Access to a reliable vehicle is often essential for managing daily responsibilities from attending medical appointments to commuting to work or caring for family.
For people receiving state benefits in the UK, securing car finance can feel challenging due to strict eligibility criteria or credit concerns.
However, a growing number of lenders are offering tailored solutions designed specifically for individuals on various types of benefits.
This guide explores the best car finance options available for people on benefits in the UK, including top lenders, eligibility requirements, and practical tips for improving approval chances.
What is the Car Finance for People on Benefits in the UK?
Car finance allows individuals to spread the cost of a vehicle over an agreed term, typically through monthly instalments.
There are various forms of car finance available in the UK, including Hire Purchase (HP), Personal Contract Purchase (PCP), and leasing agreements.
For people on benefits, accessing car finance is possible, though the process may differ slightly from standard applications.
Specialist lenders take a broader view of affordability, factoring in benefit income such as Universal Credit, Disability Living Allowance (DLA), or Personal Independence Payment (PIP).
This inclusive approach means that individuals who are unemployed or unable to work due to a disability may still be eligible.
Finance providers that cater to this demographic focus on responsible lending, conducting affordability assessments to ensure repayments are manageable.
Credit scores remain a consideration but are often balanced against the applicant’s wider financial situation.
What Are the Common Challenges Faced by Benefit Claimants in Securing Car Finance?
People on benefits may face unique obstacles when applying for car finance. Traditional banks and lenders often use rigid assessment criteria that do not always account for non-traditional income sources.
Common challenges include:
- Low or poor credit scores due to missed payments, defaults, or limited credit history
- Difficulty providing proof of regular income, especially when payments are split between multiple benefits
- High deposit requirements which may not be feasible for low-income households
- Limited choice of lenders willing to approve benefit-only applications
These issues, however, can often be mitigated by choosing the right specialist lender and providing comprehensive supporting documents during the application process.
What Are the Eligibility Criteria for Car Finance While on Benefits?
Each lender sets its own eligibility criteria, but most specialist finance companies share several key requirements. It’s essential to understand what’s typically expected before applying.
The following criteria are commonly considered:
- Age: Applicants must usually be at least 18 years old
- Residency: Must be a UK resident with proof of address
- Income: Regular income from state benefits such as Universal Credit, PIP, or DLA is usually accepted
- Affordability: Lenders carry out affordability checks based on total monthly income and expenditure
- Identification: A valid form of ID and proof of income is required
Some lenders also consider additional income from part-time work, pensions, or spousal income when assessing eligibility. The focus is on the applicant’s ability to make monthly repayments rather than their employment status alone.
Top Car Finance Companies for People on Benefits in the UK
Several car finance providers in the UK offer tailored services for benefit claimants. These companies assess each applicant based on affordability rather than just credit score or employment status.
The five most notable providers in this space include Go Car Credit, Stoneacre, Moneybarn, Carplus, and We Finance Any Car.
1. Go Car Credit
Go Car Credit is a specialist direct lender providing car finance for people on benefits, including those with poor credit histories.
Unlike many traditional finance providers, they include benefits such as PIP, DLA, Universal Credit, and Carer’s Allowance when assessing an applicant’s income.
Their approach is inclusive and focuses on overall affordability, not just employment status or a high credit score.
They offer conditional sale agreements, with Representative APR starting from 24%, and a typical 36.1% APR. No deposit is required, making it accessible for applicants without upfront funds.
Additionally, they offer a straightforward online application with an application tracker and finance calculator.
Applicants with CCJs, IVAs, or even a history of arrears can be considered, and the company accepts self-employed individuals and the unemployed if they receive qualifying benefits.
Go Car Credit stands out due to their manual underwriting process. Unlike automated systems, real people assess each case individually. This means applications are not judged solely by credit scores, offering more opportunity to those with complex financial circumstances.
They also provide access to a network of approved dealerships across the UK, so applicants can choose from a wide range of quality used vehicles. Once finance is approved, the paperwork is completed online with an e-signature, ensuring a hassle-free process.
Key benefits:
- No deposit options with flexible terms
- Accepts a wide range of state benefits and poor credit histories
Representative Example from Go Car Credit
| Loan Amount | Term | Monthly Payment | Interest | Total Payable | Representative APR |
| £10,000 | 60 months | £323.67 (59x), £333.47 (final) | £9,430 (incl. fees) | £19,430 | 36.1% |
2. Stoneacre
Stoneacre is both a dealership and car finance provider offering tailored car finance for people on benefits. They work with a panel of flexible lenders who consider benefit income when assessing eligibility.
Their finance products include Hire Purchase (HP) and Personal Contract Purchase (PCP), with offers tailored to each applicant’s circumstances.
At Stoneacre, state benefits like Universal Credit, DLA, PIP, Housing Benefit, and Carer’s Allowance are accepted as forms of income.
Their pre-approval process allows applicants to check their eligibility online without affecting their credit score. This can be particularly useful for people unsure about their creditworthiness or financial history.
