Car Finance for Young Drivers

Rates from 7.9% APR. Representative APR 19.9%

green cartoon car in shopping trolley representing buy a car from any reputable car dealer

Get your car finance first with Young Car Driver in partnership with CarFinance247

Getting your car finance in place – before contacting the dealer – can put you in a stronger position when you come to negotiate the purchase.

It also helps you avoid getting carried away in the heat of the moment at the dealership and ending up with a complicated finance deal that may not be right for you.

Get your car finance the easy way

Young Car Driver increases your chance of finding a great car finance deal by searching the market for you.

What is the minimum age to finance a car?

How old do you have to be to get a car on finance – You can get a car finance deal from 18, although it won’t necessarily be only in your name.

Once you hit 21, it becomes significantly easier to get car finance!

green 18 in a blue circle

Car finance for 18-year olds

Can I get a car loan at 18?

You’re 18! You can now have a guilt-free drink at the pub, but you can also get a car finance loan. Be aware, though, that just because you’re 18 doesn’t guarantee that you will get accepted for finance.

To increase your chances of getting a young person car loan deal, you need to have a solid credit rating. You can build this up by paying for your mobile phone on a contract, taking out a credit card and clearing it every month. It’s also worth making sure you’re on the electoral roll.

Having no credit history is almost as bad as having a terrible one, so start improving your credit score ASAP and increase your chances of getting a car loan for an 18 year old.

You also have a better chance of getting young person car finance if you have been employed for around 6-12 months. Having a secure job reassures the lender that you can pay for the car.

If the lender still isn’t convinced, don’t worry. It’s challenging getting accepted for car finance at 18.  But! All hope isn’t lost!

It’s common for lenders to offer young drivers a joint or co-signer application, where you take out the car in both your name and that of a parent/guardian name.

Also, you can take out a Guarantor Car Finance agreement, where someone will act as the backup if you can’t make the repayments.

young women in jeans with 18 sign in square green boarder the age you can get a credit agreement
credit score dial in the green zone the score needed by 19 and 20 year olds for car finance

Car finance for 19-year-olds

Can a 19-year-old get a car loan deal?

Car finance becomes a little easier to get accepted for once you get to 19. Yet, the credit history of a young person remains a significant issue for the lender.

Car loans for 19-year-olds are available but only if you have a good credit profile.  However, with a bad/non-existent credit history, most young drivers will struggle to get a car finance deal without a cosigner.

Nonetheless, if you’ve made an effort to build a credit rating and have a stable job that provides a regular income, you could get accepted for a car loan deal.

Car finance for 21 year olds and over

Once you hit 21, you’re far more likely to get car finance as a new driver.

You can apply for various types of finance at this age, including a traditional Hire Purchase (HP) deal, where you pay for the car over a certain amount of time.

You can also apply for a Personal Contract Purchase (PCP), where you pay a smaller fee monthly but hand the car back at the end.

When applying for a car loan for young adults 21 and over, you are likely to be offered finance even with a poor credit rating. However, you will pay a fortune in interest, and it’s often not worth it.

You could get a better car loan deal with a lower interest rate by waiting for a bit longer while building a solid credit history.

hand on calculator to check car finance for 21 year old

Am I eligible for car finance?

What boxes do you need to tick to get car finance as a young driver?

Unless you’re lucky enough to jump straight onto the property ladder, financing a car as a new or first-time driver is likely your most significant and most intimidating purchase.

But don’t worry: whether you’re a young driver who’s just passed your test or have been on the roads for a few years now, you can probably get a car finance deal.

Before you get started, there are boxes to tick to ensure you’re eligible for a car loan:

  • Age The minimum age you can legally sign up for a car finance agreement by law is 18 – even if you get a guarantor, you still need to be 18.
  • Residence You need to have been living in the UK for a minimum of 3 years.
  • Driving licence You’ll need a driving license to get a car finance deal (who would’ve thought)!
  • Job You’ll likely need to be full-time or part-time employment for a while. Sometimes as little as six months might be OK, but usually about 12 months.
  • Income A minimum net monthly income of around £900 after tax and insurance is what most car finance lenders will require.

