Personal Independence Payment (PIP) helps with extra costs if you have a long-term health condition or disability. Whether it helps you get car finance depends on the lender. This guide explains how lenders treat PIP, how regular car finance compares with the Motability Scheme, and what to have ready when you apply.
In short
Some lenders count PIP as income when you apply for car finance and others don’t, so check before you apply. If you get the enhanced rate of the PIP mobility component, you can also use it to lease a car through the Motability Scheme, which works very differently from car finance.
Can you get car finance if you receive PIP?
Possibly. PIP isn’t means-tested and isn’t affected by your earnings, so some lenders see it as a stable source of income. Others don’t count it, because it’s meant to cover the extra costs of a condition or disability rather than everyday spending.
If you work or receive other income as well, lenders will usually look at your total income and outgoings together. As with any car finance, approval isn’t certain, and the lender must check that the repayments are affordable.
Do lenders count PIP as income?
It depends on the lender, and practice varies. PIP has two parts:
- Daily living component, paid at a standard or enhanced rate, for help with everyday tasks
- Mobility component, paid at a standard or enhanced rate, for help getting around
Some lenders may count both components, some only one, and some neither. Ask before applying, or use a soft-search eligibility check. You’ll usually need to show your PIP award letter, which states the amount and how long your award lasts. Lenders may be more cautious if your award ends soon or is due for review.
PIP mobility component and the Motability Scheme
If you get the enhanced rate of the PIP mobility component, you can exchange it for a vehicle through the Motability Scheme. You need at least 12 months left on your award when you apply (Motability). The higher rate mobility component of Disability Living Allowance, War Pensioners’ Mobility Supplement and Armed Forces Independence Payment also qualify.
| Motability Scheme | Regular car finance (HP or PCP) | |
|---|---|---|
| What it is | A lease, usually for three years | A credit agreement |
| Do you own the car? | No | Yes, at the end of HP, or with PCP if you pay the final payment |
| How you pay | Your mobility allowance is paid directly to Motability, sometimes with an upfront payment | Deposit and monthly payments from your income |
| Credit check | Not usually | Yes |
| Running costs | Many costs are included in the lease; check what yours covers | You pay insurance, servicing and repairs separately |
| Eligibility | Enhanced rate PIP mobility (or another qualifying allowance) | Any income, subject to the lender’s checks |
The Motability Scheme suits many people because it’s predictable and doesn’t need a credit check. Regular finance may suit you if you want to own the car, don’t get the enhanced mobility rate, or want a vehicle the Scheme doesn’t offer.
What to have ready when you apply
- Your PIP award letter
- Recent bank statements, usually the last three months
- Photo ID, such as a passport or driving licence
- Proof of address, such as a recent utility bill or council tax letter
- Details of any other income, such as payslips or other benefit letters
Adaptations and extra costs
If you need an adapted vehicle, factor in the cost of adaptations, whether they can be moved to a future car, and whether the lender will finance them. Insurance may cost more for an adapted car, and the insurer must be told about any adaptations. Some charities and grant schemes help with adaptation costs. Driving Mobility can assess what you need.
Remember the ongoing costs too: insurance, fuel, servicing and repairs. You may be able to get a vehicle tax exemption or reduction if you get the PIP mobility component.
PIP car finance FAQs
Can I use my PIP mobility component to pay for car finance?
Yes, PIP is paid to you and you can spend it as you choose, including on car finance payments. Whether a lender counts it as income when deciding whether to lend is a separate question, and varies by lender.
Do I need to tell the lender about my condition?
You don’t have to share medical details. You may need to show your PIP award letter as evidence of income, and you must answer application questions honestly. If you need adjustments during the application, such as extra time or a different format, you can ask the lender.
What happens if my PIP stops during the agreement?
You’d still owe the finance payments. If your income drops, contact the lender straight away to discuss your options, and get free advice from MoneyHelper or Citizens Advice.