Stoneacre’s in-house finance team considers more than just a credit rating. Instead, they look at the applicant’s overall affordability and regular income, which gives more people a chance to get approved, even if they are on a low income or benefits.
The company also supports people with poor credit histories, including those with CCJs, IVAs, or previous bankruptcies. They advise applicants to improve their chances by putting down a deposit, paying off existing debts, and building their credit where possible.
Tips to improve approval chances:
- Use a deposit or part exchange vehicle to lower monthly costs
- Reduce existing credit balances before applying
Representative Example from Stoneacre
| Cash Price | Deposit | Term | Monthly Payment | Interest Rate | Total Payable | Representative APR |
| £19,121.93 | £1,266.23 | 48 months | £323.72 | 6.46% fixed | £25,715.36 | 11.36% |
3. Moneybarn
Moneybarn is one of the UK’s leading specialist lenders for individuals with poor credit, including those seeking car finance for people on benefits.
Their Conditional Sale agreements allow customers to pay monthly over 36 to 60 months, with ownership of the vehicle transferring at the end of the agreement.
To be eligible, applicants must have a minimum monthly income of £1,000 after tax, which can come from a combination of employment, pensions, or benefits.
They accept Disability Living Allowance (DLA) and Carer’s Allowance as primary sources of income. Additional income like Universal Credit, Tax Credits, or Child Benefit can be included to meet the minimum requirement.
Moneybarn assesses each application based on affordability and credit history. They support applicants with CCJs, IVAs, and even discharged bankruptcies. Their finance is designed for real-world circumstances, offering transparent terms with no late payment penalties.
Cars financed through Moneybarn must meet certain criteria, including being priced between £4,000 and £35,000, having fewer than 120,000 miles, and being no more than 15 years old at the end of the agreement. This ensures quality standards while keeping financing realistic and affordable.
Why choose Moneybarn:
- Accepts benefits as primary or supporting income
- No mileage limits and no hidden fees
Moneybarn Example Finance Calculation
| Vehicle Price | Term | Monthly Payment | Total to Repay | Required Income | Representative APR |
| £10,500 | 50 months | £356.30 | £17,458.70 | £1,000/month (after tax) | 30.7% |
4. Carplus
Carplus is a credit broker that partners with a panel of lenders offering car finance for people on benefits. With rates starting from 9.9% APR, the company provides both Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements.
Applicants can borrow between £3,000 and £50,000 with no deposit required, and their car can be purchased from any UK dealership, offering significant flexibility.
The application process is entirely online, with soft credit checks that won’t impact your credit score at the quotation stage. Carplus aims to simplify access to car finance by considering a variety of income sources, including benefits such as PIP, DLA, Carer’s Allowance, Working and Child Tax Credits, and Universal Credit. The soft-check approach increases approval chances for people with bad credit or irregular income streams.
Carplus works with over 10 specialist lenders, allowing them to tailor finance solutions to applicants with different financial backgrounds.
Even those with CCJs, a discharged IVA, or past financial difficulties can apply. However, customers currently in an IVA or active bankruptcy are not eligible.
What sets Carplus apart is its emphasis on customer choice, transparency, and no-pressure approvals. After submitting an online application, applicants receive a personalised quote and can adjust loan terms based on budget and repayment capacity.
Highlights:
- No deposit required with soft credit checks
- Accepts wide range of benefits and offers flexible finance options
Example Monthly Repayments via Carplus
| Finance Type | Amount Borrowed | Term | Monthly Payment | Final Balloon (PCP only) | Total Payable | APR |
| Hire Purchase (HP) | £9,500 | 60 months | £207.96 | N/A | £12,477.60 | 11.9% |
| Personal Contract Purchase (PCP) | £9,500 | 60 months | £135.17 | £6,175 | £11,435.43 | 11.9% |
5. We Finance Any Car
We Finance Any Car is a flexible and inclusive broker specialising in car finance for people on benefits. Understanding that mainstream lenders often reject benefit recipients, the company partners with lenders who treat benefit income as valid and assess applications on a case-by-case basis.
Applicants are not required to pay a deposit and can apply for finance online without affecting their credit score. Whether benefits are the applicant’s sole source of income or supplemented by part-time work or pensions, the company works to find tailored solutions that meet the customer’s individual needs.
We Finance Any Car provides access to a range of car finance options, including Hire Purchase, PCP, and Guarantor Loans. These are all structured to make repayments manageable and budgets predictable — an essential feature for benefit recipients.
The company’s friendly team of experts provides personalised support from the first application to vehicle collection. They also guide applicants on the documents required, which typically include proof of benefit payments, a valid driving licence, and affordability details.
For customers with very bad credit or those rejected by other lenders, the guarantor option offers a higher likelihood of approval. This added security helps build trust with lenders and may lead to more competitive finance terms.
