Getting approved for a new car on Personal Contract Purchase (PCP) is suddenly much harder. Motor finance brokers and dealerships across the UK are reporting a sharp surge in application rejections, particularly for applicants with 'Fair' or 'Poor' credit scores.
Why are lenders pulling back?
The tightening of the motor finance market is a direct result of rising default rates. As the cost of living squeezes household budgets, car finance payments are increasingly being missed. In response, lenders are adjusting their risk models.
Previously, a consumer with a borderline credit score might have been approved for a PCP deal at a higher interest rate. Today, that same consumer is simply receiving a flat rejection.
The hard search trap
This surge in rejections is creating a secondary problem: the hard search trap. A consumer applies for finance at a dealership and gets rejected (leaving a hard search on their file). Desperate for a car, they try another dealership and get rejected again (leaving a second hard search). Their credit score plummets, locking them out of the market entirely.
If you are looking for car finance, you must check your statutory credit report first. Ensure your file is clean, and only use brokers that offer a 'soft search' eligibility check before submitting a formal application.