Can I get car finance with a low income?

Written by:
Verity Hogan
Content Manager

Low income car finance

If you have a job that pays minimum wage, work part-time, or have a low income for any other reason, you can still get car finance.

Unfortunately, securing a car finance deal with a low income isn’t always easy. The amount you can afford to buy and run a car is one of the most important factors lenders consider when deciding whether to offer you a loan. The lower your income, the less you can afford to borrow.

However, your income isn’t the only factor that affects your loan eligibility. Your credit score, the car you want to buy, and the type of loan you’re looking for all play a part.

If you have a minimum wage job but very low expenses – if you live with your parents at home, for example – you may still be able to afford a relatively high car finance payment. In contrast, if your living costs are higher, but the car you want to buy is older, cheaper, and more efficient, you may still qualify for a small loan.

When you apply for car finance on minimum wage with Autedia, you’ll receive a decision in minutes – and getting a quote won’t impact your credit score.

How much do I need to earn to get car finance?

You need to earn no minimum monthly amount to be eligible for a car finance loan.

Your income is one of the factors that lenders consider, but they will be looking at how much you spend and how much you regularly receive each month.

Most lenders will require proof of income as part of your car finance application, and this might include copies of your recent bank statements or three months’ worth of payslips.

Car finance with a low income

The car finance process is the same for everyone, no matter whether you have a low income or a high salary. If approved for an HP or PCP loan, you’ll typically pay a deposit upfront (if you can) and then pay back the remaining loan balance in fixed monthly repayments.

Your income isn’t the only factor that determines your car finance eligibility. Still, it can restrict the amount you can borrow and the lenders willing to approve you.

Lenders may perceive you as a higher-risk borrower if you have a low income. An unexpected bill or rise in the cost of living could stretch your finances and make you more likely to miss a car finance payment.

When looking for car finance on minimum wage, check the total cost of finance and be aware of any deals that seem too good to be true. Responsible lenders should always carry out affordability checks and only offer you a loan they know you’ll be able to repay.

Low income and affordability

Qualifying for car finance with a low income can be easier if you’re realistic about your affordability, the amount you can afford to borrow without impacting your essential expenses.

If you earn minimum wage, take time to work out your budget and determine whether you’ll be able to afford a monthly car finance repayment on top of your other expenses. Keep in mind that this won’t be the only cost associated with owning a car; you’ll also need to pay for fuel, insurance, road tax, repairs, MOT, and services.

The more disposable income you have, the more likely it is that you can afford a car payment.

How can I improve my chances of getting car finance on a low income?

Increasing your income or getting paid above minimum wage isn’t always possible. But there are other steps you can take to improve your chances of getting a low-income car finance loan:

  • Improve your credit score

A good credit score reassures lenders that you’ll make your monthly repayments on time and in full. It could also help you secure a loan with a lower interest rate. If yours could do with some work, registering on the electoral roll, keeping your credit utilisation low, and avoiding making too many finance applications in a short time could all help improve your credit score.

  • Save a larger deposit

While no deposit car finance is available, saving a larger deposit could help improve your loan eligibility if you have a low income. The more money you can put down upfront, the less you’ll need to borrow, and the lower your monthly repayments will likely be.

  • Consider a guarantor or joint car finance loan

A joint or guarantor loan could offer a solution if you struggle to get car finance independently. With a joint loan, you and another person will be equally responsible for the car loan, meaning both monthly incomes will be considered. In contrast, a guarantor loan will remain in your name only, but have a guarantor with a good credit score who is willing to step in and cover your repayments if you can’t.

Published: 26th of November 2023
Updated: 9th of January 2024