Why choose We Finance Any Car:
- Benefits accepted as valid income without deposit
- Tailored support and wide panel of specialist lenders
Comparison of Finance Types Offered by We Finance Any Car
| Finance Type | Ownership Option | Credit Check Type | Suitable For | Deposit Required |
| Hire Purchase (HP) | Own at end of term | Standard | Long-term vehicle ownership | No |
| PCP | Optional ownership | Requires higher credit rating | Flexible end-of-term options | No |
| Guarantor Loan | Own at end of term | Manual review | Applicants with poor credit or benefits-only income | No |
What Are the Tips to Improve Car Finance Approval Chances While on Benefits?
While it is possible to obtain car finance on benefits, taking certain proactive steps can help improve the likelihood of being approved and may lead to better loan terms.
Consider the following tips:
- Review your credit report before applying and correct any errors
- Ensure benefit payments are paid into your bank account regularly to provide proof of income
- Prepare supporting documents such as bank statements and benefit award letters in advance
- Choose a realistic car value and finance amount based on your monthly budget
- If possible, offer a small deposit to reduce the loan amount and demonstrate financial commitment
In some cases, applying with a guarantor or jointly with a spouse or family member can strengthen your application.
What Are the Alternative Options to Traditional Car Finance?
If car finance through specialist lenders isn’t suitable, there are other options available that may be better suited to those receiving benefits. These alternatives often provide more flexibility or come with additional support services.
Motability Scheme
The Motability Scheme is a government-backed initiative that allows people receiving the higher mobility component of PIP or DLA to lease a car.
The scheme includes tax, insurance, maintenance, and breakdown cover. While this is not a traditional finance agreement, it offers a cost-effective way to access a new car with comprehensive support.
Credit Unions and Community Finance
Local credit unions may offer small personal loans at low interest rates. These can be used to purchase a vehicle outright and are typically easier to manage, especially for those on low incomes.
Personal Contract Hire (PCH)
Leasing through a personal contract hire agreement may be a more suitable option for some people on benefits. Monthly payments are often lower, although the vehicle must be returned at the end of the lease term.
Hire Purchase (HP)
Hire Purchase agreements allow the buyer to pay off the cost of the car in fixed monthly instalments, with ownership transferring once the final payment is made. HP deals are commonly used by people on benefits and are widely available through car dealerships.
Side-by-Side Comparison: Finance Options for People on Benefits
The table below summarises several finance methods and how they compare across key factors:
| Finance Option | Ownership at End | Monthly Cost | Credit Check | Benefits Considered | Key Notes |
| Hire Purchase (HP) | Yes | Medium | Yes | Yes | Ownership after final payment |
| PCP | Optional | Low-Medium | Yes | Yes | Balloon payment required to own car |
| Personal Loan | Yes | Varies | Yes | Sometimes | May offer lower APR from credit unions |
| Motability Scheme | No | Fixed (DLA/PIP) | No | Yes | Includes insurance and maintenance |
| PCH (Leasing) | No | Low | Yes | Sometimes | Return car at end of term |
Summary of Practical Steps
To navigate car finance while on benefits more effectively, applicants should:
- Research lenders that specialise in non-standard finance
- Compare APR, term length, and deposit requirements
- Prioritise affordability over luxury features or high-end models
- Seek out FCA-authorised firms for protection and transparency
By focusing on lenders who understand the unique challenges of benefit recipients, applicants can find affordable, responsible finance solutions suited to their situation.
Conclusion
While it may seem daunting at first, car finance for people on benefits is not only possible but increasingly accessible in the UK. With several reputable lenders offering tailored plans, those receiving support can still enjoy the independence and mobility a car provides.
Choosing a lender that understands your financial situation — whether it’s Go Car Credit, Carplus, or We Finance Any Car — is key to securing an affordable and sustainable finance deal. Always compare your options, read the terms carefully, and ensure you’re working with FCA-regulated providers to protect your rights and money.
FAQs About Car Finance for People on Benefits
Is it possible to get car finance with only benefit income?
Yes. Many specialist lenders in the UK accept benefit income as the main or sole source of income, as long as the applicant passes affordability checks.
Which benefits are typically accepted for car finance?
Commonly accepted benefits include Universal Credit, PIP, DLA, Carer’s Allowance, and Employment and Support Allowance (ESA).
Do I need a guarantor to get approved for car finance on benefits?
Not necessarily. While a guarantor can strengthen an application, some lenders approve applicants on benefits without one.
Can I get a car on finance with bad credit and benefits?
Yes. Companies like Go Car Credit and Moneybarn specialise in helping those with poor credit history and benefit income.
What documents are required to apply for car finance on benefits?
Typically, you’ll need ID (e.g., passport or driving licence), proof of address, benefit award letters, and recent bank statements.
Are there no-deposit car finance options for people on benefits?
Yes, several lenders, such as Carplus and Go Car Credit, offer no-deposit finance agreements to eligible applicants.
Is the Motability Scheme the only option for disabled people on benefits?
No. While the Motability Scheme is a popular option, others include car finance from specialist lenders and hire purchase agreements.
