A declined finance application doesn't always mean the customer can't be financed. In non-prime motor finance, the way an application is understood, structured and placed can make a significant difference.
For motor dealers, improving non-prime finance acceptance isn't about trying to make every application fit. It's about understanding the customer's circumstances, collecting accurate information, structuring the deal appropriately and placing the application with a lender whose criteria suit that particular customer.
Get those elements right, and dealers may be able to turn more finance enquiries into completed vehicle sales.
What is non-prime motor finance?
Non-prime motor finance is generally used to describe finance for customers who may not meet the lending criteria associated with mainstream or prime credit.
There isn't one universal definition of a "non-prime customer". Depending on the lender, a customer may fall outside prime lending criteria because of factors such as:
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A limited or thin credit history
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Previous missed payments
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Defaults or County Court Judgments (CCJs)
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Historic financial difficulties
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Irregular or non-standard income
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Being self-employed
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Affordability considerations
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Existing financial commitments
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A previous finance decline
Importantly, a less-than-perfect credit profile does not automatically mean a customer cannot obtain vehicle finance.
Different lenders assess risk in different ways, which is why understanding the application and choosing an appropriate lender is so important.
How can dealers improve non-prime finance acceptance rates?
Dealers can improve their chances of securing an appropriate finance approval by focusing on five key areas: customer information, affordability, deal structure, lender selection and application quality.
1. Get the full picture before submitting the application
One of the biggest mistakes a dealer can make is treating every finance application in the same way.
A non-prime customer's circumstances may require more context.
Before submitting an application, make sure the information supplied is complete and accurate. Depending on the circumstances and lender requirements, this could include:
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Current and previous addresses
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Employment status and history
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Income
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Time in employment
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Residential status
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Existing financial commitments
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Deposit available
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Vehicle details
If there is something unusual about the application, understanding it before submission can also be useful.
For example, a customer may have experienced financial difficulties several years ago but have maintained their commitments since. Another may have recently become self-employed after spending years working in the same industry.
The credit profile alone doesn't always tell the complete story.
Dealer takeaway: Don't just collect enough information to submit the proposal. Understand the application you're submitting.
2. Have an open conversation about affordability
Budget conversations are particularly important with non-prime customers.
Rather than beginning with:
"Which car do you want?"
it can be more productive to establish:
"What monthly payment are you comfortable with?"
A customer's preferred vehicle, deposit, term and monthly budget all influence how a finance agreement can be structured.
If the proposed vehicle creates a monthly payment that doesn't fit comfortably within the customer's circumstances, repeatedly submitting the same deal is unlikely to solve the underlying issue.
Instead, consider whether an alternative vehicle, different deposit or appropriate agreement structure could produce a more suitable outcome.
Affordability should always come before simply trying to secure an acceptance.
3. Structure the deal around the customer
Sometimes the issue isn't necessarily the customer. It can be the deal being proposed.
Vehicle value, age, mileage, deposit, loan-to-value (LTV), term and amount financed can all influence a lender's decision.
For example, depending on the customer's circumstances and lender criteria, it may be worth considering whether:
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A different vehicle would create a more suitable proposition
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A larger deposit could reduce the amount financed
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The agreement term is appropriate
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The vehicle's age and mileage suit the lender
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Existing finance needs to be settled
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Negative equity is affecting the proposal
This doesn't mean changing a deal simply to achieve an approval. Any finance agreement still needs to be appropriate and affordable for the customer.
It means recognising that deal structure and credit profile need to work together.
4. Don't assume every lender views risk in the same way
This is where access to a broad lender panel and experience of non-prime finance can make a considerable difference.
Lenders have different appetites and lending criteria.
One lender may be less comfortable with a particular credit profile, vehicle or employment situation, while another may be better positioned to consider it.
This is why sending every application to the same lender — or simply starting with the lender offering the lowest headline rate — isn't always the most effective approach.
The objective should be to identify an appropriate lender for the customer's individual circumstances.
A decline from one lender is not necessarily a decline from the market.
5. Make sure the application tells the right story
An underwriter can only assess the information available to them.
Incomplete, inconsistent or inaccurate applications can therefore make an already complex proposal harder to assess.
Before submitting an application, check that:
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Names and addresses are accurate
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Address history is complete
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Employment information is correct
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Income information is accurate
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Vehicle information is complete
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Deposit figures are correct
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Part-exchange and settlement figures are accurate
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Relevant supporting information has been included where appropriate
Where a lender or finance partner provides an opportunity to add relevant context, use it.
Clear information can help an underwriter understand the application without having to fill in the gaps.
