If you’re retired, you can feel like you’ve got the whole world at your feet. You’ve got more time to do the things that you want to do and for many retired drivers, a car can be their lifeline. Cars can be expensive to buy outright though, even if you’re choosing second-hand. In this instance, you may be wondering if you can get approved for a car loan when you’re retired. The guide below looks at the ways in which you can increase the likelihood of getting finance approval and a few tips to prepare your application before you start to apply.
Can you get retired car finance?
You’ll be pleased to know that getting car finance for retired people isn’t as hard as you may think. The main thing that car finance lenders focus on is your ability to meet the repayment deadlines and based on your previous history of borrowing, what the likelihood is that you’ll pay your loan back on time and in full. From a lender’s point of view, it’s all about risk and if you can be trusted to stick to the rules of a finance agreement. It can be a good idea to check out lenders or brokers who offer retired car finance first to get an idea of who may approve you.
How to increase your chances of approval:
Whilst it can be possible to get approved for a car loan when you’re retired. You should always remember car finance is never guaranteed to anyone and you will need to meet the lenders’ requirements before you can receive approval.
1. Prove your income
Car finance lenders ultimately want to know if you can afford to take out a car loan and how you’re going to make regular payments each month. Car finance deals usually last between 3-5 years so it’s important that you can meet each and every payment. Even though you’re retired, you can still have a regular income in the form of a state or private pension or even receive interest from savings accounts. All you need to do to prove your income is to provide 3 months’ worth of bank statements and sometimes you may be required to pass a car finance affordability check too.
2. Check your credit score
Your credit score is really important when it comes to financing a car. Your credit score and credit report reflect how you’ve handled credit in the past and allow lenders to assess the likelihood of you paying back future finance, based on your previous behaviors. If you’ve missed payments in the past, made late repayments, have been declared bankrupt, or have a CCJ or default on your credit file, it may leave you with a bad credit score and lenders could decline you for finance. If your credit score is a little on the low side, it can be a good idea to take some time to improve your score before you apply. Not only can a better score increase approval rates, but it can also get you a better interest rate offered.
3. Compare interest rates
No matter what your situation, it’s always best to compare car finance interest rates and select the lowest rate possible for your circumstances. Interest rates reflect the rate of borrowing, and a higher interest rate makes your deal more expensive. Usually, interest is included in your monthly payments so it’s important that you aren’t paying any more than you need to. You could consider using a car finance broker to help find the lowest rate on your behalf as they usually have access to multiple lenders on their panel.
4. Have a deposit to put down
A deposit contribution for car finance can be beneficial if you’re struggling to get approved. The main reason why you should put down some money at the start of your agreement is that you are lowering the loan amount by paying off some of the loans at the start. A smaller loan amount can reduce your monthly payments, or you could pay off your loan faster as it’s less to pay. A shorter loan term means you don’t pay as much in interest too.
