When you get rejected for finance, people always assume that its due to poor credit history. However, there are a few reasons why you may be declined. One reason you may have been declined for finance is due to your employment status.

Your employment status can affect your affordability and job stability. But how can you get approved for finance with different types of employment status? Let’s find out.

Why does employment status matter?

Lenders usually look at your employment status to work out your affordability. If you are in full time employment with a good, steady income it is mor favourable for lenders. This is because you have proof that you could afford to pay back your car loan. Your employment status can also affect the amount of loan offered. This is because having a variable or low income can reduce how much you can afford to pay for finance. A bad credit auto loan is not out of the question though.


Unfortunately, being unemployed and applying for car finance can seriously affect your chances of getting accepted for a car loan. This is due to no income to show that you can pay your finance back. There could be options for you with some finance lenders if you have additional income. But it is recommended that you have some form of income when applying for finance

Benefit income

Being in receipt of benefits doesn’t have to hold you back when it comes to car finance. Regular benefit income can be used a credible source to prove your affordability. Getting approved for benefit car finance isn’t as hard as it sounds. Many lenders accept benefit income such as carers allowance, disability allowance, universal credit, personal independent payment and more. You can also get car finance when just in receipt of benefits or being employed and receiving benefits on top.


Being retired is like being unemployed in the eyes of lenders as you have no steady income. However, receiving a pension and having a good credit file can help you to get approved. It’s also noting that some lenders won’t finance people up to a certain age. You should also check the length of your credit agreement as some finance providers will require the agreement holder to not be over a certain age at the end of the agreement.

Self employed

Being self-employed has a whole range of benefits but having a varied income or cash in hand can affect your chances of getting car finance. If you receive cash in hand, it is recommended that you pay your wages in a UK bank account as and when you can to prove your affordability. Driving jobs that are on a self-employed basis such as taxi drivers or delivery drivers require a high mileage. Car finance for taxi drivers may be more suited to agreements such as hire purchase as they don’t require mileage limitations.

How to increase your chances of getting approved?

Save up for a deposit

If your employment status is letting you down, you could consider having a deposit for car finance. Even saving up for a few months before you apply for finance can help you geta approved. Lenders like applicants who have a deposit because it reduces how much they need to lend out. It can also help to reduce your monthly payments so you can save money in the long run.

Improve your credit score

Having a good score is favourable to finance lenders. Many lenders will run a soft search credit check on your credit score before they decide whether to accept you for finance.

This is because they want to know if you have a good history of making payments on time and if you can be trusted to pay back their loan. You can help to repair your credit score by making payments on time and in full, reducing any existing debt, keep credit usages low and fixing any mistakes on your credit file.


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