Car finance explained
Affording a car once you have passed your test is not as daunting as you may think. Our finance pages strip back all the jargon and present all the facts to you in a straightforward manner. Read through the sections below to make an informed decision on your choice of finance options.
Before you apply for finance
This section will help you understand what information is needed to obtain for car finance and our jargon buster blows apart the banker language. We also look at what you can do to improve a poor credit rating.
Young Car Driver can help you apply for car finance and check your credit rating. Check out the sections below.
Can I buy a car with poor credit?
Yes! You can buy a car with a with poor credit (credit score of between 225 and 350), but you may have to pay a higher APR or need a family member or friend to be your Guarantor. Read more about improving your credit rating in our Finance Hub. ...Read More
What is a Guarantor Car Loan?
With a guarantor loan, you need someone who can guarantee the loan should you fail to make the repayments. Your Guarantor could be a family member or friend; they will need to: Be aged between 17 and 75. Have a Good credit rating and preferably be a house owner (but not essential). Read more about ...Read More
What does PCP mean?
Personal Contract Hire. Personal Contract Purchase deals are available from car dealers and manufacturers, but taking out your PCP with a finance company will allow you to select a car from any dealer you choose. PCP deals are between three and four years and require a deposit usually equal to three months payments. Read more ...Read More
Can I get car finance?
Absolulely…Car finance is available for most young drivers regardless of credit history. The process of applying for a car loan from is easy and stress-free, and the benefits include: Regardless of your credit status all applications considered. A decision is usually available in minutes. Read more about applying for Car Finance in our Finance Hub. ...Read More
process from beginning
- Sadie, Edinburgh
Car Loans and Finance Guide for Young Drivers
How to apply for a car loan – Prepare an budget before applying for car finance to see how much you can afford, there are the monthly repayments on the car loan as well as the entire car running cost to consider. When you do buy a car on finance, you are in reality making two purchases, the car, and the loan. Make sure you get a good deal on the price of the car as well as the best APR rate available on loan.
Credit Rating – Any time you apply for a loan or finance the Lender will check your credit score before making a decision. Find out your credit rating before you apply for a loan.
Car finance options for young drivers – What do all these different loans mean? PCP, HP, PCH, Personal car loan, Guarantor car loan. Find out the best car finance option for you.
Personal Contract Purchase (PCP) – With a PCP Car Loan young drivers can return the keys when the agreement ends and the repayments are less than with HP car finance.
Car Hire Purchase (HP) – At the end of an HP agreement you will own the car, but until then you are not the owner and cannot sell the vehicle without the Lenders permission.
Car Lease Deals (PCH) – With an Young Driver Car Lease you should be able to drive away in a new car because with leasing (or renting) the monthly repayments are less than for other forms of car finance. However, you will never own the car, and you will have to return it at the end of the car rental agreement.
Personal Car Loan – Young drivers applying for a personal car loan will need an excellent credit rating because personal loans are unsecured and you will own the car straight away.
Guarantor Car Loan – Who can act as Guarantor on your car loan? Everything you need to know about a Guarantor loan! Suitable for young people with a poor credit rating or who have not applied for credit before.
Car Finance Jargon – Do you know your car finance buzzwords? What’s a Balloon payment? Do you know what a GMFV is? Be wise and do your homework before applying for a car loan.