Can you get car finance if you're retired?

Retirement, for many people, means the beginning of a new chapter. The chapter for spending time with family and friends, for finally reading all those books patiently gathering dust on the bookshelf, and a time to take the little trips you’ve always wanted to make. For some, it often means buying that dream car you’ve had your eye on for a long time, and why not? You’ve earned it.

The key to a full and independent retirement is mobility – and a car is the forefront of this. However, retirement traditionally comes hand-in-hand with a drop in income. This means not everyone will be in the position to purchase a car outright. And, so, the question we often get asked is can you get car finance if you’re retired?

Can a retired person get car finance?

The simple answer is yes. You can get car finance after retirement. Car finance can still be a viable option for those looking to secure a car when you are no longer actively employed.

As someone in retirement, you do have the option of borrowing money, should your credit status, income, and outgoings prove to be in good order.

Although many people may think of retired people as individuals without income, this is not technically true. Income can be in the form of a pension, or interest on savings. Rental income from a property could also be considered a source of income by lenders.

What to look out for when applying for car finance after retirement?

There are many factors that need to be understood, as well as kept in mind when applying for car finance after retirement. Lenders will always consider the following when deciding whether to approve car finance for an individual or not.

Whether you’re employed

It’s a common misconception that you must be fully employed to even be considered for car finance by lenders.

Although it’s true that lenders do consider an individual’s employment status, what is most important to them is proof of a consistent income. It doesn’t matter if this income is the result of day-to-day employment, a private pension, or a rental income from a property - they simply want to know you can afford the monthly payments.

How old you are

In the UK, you can apply for car finance if you are at least 18 years old. As someone in retirement, you should have no problem ticking this box. Different lenders do however, have their own criteria when it comes to approving loans, including a possible maximum age limit. So, can pensioners get car finance?

The chances are, if you can afford the payments for the duration of the agreement, you stand a very good chance of being approved for car finance, even if you’re a senior citizen.

It is however, a good idea to check if you’re eligible for finance before applying for it.

Wave Motor Group is committed to helping everyone find the most affordable and convenient car finance or leasing option to suit their individual financial circumstances. Take advantage of our soft credit search that provides instant decisions, without affecting your credit score.

Your credit history

Your credit history is another important consideration for lenders. It provides potential financiers with a clear understanding of the way in which you’ve handled your finances in the past, and if you’re a safe bet when it comes to lending you money.

If you have a history of managing your income well, your credit score should be high. If, on the other hand, you’ve previously mismanaged your finances, your credit score will reflect this, and it’ll could be more challenging to secure finance from lenders.

Affordability

When it comes to car finance for the retired, what’s most important to lenders is that you receive a consistent source of income. Whether or not you’re in full time employment is secondary to this.

As previously mentioned, during retirement, it’s still possible to have several different sources of income including interest on savings, a private and/or a state pension, investments, casual/part-time work, rental income, etcetera.

In order to ascertain how much you can afford to spend on monthly car finance payments, the lender will be assessing what your total income is, minus your outgoings. These outgoings can include your mortgage payments, food bills, utility bills, loan repayments, and other relevant expenses. This will enable them to calculate your disposable income.

Tips for getting finance if you’re retired

Wave Motor Group would like to help all of you looking to secure car finance during retirement. There’re several actions you can take to increase your chances of being approved. Below are some of the most effective ways you can strengthen your application:

Try and pay any outstanding debts

When asking if you can get car finance if you’re retired, the answer will be affected by the state of your finances. A great way to improve your credit score - thereby increasing your chances of approval – is to pay any outstanding debts.

If you’re serious about receiving finance for a car, you should cut back on unnecessary expenses. Consider getting rid of any direct debits and/or loans that could easily be cancelled or paid off. This won’t only free up your credit options, but will strengthen your case in the eyes of lenders.

When taking this approach, the chances are that you’ll end up securing a better finance deal – one that allows you to get your hands on the car you really want, as opposed to selecting one based solely on its affordability.

If you have other loans however, this is not a deal breaker for financiers. In fact, if you have consistently made all repayments, and on time, it could prove to lenders that you’re a safe bet.

Weigh up your current income

When applying for car finance, it’s hugely important to fully understand the state of your finances, as well as your total income.

When fully employed, the chances are your income is coming from one primary source, namely your salary. As previously mentioned, people who properly prepare for retirement, may receive several streams of income, including interest on savings, a private and/or a state pension, return on investments, casual/part-time work, rental income, etcetera.

Make sure to collect all the relevant information on your earnings, including bank statements, so you can accurately calculate your total income before applying for car finance. This’ll help prove to lenders that you receive a consistent income, and that you’re capable of financing a loan over a prolonged period.

Apply for a secured loan

Applying for a secured loan, directly linked to the car you’re buying, is a better option than applying for an unsecured loan. This is because financiers know that if you were to stop making the agreed upon payments, they can simply take possession of the vehicle and recover all their costs. This means you have a safety net should your financial situation change at any time.

Pay a deposit

If possible, it’s a great idea to put down a deposit on the car you’re wanting. By doing this, you’ll not only need to borrow less from a lender, but your monthly payments will be reduced - as will the risk you pose in the eyes of potential financiers. This means they’re far more likely to approve you for car finance in the first place.

Putting down a deposit could greatly assist you in getting the car you’d like, at an affordable monthly rate. Not paying a deposit – depending on your financial situation – could mean a higher monthly rate, one that lenders think is too high for your income. This in turn could lead to an outright rejection for car finance.

Opt for a used car

If buying a new car is going to place unnecessary strain on your finances, it’s worth considering a used car. In this way, the cost will be considerably less, also making it more likely for you to be approved for car finance. Even newer used cars with a lower mileage will mean saving a lot of money, compared to buying a brand-new one.

In the UK, a car that is only one- or even two-years old, could in many cases, save you anywhere from £5,000 - £10,000 on the list price. This in turn could reduce your monthly payments by hundreds of pounds.

Wave Motor Group would like to help you find the used car of your retirement dreams. All Wave Motor Group’s cars have undergone a thorough 124-point check, meaning you’ll always receive a quality car, that’s right for you.

Should I buy or lease a car if I’m retired?

Whether you should buy or lease a car when retired largely depends on your personal circumstances, finances, and priorities. Some people may feel that it’s worth spending the extra money buying a car, and have the money to do so. Others may feel they’d rather keep the money for something else, and choose to lease a car instead. Whatever your decision, it’s important to carefully weigh up the pros and cons, and to accurately appraise your financial situation.

How can Wave Motor Group help?

Wave Motor Group is committed to helping everyone find the most affordable and convenient car leasing option for their financial circumstances. Take advantage of our soft credit search that provide instant decisions, without affecting your credit score.

With our large range of approved used cars, we are committed to finding the right car for your leasing or buying needs.

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