If you want to read some more about how APR works in car finance, we have a really useful guide to help you understand: What is APR? | CarMoney


Can I sell a car on Finance?

We all know how quickly circumstances can change. And a finance payment of a few hundred pounds a month or more can seem like a massive burden when it was affordable when you started. If you have taken out a PCP or HP deal, the length of the deal can sometimes be up to 5 years of repayments (depending on the deal of course).

Can I sell my car with outstanding Hire Purchase (HP) finance?

In short, no you cannot. As the car is legally still the possession of the finance company until the end of the agreement, or unless you end the agreement early by paying off what you still owe.

If you are more than halfway through your repayments then you will not be able to return the car. If you wanted to get out of your car finance agreement, you would need to pay a settlement figure set by your lender. 

Can I sell my car with outstanding Personal Contract Purchase (PCP)?

Again, you are not allowed to sell the car while you still have debt outstanding. You’re not the car’s legal owner until you’ve repaid the PCP agreement or the settlement figure in full.

The first option is to return the car if you’ve paid off half the finance agreement. If you haven’t, you’ll have to pay up the difference towards it. Remember you have to have paid 50% of the total amount payable, which includes fees and interest, not just the amount borrowed. 

Read more on the subject - Selling a Car that is on Finance | CarMoney


Can I trade-in/part-exchange my car that's on finance?

A common question we get asked! The answer to this question is yes and it doesn't matter whether you have a car on Hire Purchase (HP) or Personal Contract Purchase (PCP), the process is simple. There are a few steps you will need to take in order to do this:

Get a settlement figure from your current lender. Then, find out the value of your car with any valuation tool. All you will need is your registration. Next, time for a tiny bit of maths, subtract the settlement figure from your car's valuation price. This will equal the amount of equity available in your car. If you have a positive figure, great news! You can use this amount of money as a part exchange for your next car. However, if the figure is negative, you'll need to pay that amount of money on top of your new car's price. 

Read more on the subject - Selling a Car that is on Finance | CarMoney

Can I get a car with no deposit?

It may seem unbelievable, but there are occasions when you can get a new car without paying a deposit. The only exception would be for perhaps a reservation fee of a couple of hundred pounds. In fact, you typically won’t have to make a payment for 30 days, until your first repayment is due. 

A no deposit car finance deal can get you on the road quickly and allow you to spread the cost of a new vehicle equally across the loan term. However, you’ll invariably end up paying more each month. These loans will also usually come with higher interest rates and higher costs overall.

Can I cancel my car finance?

The good news is that it is possible to terminate your contract early with the most popular forms of car finance, but there are rules about when and how you do it. If you can no longer afford to keep up repayments, it is very important that you contact your lender and let them know of your situation. 

You must have already repaid 50% of the balance due, which includes interest and any other charges. If you have, you can cancel the contract and return the car. This is called voluntary termination and is a legally binding initiative under the Consumer Credit Act 1974. If you haven’t yet paid off 50% of the money you owe on the car but still want to cancel the contract, you can make additional payments to bring you up to the halfway point. You won’t be able to terminate the contract until you have, though.

If you’re leasing a car on personal contract hire (PCH), it’s more complicated and expensive if you want to cancel the contract early. You can do it, but you’ll probably have to pay back the full amount of the remaining lease costs. For example, if you wanted to cancel your lease contract but still had a year remaining, you would have to pay a year’s worth of monthly fees upfront in order to do so.

Can I get car finance if I am self-employed?

The short answer to the question is yes! The key thing will be proving your income, along with the usual checks on your credit score. The lenders we will be contacting on your behalf will be looking out to see if you can afford your monthly repayments, and they will do this by checking your credit score. 

To work out your average income, lenders will usually total your income in the last three month’s bank statements and divide it by three. This then allows them to get a credit limit based on your proof of income. This can vary slightly if you have a lower credit score. In this case, you may be required to produce in excess of three months’ worth of bank statements or payslips to prove your income.

Want to read more about car finance and self-employment? We have a really useful guide: Car Finance for the Self-Employed | CarMoney

Is it more difficult to get finance when self-employed?

The good news is that self-employed workers now make up almost 16% of the UK workforce, meaning that lenders are much more ready to approve someone who is self-employed. You may be asked for more information about yourself than usual, but this is only so the lenders know as much about your financial history as possible before they make their decision. 

Lenders are looking for evidence of stability in employment and address history – the longer you have been at your current job and address, the better. They also check your credit score, so make sure to get a credit report free from Experian, Equifax, or Callcredit before you go ahead with applying.

Read more about Car Finance and Self-Employment

Why buy with CarMoney?

1. Our team of expert ninjas can help you even if you haven’t found a car yet! With dealerships up and down the nation, we are sure we will find something to your liking!

2. Your designated Ninja will guide you through the process and answer any questions you may have. They are well trained and keen as a bean to get you the best possible finance rates!

3. We provide some of the most competitive rates from our panel of lenders that can cover even someone with a poor credit score.

4. We provide you with impartial quotes from trusted lenders and don't push you into a certain deal!

5. We will deliver the car to your door (if you need it) without you having to leave the comfort of your armchair!

What is the difference between a soft credit search and a hard credit search?

Whenever you are buying a credit product such as a loan, mortgage, or car finance, the company will require a credit check before they take you on as a customer. Your credit history will tell them how reliable you are at repaying loans or credit cards, even your phone bill counts towards it (if you are on a contract). 

A soft credit check occurs when you check your own credit score or when a company checks your credit score as part of a background check. This could include banks, lenders, retailers, or landlords. Soft credit checks are recorded on your report but do not impact your credit rating.

Hard credit checks are used by lenders to review your full credit history when you take out a personal loan or mortgage. A hard credit check is carried out each time you apply for a loan. This type of credit search leaves a mark on your credit history.

If I need to speak to someone about car finance, who can I call?

You can call our office 7 days a week on 0333 456 4550 or email and one of our ninjas can answer any questions you may have! Our office hours are as follows:

Mon - Thurs: 9am - 7pm

Fri - Sat: 9am - 6pm

Sunday: 10.30am - 5.30pm


What is Negative Equity?

Negative equity is a concept that normally relates to property – falls in house prices can leave owners in a position where they owe more on their mortgage than their home is currently worth. This issue can, for example, present difficulties for anyone who’s thinking about selling a financed car.

When a car slips into negative equity while on finance, it can cause issues. Find out what exactly this means and how to minimize any problems with CarMoney.

Car Finance with Negative Equity | CarMoney

Are there any restrictions on which car I can buy?

No, as long as you are buying from a reputable dealer, our finance ninjas will try to find you the best possible finance deal for that car! We even offer finance on commercial vehicles as well! 

What paperwork will I need?

You will need a few things to hand when completing an application:

Licence: You will need to at least have a provisional/full UK licence on hand in order to make an application. 
Employment status: If you are employed, you will be required to submit payslips from the last 3 months (sometimes more depending on the lender).
Residency: You will need to have proof of address, some kind of utility bill, or a formal document that has your name and address on it. Make sure you send the entire doc, not just the address.
Passport: You will need a form of photo ID that isn’t a driver's licence, usually a passport.