Car Finance With Commission-Based Pay
When Your Payslip Changes Every Month
If part or most of your income comes from commission, applying for car finance can feel uncertain. You know what you earn over a year, but your payslips tell a different story each month. Lenders like predictability, so variable pay naturally raises a few extra questions.
The good news is that commission-based income is perfectly acceptable to most UK lenders. It simply needs to be evidenced a little differently. Here is how it works, in plain English.
Who This Guide Is Written For
This is for anyone whose earnings move up and down: sales professionals, estate agents, recruitment consultants, retail staff on bonus schemes, mortgage and insurance advisers, and anyone on a low basic salary topped up by commission. It is also useful if you are part-employed and part self-employed with variable earnings.
What Lenders Mean By Variable Income
Commission-based pay is any income that changes according to performance, sales volume or targets. In lending terms, it sits in the same family as bonuses, overtime and tips: income that is real, but not guaranteed month to month.
When you apply for car finance, a lender is trying to answer one question - can you comfortably afford these repayments for the full term? To do that, they carry out an affordability assessment, which is a requirement under Financial Conduct Authority rules. They look at your income, your regular outgoings and your credit history.
With a fixed salary, this is straightforward. With commission, the lender needs to decide how much of your variable income it can reasonably rely on. Some lenders count your basic salary only. Others average your commission over three, six or twelve months. A few will accept a percentage of it, often between 50% and 100%.
Your total annual earnings matter, but so does how consistently you earn them.
How The Application Actually Works
Most applications start with a soft search quote, which shows what you may be offered without affecting your credit score. You will be asked for your employment status, job title, gross annual income and time in your current role.
When you state your income, include your basic pay and a realistic figure for commission - not your best-ever year. Overstating it can lead to a decline or, worse, an agreement you struggle to keep up with.
Because your payslips vary, be ready to provide evidence. Typically that means:
- Three to six months of recent payslips showing basic and commission separately
- Three to six months of bank statements confirming the money landing in your account
- Your latest P60, which shows total earnings for the tax year
- A contract or employer letter confirming your commission structure, if requested
The lender then averages the figures, adds your basic pay, deducts your commitments and calculates a monthly repayment it believes is sustainable. Time in role helps enormously - twelve months of history is far more persuasive than two.
Why It Is Worth Preparing Properly
Preparation changes outcomes. Applicants who present a clear, evidenced picture of variable income are far more likely to be approved, and often at a better rate, than those who submit a rough estimate and hope for the best.
There is also a fairness argument. If a lender only counts your basic salary, a high earner on £22,000 basic plus £20,000 commission could be assessed as though they earn half what they actually do. That may mean a smaller loan, a higher rate, or an unnecessary decline. Providing a documented average gives the lender permission to see your real earning power.
Just as importantly, this protects you. A monthly payment based on your best month is a payment you may not be able to make in a quiet quarter. Working from a conservative average means the agreement still works when sales slow down, which is exactly what responsible lending is designed to achieve.
Weighing It Up
| Advantages | Points To Consider |
|---|---|
| Commission is widely accepted as legitimate income by UK lenders | Assessment methods vary, so quotes can differ significantly between lenders |
| Strong earners may access larger loans than their basic salary suggests | You may be asked for more paperwork than a salaried applicant |
| Averaging protects you from committing to an unaffordable payment | Newer roles with short earnings history can limit your options |
| Soft search quotes let you compare without harming your credit score | A dip in earnings during the term still leaves the repayment fixed |
| Building a payment history can improve future borrowing terms | Some lenders count basic pay only, reducing the amount offered |
Details Worth Checking Before You Sign
Read how the agreement handles a missed or late payment, and whether there is any flexibility if a month goes badly. Some lenders offer payment date changes; forbearance is available if you fall into difficulty, but it is always better to build in headroom from the start.
Check the APR, the total amount payable and the term. A longer term lowers the monthly figure but increases the overall cost. With PCP agreements, understand the mileage limit, the balloon payment at the end and the condition standards for returning the vehicle.
Avoid multiple hard credit applications in a short space of time, as this can lower your score. Use soft search comparisons instead.
Finally, ask how the broker or lender is paid. Under FCA rules, commission arrangements must be disclosed to you. A transparent firm will explain this openly.
If a payment only works in a good month, it is not the right payment.
Other Routes To Consider
- Save a larger deposit. Reducing the amount borrowed lowers the monthly payment and often improves your rate, which matters when income is variable.
- Choose a cheaper vehicle. Setting your budget against your basic salary alone, and treating commission as a buffer, is the safest approach.
- Hire Purchase instead of PCP. Higher monthly payments, but no balloon payment and you own the car outright at the end.
- Personal Contract Purchase with a lower mileage band. Can reduce monthly costs if your driving is predictable.
- An unsecured personal loan. Fixed payments and you own the car immediately, though rates depend heavily on your credit profile.
- A joint or guarantor arrangement. Adding a salaried applicant can strengthen an affordability assessment, but both parties become responsible for the debt.
- Wait a few months. Building six to twelve months of commission history can meaningfully widen your choice of lenders.
Common Questions Answered
Can I get car finance if most of my income is commission? Yes. Many UK lenders accept commission-based income, though they may average it over several months rather than taking your best figures.
How many payslips will I need? Usually three to six months. Longer histories, or a P60 showing a full tax year, strengthen your application.
Will a lender count all of my commission? Not always. Some count 100%, others use a percentage or a rolling average, and a few consider basic salary only. This is why comparing lenders matters.
Does checking my eligibility hurt my credit score? A soft search quote does not affect your score. Only a full application leaves a hard footprint.
What if I have only just started a commission-based job? It is still possible, particularly with a deposit or a modest loan amount, but your options may be narrower until you build earnings history.
What happens if my commission drops during the agreement? Your repayments stay the same. Contact your lender early if you are struggling - they are required to treat customers in financial difficulty fairly.
Does self-employed commission work differently? Yes. Lenders typically ask for one to two years of accounts or SA302 tax calculations instead of payslips.
Where Kandoo Fits In
Kandoo is a UK motor finance broker, which means we are not tied to a single lender. We can carry out a soft search and match your circumstances against a panel of lenders, including those experienced with variable and commission-based income. You see indicative terms before committing to a full application, and we explain clearly how we are paid. No pressure, no jargon - just a straightforward comparison so you can decide what genuinely fits your budget.
Important Information
This article is general information, not financial advice, and does not take account of your personal circumstances. Lending decisions, rates and eligibility criteria are set by individual lenders and can change. Car finance is subject to status and affordability checks. Your vehicle may be at risk if you do not keep up repayments. Kandoo is authorised and regulated by the Financial Conduct Authority.
Buy now, pay monthly
Buy now, pay monthly