On top of this, as a new driver, get yourself on the Electoral Register. While this isn’t strictly a requirement for a car finance loan, it will automatically improve your credit score. It’s an easy win.

Does my credit rating affect my getting car finance?

Ahh, the credit score. You might have heard horror stories about what can happen (or can’t) when you have a poor score as a young driver. But unfortunately, building and maintaining a healthy credit rating is just a part of being responsible financially.

Whether you’re a young driver or not, your credit history will play a significant part in the financial lender deciding whether they’ll loan to you. However, car finance companies know that many young drivers with bad credit need a reliable vehicle, even some who don’t have a credit rating.

With that in mind, plenty of car finance companies will offer young driver car finance, even if you have a bad or non-existent credit score. Just be aware that your interest rate will likely be higher, meaning you’ll pay more to finance the car.

How do young drivers get car finance?

Unless you’ve got a particularly savvy family member doing the wheeling and dealing for you, being a young or new driver trying to buy a car can be daunting.

And it’s understandable: buying a car is a big purchase and shouldn’t be taken lightly, particularly for new drivers.

Most young people tend to look for a car that does it all: stylish, reliable, cheap insurance, and affordable. Thankfully, there are plenty of cars out there that fit the bill.

Buying and running a car is a balancing act – you need something affordable and reliable, offer relatively cheap car insurance, is affordable to run, and is still stylish and good looking.

One easy way for young drivers to look at their car finance options as a new driver is to use a comparison tool, which looks at all the finance providers who will give you a credit agreement and find you the best price.

Why is car finance difficult to get for young drivers?

Having limited car finance options as a young driver can seem unfair – but there is a logic behind it.

Here are a few of the reasons it can be difficult for new drivers to get a car finance deal:

Lack of credit history:

As a new or young driver, you have less credit history than a 40-year-old. Due to this, the lenders can’t tell if you’re reliable yet! Therefore, you’re riskier than someone who has a reasonably lengthy and positive credit history. On the other hand, an older person will likely have a more extended credit history than a young driver, making them more likely to pass a credit check. Assuming they have a good track record of responsible money management!

Young drivers are more accident-prone:

We know, we know: it might not be fair! But the statistics are clear. New drivers between the ages of 17-25 cause many serious road accidents in the UK. Unfortunately, your age will work against you when you’re looking for car finance, as you’re considered a more considerable risk than an older person.

Young people (especially students) are skint:

Most young drivers won’t have much disposable income compared to someone ten years older who might have established a career with a decent salary. But, the stereotype of young people being broke isn’t necessarily true. If you have a decent job at a young age and can back it up with payslips, there shouldn’t be a problem finding a car finance provider who’ll give you a car loan.

So, in summary:

Most lenders will consider high-risk young drivers (mainly 17-21-year-olds). So if you fall in this age range, you’ll find it more challenging than someone older to get a new finance deal. But that doesn’t mean it’s impossible, just less likely.

Try not to get frustrated: it won’t last forever, and if you’re smart, you’ll have a booming credit score in no time at all.

First-time car finance for new drivers

What are your options if you’re a new driver looking for a first-time car finance deal?

The car finance loans available to you will depend on your age. For a new driver under 21, getting your first car loan can be challenging. However, once you cease to be a teenager and reach your very early twenties, it all gets much more accessible.

Quite a few first-time car financing deals are available for new drivers. But, of course, the first decision you want to make is to buy a new car or a used car.

As you’ll guess, a used car is significantly more affordable. However, you’ll be driving around in an older model and will likely face reliability issues sooner than someone in a new car (but not necessarily)!

Typically, we’d recommend that you find a reliable used car as a new driver. But unfortunately, if you’re like most young drivers, you won’t be able to buy it outright.

So thankfully, there are a bunch of first-time car finance deals for new drivers available, including HP (Hire Purchase), PCP (Personal Contract Purchase), a guarantor loan, a car lease deal, or a personal loan.

What’s an HP (Hire Purchase) deal, and is it suitable for young drivers?

