While Hippo Motor Finance pride ourselves on offering a niche financing option, specialising in bad credit and zero deposit car financing, one of the most common questions we receive is ‘can I get car finance if I’m unemployed?’
While we believe everyone should have an opportunity to finance a car regardless of their credit history, when it comes to being unemployed, getting finance approval becomes a lot harder.
We work with a diverse panel of lenders that can offer the best deals suitable for a variety of circumstances, but a key criteria is that any finance company will need proof that you can afford to make your monthly repayment for the term of your contract. If you can’t show any form of income then the finance company isn’t likely to approve you as they will assume that you won’t be able to make repayments.
This is due to the Financial Conduct Authority requiring that all lenders assess the financial suitability of any applicants. This is to prove they can pass a threshold to afford repayments and be trusted to make repayments.
How do I get car finance if I’m unemployed?
If you’re unemployed, or not working, and yet have a steady income stream from elsewhere such as rental properties, this is likely to make it easier to get car finance. You will however need to prove that it’s continual income rather than a one off and prove it is taxable income and verifiable.
This is obviously different to doing shift work here and there, or getting undeclared cash in hand for odds jobs. Neither of these will provide enough surety for a finance company to feel confident to offer you a finance agreement.
This may seem unfair but the fact is that if you’re unemployed with no form of income you’re guaranteed to quickly find yourself in financial trouble if you enter into any sort of agreement.
Can I get car finance if I’m unemployed temporarily?
This is a common situation many find themselves in – they’re temporarily unemployed, need the use of a car to get to any future job interviews, and yet might struggle to get approved for car finance. It’s a vicious circle.
If you have a consistent employment history across the long term it might work in your favour depending on the lender and you may be approved but on a higher interest rate than the norm and/or given a smaller amount to borrow.
This is a rarity though, and the fact is most lenders will still refuse you car finance due to the risk involved. This is also why many lenders won’t approve any form of finance if you’re still within the probationary part of your employment.
Can I get car finance if my partner is employed?
Your most likely option for approval for car finance if unemployed is through a guarantor, and even then it’s not a certainty.
A guarantor is essentially nominated to cover the loan and continue payments if you are unable to make them. Their presence will give the lender confidence that payments will be made and reduces the risk of defaulting on the loan.
Lenders may have specific eligibility criteria for who can be nominated as a guarantor, however, in broad strokes, the guarantor must be over 21 with a good credit score and credit history as well as a long-term fixed address on file.
Bare in mind that if you want to nominate your partner as guarantor, they can’t be linked to you financially (IE a joint account) either.
What options are available?
Unfortunately, the reality is that many lenders are likely to refuse you car finance if you’re unemployed unless very specific conditions are met.
The best option of all is to wait. Unemployment will not only reduce your options but any car finance terms offered are likely to be unfavourable. So it makes more sense to ask to borrow a friend or family member’s car in an emergency. Even paying for taxis is going to be a cheaper option than being tied into a long-term car finance agreement with a ludicrous APR.
Short-term sacrifices like this will put you in a stronger position financially when you are back in employment and can successfully apply for car finance on more agreeable terms.
