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What is the age limit for car finance?

Legally, you can’t sign a car finance agreement until you’re 18-years-old. Some lenders also have eligibility requirements that mean they won’t offer loans to people aged under 21-years-old. That doesn’t mean you’ll automatically qualify for a loan on your 18th birthday as other factors will be considered including your income and credit score.

What is the minimum age for car finance?

While you can pass your driving test and hit the road at age 17, you’ll need to wait until you turn 18 to get car finance. That’s the minimum age that you can legally sign a finance agreement.

Some lenders might have different eligibility requirements when it comes to age. You might find that they won’t lend money to people aged under 21.

Is there a maximum age for taking out car finance?

While there is a minimum age for car finance, most lenders won’t set a maximum age. This means older people, pensioners, and retirees can still qualify for car finance loans.

Can an 18-year-old get car finance?

While it might not seem fair that you need to wait until you turn 18 to get car finance, unfortunately it’s the law. And it doesn’t just apply to car loans, you can’t sign any financial agreements until you’re a legal adult.

That doesn’t mean you’ll automatically qualify for any car finance loan on your 18th birthday. There are other factors that will affect your eligibility including your income, the car you want to buy, and the state of your credit score.

As a young person, it’s understandable that you won’t have much of a credit history yet, but it can make lenders see as a higher risk borrower. It’s all about the unknown; lenders can’t be sure how you’ll act as a borrower and whether they can trust you to make your payments on time.

One way of improving your chances of getting finance at 18 is to start working on your credit score as soon as possible.

It’s not an exact science, but there are a few steps you can take to improve your chances of securing a loan:

  • Register on the Electoral Roll
  • Make any other loan or credit card payments on time
  • Open a bank account once you turn 16
  • Save money for a deposit so you don’t have to borrow a high amount
  • Consider increasing your income with a part-time job
  • Compare different types of car finance loan like joint or guarantor finance

Related FAQs

If I finance a car, can someone else be the registered keeper?

Most lenders won’t let you finance a car if someone else is going to be the registered keeper. That’s because car loans are tailored to an individual and based on their personal financial circumstances. If you try to take out a loan for someone else and don’t tell the lender, you could be guilty of fronting, which is a type of fraud.

Can I buy a car on finance for someone else?

It’s not usually possible to buy a car on finance for someone else. In fact, most lenders will ask that the person who signs on the dotted line is also your new wheels registered keeper and main driver. Every car finance agreement is tailored to an individual and suited to your personal circumstances.

Can you end a Hire Purchase agreement early?

Yes, there are two main ways to end a hire purchase agreement early:
Settle your finance early
You can request a settlement figure from your lender at any time. You’ll need to pay this figure to end the agreement early and become the car’s legal owner. It’ll typically be made up of your outstanding repayments minus any future interest. An early settlement charge may also apply.

Opt for voluntary termination
Under the Consumer Credit Act 1974, you have the right to voluntary termination once you’ve paid at least 50% of the total amount repayable on your loan. If you’ve not yet reached this threshold, you can choose to pay the difference. Opting for voluntary termination means you’ll hand the car back to the lender and walk away.

What deposit do I need to finance a car with HP?

While no deposit HP car finance is available, putting money down upfront could reduce the amount you need to borrow and improve your chances of securing a loan. Typically, a deposit of 10% of the car’s purchase price is considered good.

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