6. Avoid sending applications everywhere
When a customer has already been declined, there can be a temptation to keep submitting applications until somebody says yes.
That's not necessarily the best approach.
Multiple applications can create a poor customer experience and, depending on how lenders conduct their searches, may result in additional credit searches being recorded.
A more considered approach is to assess the customer's circumstances and identify lenders whose criteria are more likely to be appropriate before making further applications.
Better placement beats more placement.
7. Look beyond the credit score
Credit scores can be useful indicators, but they aren't the entire application.
Lenders may consider a much broader range of information when assessing a customer, including affordability, stability, credit history, existing commitments and the vehicle being financed.
That means dealers shouldn't automatically write a customer off because they describe themselves as having "bad credit".
Let the appropriate finance providers assess the application.
A customer who assumes they'll be declined may actually have finance options available to them.
8. Understand why an application has been declined
Where information is available and can appropriately be shared, understanding what caused an application to fail can help determine the next step.
For example, the challenge may relate to:
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Affordability
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Loan-to-value
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Vehicle criteria
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Customer credit profile
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Employment circumstances
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Information supplied on the application
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The lender's individual criteria
Those situations may require very different approaches.
Simply resubmitting the same application elsewhere doesn't address the underlying issue.
9. Work with a finance partner that understands non-prime
Non-prime motor finance isn't simply about having access to more lenders.
Experience matters too.
At Eurodrive Motor Finance, we work with motor dealers to understand applications, identify appropriate finance routes and help structure proposals for our panel of lenders.
Our team deals with applications across a range of customer circumstances, from straightforward prime finance through to more complex and non-prime cases.
When a deal doesn't fit the obvious route, we'll look at what other appropriate options may be available.
What is Eurodrive Dealsaver?
Eurodrive Dealsaver is designed to help dealers with finance applications that haven't secured an approval through their usual route.
Rather than automatically assuming a declined customer is a lost sale, our team can review the application and explore whether an alternative solution may be available through our lender panel, subject to the customer's individual circumstances and lender criteria.
For dealers, that means a finance decline doesn't necessarily have to be the end of the conversation.
Non-prime finance: a better conversation with the customer
How a dealer handles a decline can also affect whether the customer ultimately buys a vehicle.
Avoid making the customer feel that their credit history has made the conversation uncomfortable.
Instead, explain that different lenders use different criteria and that you're going to explore what appropriate options may be available.
Something as simple as:
"That lender hasn't been able to offer the finance we've requested, but different lenders assess applications differently. We'll see whether there's another appropriate option available for your circumstances."
can create a much better customer experience than simply saying:
"You've been declined."
Frequently asked questions
Can someone with bad credit get car finance?
Potentially. Previous missed payments, defaults, CCJs or other credit issues do not automatically prevent someone from obtaining motor finance. Eligibility will depend on the customer's individual circumstances, affordability and the criteria of the lender.
Does a finance decline mean another lender will also decline the customer?
Not necessarily. Different lenders have different lending criteria and risk appetites. A customer who doesn't meet one lender's criteria may meet those of another lender, although approval is never guaranteed.
Can a larger deposit help a non-prime finance application?
In some circumstances, a larger deposit may reduce the amount being financed and the loan-to-value of the agreement. Whether this improves the proposition will depend on the lender's criteria and the customer's overall circumstances.
Can self-employed customers get motor finance?
Yes, self-employed customers can potentially obtain motor finance. Requirements vary between lenders, and additional evidence of income may sometimes be required.
Can a customer get car finance with a CCJ or default?
Potentially. Some lenders consider applications from customers with historic CCJs, defaults or other adverse credit. The age, value and circumstances surrounding the adverse credit, alongside affordability and the customer's wider profile, may all be considered.
Should a dealer submit a declined application to multiple lenders?
Submitting an application indiscriminately to multiple lenders isn't necessarily the best approach. Understanding why the application hasn't fitted one lender's criteria and identifying a more appropriate lender can create a more considered route forward.
Turn more declines into opportunities
Non-prime doesn't automatically mean no.
For dealers, improving finance acceptance rates starts with understanding the customer, collecting accurate information, structuring the proposal appropriately and placing the application with a lender suited to the circumstances.
And when an application doesn't fit the obvious route, having an experienced finance partner can make all the difference.
Got a deal you're struggling to place?
Speak to Eurodrive Motor Finance about our Non-Prime Dealsaver service and let our team explore the options available.
All finance is subject to status, affordability and lender criteria. Eurodrive Motor Finance is a credit broker, not a lender.