Hire purchase is how it sounds. You hire the car over a long time, make monthly repayments, and eventually own the vehicle. The car finance term is typically around 3-5 years.

The significant advantages of a Hire Purchase deal are that you own the car at the end. So if you end your contract term with your car full of dents and scuffs, you won’t have to explain yourself to the dealer. Likewise, you don’t have any mileage limits, so you can drive as much as you fancy.

The downside is that it’s more expensive per month than other options, like a PCP (Personal Contract Purchase). On the other hand, if you opt for a PCP deal or car lease agreement, you’ll probably be able to afford a better car.

Most dealerships offer a hire purchase option. Your credit rating will impact the interest rate you’ll receive – a higher interest rate means you’ll pay more over time.

What’s a PCP (Personal Contract Purchase) deal, and is it worth getting as a young driver?

A PCP deal is probably one of the most popular ways to finance a car for new drivers. However, it’s slightly more complex than a Hire Purchase in how it works.

You make monthly payments for your contract term – usually 3-5 years. After your finance agreement is up, you have three options. You can either:

A – Hand the car back and walk away.

B – Pay what’s called a balloon payment, and own the car.

C – Give the car back for another PCP deal.

The balloon payment is typically a pretty high number – usually in the thousands, not hundreds. Most young drivers tend to hand the car back at the end of the term.


The advantage of the PCP deal for young drivers is that the monthly repayments are cheaper than with an HP or Personal Loan. You can get a better car than if you went for another car finance option. It also adds some flexibility: if you decide you want to own it, you can put some extra money aside each month, but you’re not obligated to go through with it.

The downside is that you’ll have a mileage limit and face harsh penalties if you drive over it. Similarly, if you hand the car back, you could face charges for any damage to the vehicle – including cosmetics. If you hand the vehicle back, you have nothing at the end of your repayments.

What’s a Personal Loan, and is it worth it as a young driver?

The good old personal loan is probably the most ‘traditional’ way to purchase a car and the simplest to explain.

You go to your bank, apply for a loan, and use the money to buy a car! You’ll usually repay this over 3-5 years, and you’ll pay interest on top of the money you owe the bank. Once you buy the car, it’s yours: you owe the bank the money back, not the car, so you can modify it and sell it if you decide you don’t want it anymore.

The advantages of the personal loan are its simplicity. You can buy a car from wherever you want. Meaning you get the satisfaction of telling the dealer hassling you with credit options where to go – you transfer the cash!

The downside is that it’s not that easy to get a personal loan unless you have a solid credit rating. Due to this, it’s pretty uncommon for young drivers to finance a car using this method. Also, it’s not a guarantee that the bank will offer a better credit rating than a dealer offering you a Hire Purchase – so do your homework.

What’s a Guarantor Car Loan deal, and is it worth it as a young driver?

As mentioned in the Personal Loan section, it can be difficult for a new driver to get accepted for a Personal Loan. But all hope isn’t lost!

If you have a family member or close friend who trusts you (a lot), then you might be able to get a guarantor loan. Guarantor car loans work the same as a Personal Loan – but your loved one will be personally accountable to pick up the repayments if you’re unable to. Again, a lot less risky for the bank.

Your guarantor will need to be someone with a stable income and a good credit rating!

What are some of the benefits of getting car finance as a younger driver?

The main benefit of car finance for a new driver is affordability! Even if you have hard cash in the bank, it can be nerve-wracking to spend it all on a car. You can keep your savings for emergencies and pay off your vehicle in a manageable monthly repayment by financing. While you might need a deposit, there are also a lot of zero-deposit car finance deals out there. Of course, the bigger the deposit, the less the monthly repayments.

Another benefit is that a car finance deal can help build your credit rating. Make your repayments on time, and you’ll improve that credit score: which will help you in the future with other credit applications (including a mortgage).

What are the best cars for Young Drivers?

Reality check time: as a young driver, you’re not going to be driving a Ferrari or Range Rover. And if you can afford those cars, you probably don’t need this website! You need a ‘sensible’ car as a young driver, but that doesn’t mean boring.

