Car finance on benefits

Can you pay for car finance with benefits?

Yes, you can pay for car finance with benefits, because some lenders count benefit payments as income when reviewing your application. You declare your benefits alongside any other income sources when applying. Our panel lenders assess your total income to determine eligibility.

Specialist lenders accept these benefits as income sources:

• Universal Credit
• Personal Independent Payment (PIP)
• Disability Living Allowance (DLA)
• Carers Allowance
• Child Tax Credit
• Working Tax Credit
• Employment and Support Allowance
• Income Support
• Jobseeker's Allowance
• Pension Credit
• Child maintenance payments
• Housing Benefit
• Child Benefit
• Guardian's Allowance
• Industrial Injuries Disablement Benefit
• Bereavement Support Payment
• Attendance Allowance
• Constant Attendance Allowance
• Armed Forces Independence Allowance
• Reduced Earnings Allowance
• War Widows' Pension

Carplus works with lenders who understand benefit income. We match your circumstances to lenders experienced in approving applications from people claiming benefits. Our soft credit check protects your credit score during the initial assessment.

Can I get bad credit car finance on benefits?

Yes, you can get car finance with both benefits income and bad credit. Specialist lenders assess your affordability rather than focusing solely on your credit score. Your current circumstances matter more than your financial history when determining eligibility.

Carplus works with a large panel of specialist lenders experienced in bad credit car finance with benefits or low income. These lenders understand that benefits count as valid income and review each application individually. Our soft credit check protects your credit score whilst we find suitable lenders for your circumstances.

Request a quote to see which lenders can approve your application. We match you to lenders based on your specific situation, increasing your chances of approval for car finance with bad credit and on benefits.

Types of car finance available on benefits

You can access multiple car finance types for people receiving benefits. Our panel lenders offer flexible agreements suited to different circumstances and budgets. The right option depends on your affordability, deposit availability, and whether you want to own the vehicle outright.

Available finance types:

• Hire Purchase (HP): You make fixed monthly payments over an agreed term, typically 12 to 60 months. The vehicle becomes yours after the final payment. HP suits people on benefits who want straightforward ownership without a large final payment.
• Personal Contract Purchase (PCP): You pay lower monthly payments than HP, with a larger optional final payment to own the vehicle. You can return the car, pay the final amount, or start a new agreement. PCP offers flexibility if your circumstances change.
• Guarantor car finance: A trusted person with good credit guarantees your payments if you cannot pay. This increases approval chances for applicants with poor credit or limited income. The guarantor must understand they become responsible for payments if you default.
• Joint car finance: Two people apply together, combining incomes to improve affordability and approval odds. Both applicants share equal responsibility for monthly payments. Joint applications work well when benefits income alone doesn't meet lending criteria.

Our brokers help you choose the most suitable finance type for your situation. Contact us to discuss which option fits your budget and circumstances best.

What are the criteria for getting car finance for people on benefits?

To apply for car finance while on benefits, you must meet basic lending criteria. We verify these details to match you with specialist lenders from our panel.

Your requirements

• Age 18-75 years old
• UK resident with recent address history
• Full UK driving licence
• Monthly income of £1,000 or above from employment or self-employment
• Provide details of income and regular expenses

Vehicle criteria

• Purchase price £4,000-£40,000
• Maximum 120,000 miles on the odometer
• No older than 14 years at the end of the finance agreement
• Meets lender's valuation and condition standards

How much can I borrow for car finance if I am on benefits?

You can borrow between £3,000 and £50,000 for car finance on benefits through Carplus. Lenders determine your loan amount based on your individual circumstances. Your benefits income, credit score, and monthly budget all influence how much you qualify to borrow when getting car finance.

Our panel lenders assess each application individually. They review your total income from receiving benefits alongside your regular expenses. This affordability assessment ensures your monthly payment fits comfortably within your budget. Adding a deposit can improve chances of approval and increase the amount lenders offer you.

Use our car finance calculator to estimate your monthly payments and total amount payable.

What are the best cars for people on benefits to finance?

Choose affordable, fuel-efficient vehicles with low running costs when applying for car finance on benefits. Smaller cars reduce monthly payments and improve approval chances with lenders. Focus on reliable models with cheap insurance, low road tax, and minimal maintenance costs that fit your budget.

Recommended cars for low income budgets:

• Ford Fiesta – Reliable, affordable insurance, excellent fuel economy, widely available
• Vauxhall Corsa – Low running costs, cheap to insure, good for city driving
• Toyota Yaris – Excellent reliability, low maintenance, strong resale value
• Volkswagen Polo – Practical, fuel-efficient, affordable servicing costs
• Hyundai i10 – Low purchase price, cheap insurance group, economical running
• Kia Picanto – Budget-friendly, 7-year warranty, low road tax
• Peugeot 208 – Stylish, economical engines, reasonable insurance costs
• Nissan Micra – Compact, affordable, low running expenses

Lenders assess affordability based on your total income and expenses. Select vehicles priced between £3,000 and £8,000 to keep monthly repayments manageable on benefits income. Lower-priced cars reduce borrowing amounts, making approval more likely. Use our car finance calculator to estimate monthly payments before choosing your vehicle.

What will affect your eligibility for car finance on benefits?

Several key factors influence your eligibility for car finance on benefits, and understanding these helps you prepare a stronger application.

Factors that affect approval:

• Income from benefits: Lenders assess your total income, including benefit payments. Lower income may limit your borrowing amount or require a deposit to strengthen your application.
• Credit score: Your credit history determines your interest rate and approval odds. A poor credit score typically results in higher rates but doesn't automatically disqualify you. Read more about what credit score you need to buy a car.
• Employment status: Some lenders prefer full-time employment alongside benefits income. Other specialist lenders focus solely on affordability, regardless of employment. Read more about unemployment car finance in our guide.
• Monthly expenses: Lenders review your debts and regular outgoings. High expenses relative to income reduce the amount you can afford to borrow.
• Payment history: Missed payments or late repayments on existing credit agreements impact your eligibility. Lenders view consistent payment records favourably.
• County Court Judgements (CCJs): A CCJ affects your application but doesn't always prevent approval. We review each case individually based on your current circumstances.

Factors that prevent approval:

• Active IVA: We cannot approve applications with an active individual voluntary agreement. Settled IVAs don't affect your eligibility. Read more about car finance on IVA in our guide.
• Current bankruptcy: We cannot process applications during active bankruptcy. Discharged bankruptcy doesn't prevent you from applying. Read more about car finance after bankruptcy in our guide.

Contact us to discuss your specific situation. Our experienced brokers find solutions matched to your circumstances and connect you with suitable lenders from our panel.

How to get car finance on benefits?

Getting car finance on benefits follows a simple three-step process. Our streamlined application makes it easy for people on low income to secure affordable car finance.

Step 1: Get your instant quote

Complete our online application form in minutes. We perform a soft credit check that protects your credit score whilst assessing your eligibility. Your instant quote displays your approved amount, estimated monthly payments, representative APR, and total amount payable. Include all income sources when applying for car finance, including benefit payments.

Step 2: Choose your repayment terms

Select your preferred loan term between 12 and 60 months. Adjust your deposit amount to lower your monthly payments if needed. Longer terms reduce monthly costs but increase the total amount payable. Our system confirms your choice immediately via text and email with your personalised agreement details and next steps.

Step 3: Submit documents and collect your vehicle

Review your finance agreement terms carefully before signing. Submit your required documents: valid driving licence, proof of income (benefit statements or bank statements), and proof of address. Our lenders pay the dealership directly once you sign. You can then collect your vehicle or arrange delivery.