Can You Get a Car Loan After Falling Into Arrears?
Yes, but having arrears on a previous car loan can make it harder to get approved for new finance. Lenders check your credit history to see if you have a history of late or missed payments.
Car loan arrears can:
❌ Lower your credit score
❌ Make lenders see you as a high-risk borrower
❌ Lead to higher interest rates if approved
❌ Cause lenders to decline your loan application
However, you can still qualify for car finance by taking steps to repair your credit and prove financial stability.
🔍 How Lenders Assess Applicants with Past Car Loan Arrears
| Factor | Why It Affects Approval | How to Improve Chances |
|---|---|---|
| 📉 Credit Score | Late or missed payments lower your credit score. | Make on-time payments moving forward to rebuild your score. |
| 💳 Repayment History | A history of arrears signals financial instability. | Show at least six months of consistent repayments. |
| 🚗 Outstanding Debt | Unpaid arrears can prevent loan approval. | Pay off any remaining overdue amounts. |
| 🏦 Interest Rates | Lenders may charge higher rates to offset risk. | Work with a finance broker to find competitive lenders. |
✅ Steps to Improve Car Loan Approval Chances After Arrears
If you had arrears on a past car loan, follow these steps to increase your approval chances:
1️⃣ Check Your Credit Report – Get a free credit report from Equifax, Experian, or illion to confirm if arrears are still recorded.
2️⃣ Settle Any Outstanding Debts – If you still owe money on a past loan, pay off the arrears before applying for new finance.
3️⃣ Make Consistent On-Time Payments – Show lenders you’ve improved your financial habits by maintaining a strong payment history.
4️⃣ Save for a Larger Deposit – A bigger deposit reduces lender risk and increases approval chances.
5️⃣ Apply for a Lower Loan Amount – A smaller loan is easier to get approved for, even if you have past arrears.
6️⃣ Wait Before Reapplying – If your arrears were recent, waiting 6–12 months before applying can improve your chances.
7️⃣ Use a Finance Broker – Brokers can help find lenders who approve applicants with past arrears.
🚨 What If Your Car Loan Application Is Declined Due to Past Arrears?
If your car finance application is rejected due to previous arrears, try these solutions:
✅ Work on Your Credit Score – Pay off credit card balances and other debts to improve your financial profile.
✅ Find a Specialist Lender – Some lenders specialize in car loans for applicants with a history of arrears.
✅ Consider a Guarantor Loan – A co-signer with strong credit can support your application.
✅ Opt for a More Affordable Car – A cheaper car means a smaller loan, which increases approval chances.
✅ Consult a Finance Broker – Brokers help match you with the right lenders based on your financial history.
🚀 How a Finance Broker Can Help You Get Car Finance After Arrears
A finance broker can assist applicants with past car loan arrears by:
✅ Finding Lenders That Accept Past Arrears – Some lenders are more flexible with previous late payments.
✅ Helping You Strengthen Your Loan Application – Brokers structure your application to show financial recovery.
✅ Negotiating Better Loan Terms – Brokers help secure lower interest rates and flexible repayment options.
🔑 Final Thoughts
Past car loan arrears can make it harder to get approved for new finance, but they don’t have to stop you. By rebuilding your credit, paying off outstanding debts, and working with a finance broker, you can increase your chances of securing a new car loan.
🚗 Need car finance but have a history of arrears? Get expert help today to find the best loan option!
DISCLAIMER
The information provided on this website is general in nature only and has been prepared without considering your financial needs, circumstances and objectives and should NOT be construed as financial, taxation or legal advice. For more information, get in touch with our experienced partner brokers today.