No matter what car you go for, it’s critical that you get a car finance deal that is affordable and sustainable for your living situation as a new driver. Don’t spend 25% of your income on your car finance repayment.

You also need to factor in your budget insurance, fuel, road tax, MOT, servicing, breakdown cover, and unexpected costs. Unfortunately, driving in the UK is not cheap – whether you’re young or not!

The best car for a young driver is most likely a supermini or a city car in terms of actual vehicles.

Here are the differences:

City car

Think Toyota Yaris, Peugeot 108, or Volkswagen UP. These boxy little cars are designed for narrow city streets. They’re the most affordable car type out there, so they are popular with young drivers on a budget. Also, they’re effortless to drive and quite nippy around town. They make for ideal first cars!

The downside is that they’re pretty small in the back, so you probably won’t be wanting to carry around lots of passengers, especially if they’re tall. Similarly, the boot space is pretty limited.

However, the low insurance costs, fuel economy, and overall affordability make a city car an excellent option for a first car.


Slightly larger than a city car: think Ford Fiesta, Vauxhall Corsa, and Volkswagen Polo. These are probably the most seen cars on the UK’s roads: and for a good reason. They’re easy (and quite fun) to drive, are affordable for young drivers, and offer a decent amount of practicality and space: plenty of small families get by with no problem from a Fiesta. So it’s a good choice for both young and more experienced drivers.

However, the downside is that they are more expensive than city cars, so you’d likely need to get a car finance deal on a slightly older model.

Car finance for 20-year olds

Can a 20-year-old get a car loan deal?

As a young person of 20, you’ve had the extra year or two to improve your credit score.

Car loans for 20-year-olds with solid money management and a reliable job are best placed to satisfy the lender.

However, most new drivers under 21 with less than perfect money management will require a cosigner to get a car loan agreement.

The magic number for the finance companies is 21. That is when you have a much-increased opportunity of getting a car loan deal.

Yes, you can get car finance without a deposit, even as a young driver.

Deposits aren’t mandatory for car finance. However, just because you don’t need one doesn’t mean you shouldn’t put one down.

2. If you have some savings to contribute as a deposit on your car finance, you can pay less on your monthly repayments.

3. It’s worth working out your total monthly budget for car finance and adjusting your deposit to the car you want. If you can reach that figure without a deposit, then go for it – just be aware you’ll pay more interest.

4. Another benefit of putting a deposit down is getting approval for a better loan with a more generous interest rate.

5. Remember that you can trade your old car and put that money towards your new vehicle – reducing your monthly payments.

6. Many lenders will have no-deposit car finance options, so don’t think you will have to save for months and months to finance a car.

Car finance for young drivers

How old can a car be to finance?

Lenders have different criteria for the age and mileage of a car to finance.

However, as a guide, it is fair to say most car finance lenders work within the following bands when financing a vehicle:

  • The maximum age of the car at the start of the contract is between seven and ten years.
  • The maximum age at the end of the term is 12 years. For example, when you finance a car over four years, the vehicle cannot be more than eight years old.
  • Mileage of the vehicle, when the agreement starts, is a maximum between 70,000 and 100,000 miles
  • Some lenders set a maximum yearly mileage of about 10,000.

Rates from 7.9% APR. Representative APR 19.9%

Rates from 7.9% APR: the exact rate you will be offered will be based on your circumstances, subject to status.

Representative example: borrowing £6,500 over 5 years with a representative APR of 19.9%, an annual interest rate of 19.9% (Fixed), and a deposit of £0.00, the amount payable would be £166.07 per month, with a total cost of credit of £3,464.37 and a total amount payable of £9,964.37.

We look to find the best rate from our panel of lenders and offer you the best deal you’re eligible for. We don’t charge a fee for our service, but we earn a commission. This does not influence the interest rate you’re offered in any way.

Autedia Limited is a credit broker and not a lender, authorised and regulated by the Financial Conduct Authority (Firm Reference Number: 948436). You can check the authorisation on the FCA Financial Services Register.