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How Does My Credit Score Affect Car Finance Interest

There are several different types of car finance options available and most of them come with an APR variable. This means that each finance package comes with variable interest rates that can be affected by several factors that can either lower them or raise them. One of the primary determinants is your credit score. Not only does your credit score affect whether you will be accepted or not, but it will also affect how much interest you pay on your package.

How Does My Credit Score Affect Car Finance Interest

The lenders

Finance lenders use credit scores to help them decide how much of risk you are and how likely you are going to be able to pay back your finance offer. Credit checks are triggered every time you apply for car finance and each lender has their own set of requirements needed from your credit score for you to be accepted.

Lenders and dealers usually have a representative APR advertised on their own website or on “best buy” tables on comparison websites. This APR is more of a guidance percentage and therefore the lender does not have to give you that interest rate, which might be relatively low. The truth is that the representative APR is usually only offered to just 51% of those who apply for car finance.

Instead, you will be offered a personal APR. This will be determined by your own circumstances and is particularly affected by your credit score. The lower your credit score, the higher your personal APR will be.

Rate of risk pricing policies

Each time a person applies for car finance, lenders group them dependent upon their credit score and other factors. Each group is rated by their risk when it comes to being able to pay back the loan or not. If most or all the people in a group have low credit scores, the lenders will judge that group a high risk and therefore place higher APR rates on the entire group.

Avoiding those higher interest rates

The best way to avoid those higher interest rates is to improve your credit rating. The better the credit score, the less risk you pose to the lender when it comes to getting you a car finance package with low-interest rates. You can get car finance for bad credit, but these agreements usually come with higher interest rates, precisely because of the low credit scores of those who apply for them.

If you are interested in getting a car on finance, a good idea would be finding out what your credit score is beforehand. This gives you a chance to work out how much interest you will likely be paying on a car finance package before you apply.

You can apply with us by telling us your monthly budget and the type of car you are interested in. Our staff will work hard to find you the right deal that suits your needs and your personal circumstances. Whilst other dealers will either offer you just a car or just a finance deal, Hippo Motor Finance offers you a car and finance deal in one hassle-free package.

Representative Example of Credit

We expect more than 51% of our customers to achieve this rate.

Loan Amount Total Cost of Credit Representative APR 60 Monthly Payments Deposit Amount Loan Term Total Amount Payable
£7,500 £3831 19.1% APR £188.85 £0 60 Months £11,331

All offers are subject to change at any time, you must be 18 or over and finance is subject to status, vehicle availability and terms and conditions apply. We can introduce you to a limited number of finance companies, a commission may be received. Failure to maintain payments may result in termination of your agreement and the vehicle being returned, this could affect your credit rating and make it more difficult to obtain credit in the future. All prices correct at time of publication.

We purchase a wide variety of vehicles from all over the country to ensure the best quality and value for our customers, all of our cars go through a thorough inspection process and if they do not meet our standards we do not sell them. We endeavour to inform our customers (where possible) the provenance of the vehicle they are buying and as such we will always inform you if the vehicle has previously been either an ex fleet or hire car. Should your vehicle be an ex hire/fleet car please do not be concerned as we would never value this vehicle differently when you come to part exchange it and there is no difference to the CAP valuation either.

You should try and estimate the distance you will travel as accurately as possible to try and avoid excess mileage charges at the end of your contract.

All pictures and/or photos and car descriptions on this site are for illustration and reference purposes only and are not necessarily the vehicle on offer. All offers are subject to change at any time and are subject to finance approval and vehicle availability. All prices correct at time of publication. E & OE.

Hippo Vehicle Solutions t/a Hippo Motor Finance is authorised and regulated by the Financial Conduct Authority. FRN 658076. We are a Credit Broker not a Lender and can introduce you to a limited number of lenders. Subject to status and to UK residents only (excl. the Channel Islands). Individuals must be 18 or over. Guarantees and indemnities may be required. We typically receive a fixed commission calculated by reference to the vehicle model, product or amount you borrow, for introducing you to a lender but this does not affect the interest charged on the agreement, all of which are set by the lender. Images for illustrative purposes only. Hippo Vehicle Solutions t/a Hippo Motor Finance is an Appointed Representative of AutoProtect (MBI) Limited for insurance distribution purposes. AutoProtect (MBI) Limited is authorised and regulated by the Financial Conduct Authority. Its firm reference number is 312143. You can check this at

We endeavour to ensure that all information including the specifications and finance availability are accurate. Whilst we make every effort to display correct information we are aware that errors may occur occasionally. We are not able, therefore, to guarantee the accuracy of all information especially when given to us by third parties. If you do require clarification of some information you have seen on our website, please email us at . This does not affect your statutory rights.

We are a broker not a lender and our registered office is Unit 26 Trident Park, Trident Way, Blackburn, BB13NU.