How do you get a car loan?

To get a car loan, you’ll need to take out a personal loan with a lender. Following that, you’ll need to then choose a car and find a seller to sort things out with.

Your first step is to check your credit score when you’re looking to apply for a car loan is to check your credit score as this can affect what you may receive from lenders, credit history, your budget and income.

Borrowing money for your car is going to cost you more - another option if you can wait to get your car is to start saving towards it. Even if you've not saved before, our guide will help you get started. See our guide How to set a savings goal.

You could consider getting a personal loan or a 0% credit card where possible to cover the cost of a car.

It’s important to pick the right finance options for your circumstances, so check out the other options such as leasing, Hire Purchase (HP), Personal Contract Hire (PCH), and Personal Contract Purchase (PCP). For more information, see our other guide section to Understand your payment options.

You should check your credit report and score before borrowing.  

There are three companies (credit reference agencies) that hold your credit file, so it’s best to check them all.

Here's how to check your credit reports for free:

• TransUnion – register for a MoneySavingExpert Credit ClubOpens in a new window account  

• Equifax – register for a ClearScoreOpens in a new window account 

• Experian – request an Experian Statutory Credit ReportOpens in a new window

If you’re worried about your credit score, see our guide How to improve your credit score.

You’ll need to work out your budget before you start thinking about buying a car. Having a budget means you’ll know exactly what you can afford. For more help, see our other guide section on Start with your budget.

Using our Budget planner to work out what you can afford will give you an idea of which deals will work for you.

Our guide Costs of buying and running a car goes into more detail on all of these costs, and explains how different cars tend to affect each one.

It’s also sensible to have savings ready for any unexpected costs. There’s more information about how much to save in our guide Emergency savings – how much is enough?

Being pre-approved usually means a lender has done a more in-depth review of your details and is very likely to approve your credit application, provided that you pass the final checks.

To find out more help relating to this, see our other guide section on How to get the best personal loan deal.

There are many car deals out there, and it can be confusing to work out the best option for you. See our other guide section on How to get the best personal loan deal for your circumstances.

Our guide How to buy a car will help you consider all your financial options.  

The right option for you depends on your own circumstances, so you’ll need to think about your own money situation.

It’s worth doing your research to note what you’ll need to consider before making a decision.

Like any form of borrowing, taking out car finance can significantly impact your credit rating in a positive or negative way.

For example, if you miss or default on payments, your credit report could be negatively affected with reported missed payments and your car could be repossessed.

See more in our other guide section on the pros and cons of personal loans.

Paying your car loan instalments on time is important as it demonstrates to the lender that you’re responsible and can manage your finances properly.

However, things can happen which can lead to a missed payment.

It’s always best to contact your lender first if you’re struggling and likely to miss a payment.  

Missing a payment will hurt your credit score. It’s best to try and avoid this by talking to your lender ahead of time, as they might be able to work something out with you. Talking to your creditor could be an option.