Why Does Your Marital Status Affect Car Finance?

Why is it a question on the application form? 

One of the main reasons is that the lender will be able to reach or contact the property registered to the loan if payments are missed. If the property has been used as collateral for a car loan, then the lender will need to determine whether your spouse has any interest in it. 

The lender may also require your marital status if they need more information relating to whether:

• You or your spouse are responsible for repaying any debts or late payments.
• You require your spouse’s income to repay the loan or if you’ll be using your own.

Does being married make you appear more reliable? 

Being married can make your application more favourable to lenders. The reason for this is that married couples are more likely:

• To be homeowners with a more fixed place of residence and residential status.
• To have more than one regular income coming into the home.
• To have a family and may need to take out new finance loans as the family grows.
   

These reasons indicate to a lender that there is less risk involved should they decide to approve a finance application from a married couple.

Lenders will also be more likely to consider the lower credit score of a married couple when calculating the repayments and interest, which could lead to a finance application being refused. However, a spouse’s credit score won’t immediately affect the other’s. 

Is someone who is divorced at higher risk? 

When it comes to applying for a finance loan, being divorced has a little more risk than if you were applying as a single person. You’ll likely be back down to one income coming into the household, meaning you may need to borrow more.

If you took out a joint loan with your former spouse, any debts would negatively affect your credit score, so getting these paid off as soon as possible is essential.

Another thing that can affect the credit score is you’ve been court-ordered to pay alimony or child support to your former spouse. These payments will also reduce your overall income.

What other aspects influence your eligibility? 

Not just your marital status determines your eligibility for car finance. Other factors such as:

• Your credit score will indicate to lenders how reliable you are when paying back loans.
• Your budget as you’ll need to consider how easily you’ll be able to repay the loan.
• Contract length can help to spread the cost over an extended period if needed, but you may be given a higher interest rate.
• The amount you want to borrow, as the more you need to borrow, the more the lender has to consider the risk. Putting down a larger deposit and borrowing less can help reduce the monthly repayments.

Many dealerships, including Autozone/Car Credit Now, will be able to conduct a soft search to determine your eligibility. A soft search won’t harm your current credit score.