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Car finance ›
What is approved in principle for car finance?
Updated: Monday, 4 March 2024
When applying for finance products such as car finance, one of the terms you might come across is ‘approved in principle’.
Being approved in principle means that you’ve passed the initial checks, and a lender has indicated that you may be eligible, but they need additional information to support your application.
In this guide, we explore the difference between being approved in principle and being approved. Find out what documents you might need when applying for car finance with our separate guide.
Approved in principle defined
Sometimes called provisional approval, being approved in principle is an acknowledgement from a car finance provider that you could be approved based on the information they have seen.
This is typically the result of a soft credit check, which looks at the following information:
- Personal details, e.g. your name, address, and date of birth
- Your current financial situation, e.g. bank accounts, loans, credit cards, and outstanding debts
- Your credit history, including any missed or late payments
- Details of people you’re financially linked to, e.g. spouses or partners with whom you have entered joint credit agreements
- Public records on County Court Judgments, bankruptcies, and Individual Voluntary Agreements over the last 6 years
Essentially, this is the information you can view yourself when you check your credit rating. If the soft credit check indicates that you can repay, you will be initially accepted or approved in principle for the credit agreement.
The difference between approved in principle and approved
As we have established, being approved in principle for car finance means that you should be eligible, but further information may be needed to confirm that.
By contrast, if you are approved for car finance, you can start looking for cars with confidence that you have secured the finance you need.
If you are approved in principle, the car finance lender will typically carry out an affordability check. If you’re approved in principle with us, one of our friendly Direct Sales agents will help guide you through the process. You’ll usually need to provide a few documents so we can confirm that any finance we offer is affordable and suitable for you.
What is the approval process when applying for car finance?
The approval process for car finance varies from company to company, so it’s best to check with the specific provider about their process.
Our car finance application process is as follows:
1. Applying for a quote
When you get a quote, we conduct a soft credit check, and we’ll be able to give you an instant decision as to whether you’re declined, approved, or approved in principle.
2. Approval
Once approved, it’s time to find your new vehicle. At the end of your application, you can browse vehicles within your budget on our vehicle finder in partnership with Exchange & Mart.
If you can’t find what you’re looking for, one of our friendly Direct Sales agents will be able to help. If you already have one in mind, remember to check that it meets our lending criteria.
3. Submitting proof of identity
Whether approved or approved in principle, you must provide proof of identity. Typically, this will be a copy of your driving licence, but it may be something else if this is unavailable.
4. Affordability checks
If you have been approved in principle, we’ll need more information before approving your application. We will run an affordability check to ensure finance is affordable and suitable for your circumstances.
5. Signing the contract
Now you’re happy with the vehicle you’ve chosen, we’ll provide you with a quote and the proposed monthly payments and prepare the contract. At this stage of the process, we’ll do a hard credit check. We wait until this time to do the credit check because we want you to be confident you’ve found a car you like and that you are happy to enter into an agreement with us.
6. Payment and collection
Once the contract is signed, we’ll transfer the funds to the car dealer, and you can pick up your new vehicle.
What happens if you don't get approved in principle?
If you’re not approved or approved in principle for car finance, don’t worry. It doesn’t mean that it’s impossible for you to get car finance. It just means that there are some things you might need to do to increase your chances of being approved.
How to increase your chances of being approved
There are a few things you can do that may improve your chances of being approved for a car finance agreement. Nothing can guarantee that your car finance will be approved, but some things that may help include:
When applying for finance products such as car finance, one of the terms you might come across is ‘approved in principle’.
Being approved in principle means that you’ve passed the initial checks, and a lender has indicated that you may be eligible, but they need additional information to support your application.
In this guide, we explore the difference between being approved in principle and being approved. Find out what documents you might need when applying for car finance with our separate guide.
Approved in principle defined
Sometimes called provisional approval, being approved in principle is an acknowledgement from a car finance provider that you could be approved based on the information they have seen.
This is typically the result of a soft credit check, which looks at the following information:
- Personal details, e.g. your name, address, and date of birth
- Your current financial situation, e.g. bank accounts, loans, credit cards, and outstanding debts
- Your credit history, including any missed or late payments
- Details of people you’re financially linked to, e.g. spouses or partners with whom you have entered joint credit agreements
- Public records on County Court Judgments, bankruptcies, and Individual Voluntary Agreements over the last 6 years
Essentially, this is the information you can view yourself when you check your credit rating. If the soft credit check indicates that you can repay, you will be initially accepted or approved in principle for the credit agreement.
