How car finance works


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Get a no deposit car finance approved without affecting your credit score.


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Choose any car from any reputable dealer and we will finance it for you.


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Collect or get the car delivered to you with a 14 day return guarantee.

Car finance calculator for bad credit

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Amount to borrow:
To repay over:
5 Years
Car finance rate XX% APR
Cost of credit £ XXX
Total repayment £ XX,XX.XX
48 monthly payments of
£ 245 /mo

Representative example - Borrowing £5,500 over 4 years with a representative APR of 19.8%, and a deposit of £0, the amount payable would be £162 per month, with a total cost of credit of £2,282 and a total amount payable of £7,782.

Carplus will find the best car loan rate from our panel of lenders and will offer you the best possible deal. We don’t charge fees, but we earn a commission. This does not influence the APR you’re offered in any way.

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As many as 20 million people are claiming some kind of welfare benefits in the UK, with 6.8 million being of working age. That’s a huge amount of people, and there’s a lot of confusion surrounding whether it’s possible to secure car finance on benefits. Much of the confusion stems from a misunderstanding of what it means to receive welfare benefits and what it implies about a person’s financial situation. In fact, there are many different types of benefits, so it’s far too sweeping to assume that nobody who receives them can secure car finance. Securing car finance is entirely possible while on benefits, it may just be a little more difficult. Here’s our guide to car finance for people on benefits.

Circumstances surrounding welfare benefits

Before we discuss car finance specifically, it’s important to clarify some different types of welfare benefits and the circumstances in which a person may find themselves in order to require them.


There are a number of circumstances you may find yourself in which have little to do with your ability to repay a loan, but you are nonetheless receiving benefits. For example, if you’re suffering from a temporary illness which is making it difficult or impossible for you to work, you may be eligible for a Disability Living Allowance (DLA) or Personal Independence Payment (PIP). Receiving this type of welfare benefits should not prevent you from buying a car on finance for you to drive once you’re well again, and so you will not be ruled out solely on this basis. Similarly, certain disabilities may render you eligible for these benefits while still able to drive, so we think it’s unfair to be discriminated against in this fashion.

Those who act as carers for people with long-term health conditions will often be eligible for receiving a carer’s allowance. We feel that this should not prevent them from being able to buy a car on finance. As such, people receiving this type of benefit may still apply and will be considered for car finance.


Another common type of welfare benefits people receive is Child Tax Credit (which is being replaced by Universal Credit). Many parents with children of a certain age are eligible to receive financial aid. Parents who do will not be discounted from receiving car finance on these grounds. There are many more considerations which are taken into account by lenders when they assess a person’s loan application, and receiving child support is highly unlikely to cause lenders to refuse you.

Improve your chances

While it’s possible to be accepted for car finance while receiving the aforementioned types of benefits, it’s by no means guaranteed. There are a number of steps you can take to improve your chances. The best thing to do is work on improving your credit score since this is the key metric which prospective lenders will use to assess how much of a credit risk you pose. The higher your credit score, the less of a risk you seem.

The first thing you should do is join the electoral roll (which is easy to do online in just five minutes). Not only does this suggest that you are an active citizen, participating in democracy; it also verifies your identity and details in the eyes of the authorities. Not being on the electoral register will can’t doubt in the minds of lenders and significantly harm your credit score.

Another, more long-term, strategy for improving your credit score is to take out a credit card and establish a record of you paying back loans on time. Having a credit card and paying it off regularly each month will effectively build up a portfolio of evidence proving that you pose a low credit risk and are fiscally responsible. This will boost your credit score and your esteem in the eyes of lenders.

While car finance is one of the most affordable and manageable ways to buy a car, it’s important to carefully consider whether buying a car at this stage is feasible for you. Above the monthly finance costs, you’ll also need to pay for tax, insurance, fuel, and maintenance. If you’re in a position where you’re relying on welfare benefits to make ends meet, it may be a better idea to delay the purchasing of your new car until you’re “back on your feet” and in a more stable financial situation.

If you receive welfare benefits and are considering buying a car on finance, get in touch with us. We’re more than happy to answer all of your questions. Alternatively, start the process immediately by filling in our simple online application form. Shortly after doing so, one of our team will be in touch to discuss your options.

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