How much car finance can I get?

What the rules require

CONC 5.2A in the FCA Handbook says a firm must make a reasonable assessment of a customer’s creditworthiness before entering into a regulated credit agreement, and must have proper regard to the result. It must consider the risk that you will not repay on time and the risk to you of not being able to afford the repayments.

On affordability, the firm must consider whether you can make the repayments as they fall due over the life of the agreement, out of your income or the savings you plan to use, without having to borrow to meet them, without failing to make other payments you are bound to make and without a significant adverse effect on your finances.

What the lender looks at

The assessment is based on sufficient information, obtained from you and, where necessary, from a credit reference agency. Unless it is obvious that you can afford the repayments, or you have said clearly that you will repay entirely from savings or other assets, the lender must take reasonable steps to find out or estimate your current income and your non-discretionary spending, unless that spending is obviously unlikely to matter. The FCA’s guidance says non-discretionary spending includes essential living costs and payments you are already committed to, such as credit agreements and mortgage payments.

How much checking the lender does is proportionate to the case. The rules list factors to weigh, including the amount of the credit, how long it lasts, the size of the repayments, the total amount payable and the rate, so a larger loan on a longer term can call for a closer look.

Why there is no single answer

Because the rules ask for an assessment rather than set an amount, the same car and deposit can lead to different outcomes for different people. nidirect puts it plainly: you do not have a right to credit, and a lender may check your credit history with a credit reference agency before deciding.

A calculator shows what a payment would be for the price, deposit, rate and term you enter. It cannot show what a lender will approve.

If a lender lent when you could not afford it

The Financial Ombudsman Service lists a finance agreement being unaffordable as a type of complaint it sees. Complain to the lender first; if it has not sent a final response within eight weeks, or you are unhappy with it, you can take the complaint to the Ombudsman. You have six months from the date on the lender’s final response to do so, and the Ombudsman usually cannot help after that.