The difference between approved in principle and approved
As we have established, being approved in principle for car finance means that you should be eligible, but further information may be needed to confirm that.
By contrast, if you are approved for car finance, you can start looking for cars with confidence that you have secured the finance you need.
If you are approved in principle, the car finance lender will typically carry out an affordability check. If you’re approved in principle with us, one of our friendly Direct Sales agents will help guide you through the process. You’ll usually need to provide a few documents so we can confirm that any finance we offer is affordable and suitable for you.
What is the approval process when applying for car finance?
The approval process for car finance varies from company to company, so it’s best to check with the specific provider about their process.
Our car finance application process is as follows:
1. Applying for a quote
When you get a quote, we conduct a soft credit check, and we’ll be able to give you an instant decision as to whether you’re declined, approved, or approved in principle.
2. Approval
Once approved, it’s time to find your new vehicle. At the end of your application, you can browse vehicles within your budget on our vehicle finder in partnership with Exchange & Mart.
If you can’t find what you’re looking for, one of our friendly Direct Sales agents will be able to help. If you already have one in mind, remember to check that it meets our lending criteria.
3. Submitting proof of identity
Whether approved or approved in principle, you must provide proof of identity. Typically, this will be a copy of your driving licence, but it may be something else if this is unavailable.
4. Affordability checks
If you have been approved in principle, we’ll need more information before approving your application. We will run an affordability check to ensure finance is affordable and suitable for your circumstances.
5. Signing the contract
Now you’re happy with the vehicle you’ve chosen, we’ll provide you with a quote and the proposed monthly payments and prepare the contract. At this stage of the process, we’ll do a hard credit check. We wait until this time to do the credit check because we want you to be confident you’ve found a car you like and that you are happy to enter into an agreement with us.
6. Payment and collection
Once the contract is signed, we’ll transfer the funds to the car dealer, and you can pick up your new vehicle.
What happens if you don't get approved in principle?
If you’re not approved or approved in principle for car finance, don’t worry. It doesn’t mean that it’s impossible for you to get car finance. It just means that there are some things you might need to do to increase your chances of being approved.
How to increase your chances of being approved
There are a few things you can do that may improve your chances of being approved for a car finance agreement. Nothing can guarantee that your car finance will be approved, but some things that may help include:
Increase your deposit amount
Offering a larger deposit can help improve your chances of being accepted because the finance company will have to loan you less money. However, it is still possible to get car finance with a bad credit history and no deposit.
Apply for a smaller amount
Similar to increasing your deposit, applying for a smaller amount of money reduces the risk associated with your application. Additionally, it can be repaid quickly or in smaller, more manageable monthly payments.
Work on your credit score
Finally, improving your credit score can help you appear more favourably when finance companies review your credit report, increasing your chances of being approved.
Increase your deposit amount
Offering a larger deposit can help improve your chances of being accepted because the finance company will have to loan you less money. However, it is still possible to get car finance with a bad credit history and no deposit.
Apply for a smaller amount
Similar to increasing your deposit, applying for a smaller amount of money reduces the risk associated with your application. Additionally, it can be repaid quickly or in smaller, more manageable monthly payments.
Work on your credit score
Finally, improving your credit score can help you appear more favourably when finance companies review your credit report, increasing your chances of being approved.
Car finance from Moneybarn
At Moneybarn, we specialise in bad credit car finance, so if you have a poor credit history or have been previously been refused car finance, we could help.
We’re one of the UK’s largest car finance providers for people with bad credit. We’ve over 30 years of experience, so if you’ve experienced bankruptcy, have a County Court Judgment, are looking for car finance while receiving benefits, or anything else, use our car finance calculator to see what your agreement could look like.
Car finance from Moneybarn
At Moneybarn, we specialise in bad credit car finance, so if you have a poor credit history or have been previously been refused car finance, we could help.
We’re one of the UK’s largest car finance providers for people with bad credit. We’ve over 30 years of experience, so if you’ve experienced bankruptcy, have a County Court Judgment, are looking for car finance while receiving benefits, or anything else, use our car finance calculator to see what your agreement could look like.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
