Car finance - where you stand - How it works

Finance companies are legally obliged to offer two-thirds of successful applicants the eye-catching headline rate they advertise loans at.

However, they are also free to reject applicants, or offer the remaining applicants money at whatever rate of interest they deem appropriate.

A spokesman for Abbey National said: 'We use credit searches and credit scoring, but also look at a customer's outgoings versus their income, to ensure the loan is affordable to a customer.'

James Jones, Consumer Education Manager at credit history company Experian, adds: 'Loan companies are very sensitive at the moment. There are less funds available, so the money is going to people with the best credit history – or who'll pay high rates.'