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Can You Get Car Finance on Benefits?

Posted on 10th July 2023
Can You Get Car Finance on Benefits?

A car can be a costly yet vital purchase and at times, buying one isn’t as easy or affordable as you may have hoped. As a result, many people turn to cheap car finance to help with securing a vehicle, but this can be an option that many are unsure of. Concerns over eligibility, affordability and choice of vehicle deter many from applying.

This is even more evident with those in receipt of benefits. With either a low income or less disposable cash, some benefit claimants are understandably worried that they may not be able to purchase a new car when it becomes a necessity. Luckily though, there is no need to be concerned. Provided you meet a few criteria you can get car finance on benefits, and it can be quite an easy process. Lenders assess your situation and perform affordability checks alongside a few other things and as long as you can still support your other financial commitments you are likely to hear a yes!

In some cases, direct car finance lenders like Euphoria Finance can make it even easier. With a full understanding that those on benefits or those looking for poor credit car loans may need a little support, they make sure that finding a car is never too difficult.

So, in the first of this month’s blogs, we look at how you can get car finance on benefits.

Car finance for people on benefits

As we mentioned above, car finance for people on benefits is possible and, in many cases, it will be easier to secure than you think.

There are more than 20 million people in receipt of some form of benefit in the UK and it would be extremely discriminatory to say people claiming them were not entitled to make a car purchase. Of course, checks are carried out to make sure it is affordable and does not put undue pressure or inconvenience on the applicant.

In many cases, benefits are classed as a source of income, just like a salary would be, however it is wise to understand that there are lenders that categorise some benefits as “additional income” meaning you must have another income source to support you in order to secure the car finance. This could be a pension, another type of benefit or employment.

This can vary per lender so check in advance as this could drastically change the status and affordability of your application.

What benefits can you pay for car finance with?

There are a host of benefits available to people in the UK, each with varying levels of support. In some cases, people are eligible to claim more than one and in others, only one can be paid. As far as using them to help pay for a car on finance, you should consult your proposed lenders first. Common benefits that are taken into account for a car finance application are:

  • Universal Credit
  • Child Tax Credit
  • Housing Benefit
  • Working Tax Credit
  • Child Maintenance Payments
  • Guardians Allowance
  • Employment and Support Allowance
  • Personal Independence Payment
  • Carers Allowance
  • Disability Living Allowance
  • Child Benefit

Other benefits may also be considered when applying so it is worth contacting the lender to find out if any you are receiving would be included in their calculations. You should also remember that some of these benefits constitute an additional income and therefore your application must be supported by other income sources.

What do you need to apply for car finance when on benefits?

Any lender will want documentation to support your application as well as some general criteria to be met. At Euphoria Finance, for example, we require you to have:

  • Proof of Address
  • Proof of Identification
  • Proof of Income
  • Proof of Benefits
  • Aged over 18
  • Hold a Full UK Drivers Licence

How to apply for car finance on benefits

The first thing to do is work out your monthly outgoings. A car purchased on finance is a commitment that may span as long as five years. With that in mind, compile a list of all your outgoings. With the balance that’s left, can you afford to support yourself and your family as well as make payments on a car? Don’t forget car insurance, tax and fuel will all need to be added to your costs.

If the answer is yes, start researching car finance companies, some will be able to give a quick car finance quote to give you a rough idea of costs. Once you have seen these quotes, contact them to discuss your circumstances. This will give you a more concrete idea of how much the car and the interest will cost.

Ensure you have all of your benefits paperwork to hand. Lenders will want to see full information on financial incomings and outgoings before making a decision. In addition, they will study your credit record and want to be aware of any CCJs or IVAs you may have. Many specialist lenders, like Euphoria Finance, recognize that circumstances can change for people quite suddenly so understand that a CCJ or IVA does not necessarily need to harm your finance application.

Once you have been given approval or an agreement in principle, you should start looking for cars that fit the budget. Of course, you could start this before assessing your finances or applying for car finance, but it would be disappointing to find out the car you had in mind is now out of reach!

Once done. Go back to your preferred lender to complete the application, pay your deposit and get your car!

Car finance on benefits with good credit

If your credit score is good and you are currently claiming benefits, a lender will be much more encouraged to lend to you than if your credit score is really poor. You will also likely benefit from a better interest rate. Of course, the benefits you claim can alter the likelihood of being given a positive response to your application too so as mentioned earlier, speak to the lender in advance to see which benefits they accept as part of a car finance application.

Car finance on benefits with poor credit score

It can be harder to secure car finance if your credit score is poor and that is why many people choose direct lenders like Euphoria. Poor credit scores can stem from missed payments, bankruptcy or just poor management of finances. Sometimes it can even be a result of not supplying the correct information on previous financial applications!

Some lenders will say no to those on benefits with poor credit but there are plenty that can also say yes. Just ensure you have a deposit ready to put down. The bigger the deposit, the less the lender has to part with, meaning less risk on their part. Interest tends to be higher if you have poor credit too so factor this in when you apply too.

What can affect your application for car finance on benefits?

The criteria varies per lender and that is why we have stated throughout this article that you should speak to the lender you have chosen in advance to see what they expect. Direct lenders like Euphoria are more inclined to say yes whereas others say no. This is due to how the way we operate bases each application on its individual merits rather than a generic set of conditions.

All other lenders will study your credit history, commonly, the factors listed below are likely to see your application success impacted:

  • Having an IVA can often see lenders say no. If you had one in the past that is now settled, you should be ok to apply.
  • Late repayment history gives lenders a concern that you may default on payments to them. If you have done this regularly, they may be reluctant to lend.
  • Being unemployed can see lenders being hesitant to offer car finance but only if no form of benefits are being received.
  • A CCJ can also deter lenders from being willing to offer car finance.


If any of the above apply to you then speaking to Euphoria Finance may be the best option!

At Euphoria Finance, we love to say yes. So if you are on benefits but need a new car to help transport the family or get to work. Contact us! Our team of car finance experts will carefully assess your application to give you a full breakdown of costs and the terms behind the finance. With no obligation, you can shop around to see what else is on offer but with access to over 50,000 cars, we feel that you will not find a better used car finance or new car finance deal than what we can offer! Find out today!

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