Car Finance for Young Drivers

Rates from 9.9% APR. Representative APR 19.9%

Car Finance for Young Drivers - Eligibility

Can I apply for Car Finance for Young Drivers without affecting my Credit Score?


It is natural to be unsure, especially when applying for car finance for young drivers. Will I get accepted? Does applying for a car loan affect my credit score? Let’s make this clear.

When you fill in the application form, you only request a quote –  you are not applying for finance – that comes later. You have to get accepted before you can receive quotes. Requesting a quote does not affect your credit score.

As a young adult, there is no certainty you will or won’t get car finance. You’ll need a reasonable credit history, but it’s not just about a credit score. Affordability is equally essential.

At 18, with good credit, a reliable job, a decent income and able to prove you can make the monthly repayments, the chances are you will get car finance.

By 20, you might obtain car finance even with a lesser credit score. Age can count.

When applying for a car loan for young drivers, once you reach 21, you will likely find car finance easier to obtain.

If you get declined and miss out on receiving a quote, remember no damage to your credit. Find out why you were unsuccessful, helping you when you apply for car finance next time.

What is a Joint car finance application?

Joint car finance applications are an excellent way for young drivers and students to use their parent/guardian’s good credit record to get a finance agreement on a reliable motor.

Over time your credit score improves, and you can apply on your own next time.

Young couples struggling to get a decent car can also pool their collective incomes and resources with a joint application for car finance.

Rates from 9.9% APR. Representative APR 19.9%

green 18 in a blue circle

How old do you have to be to Finance a Car UK?

How old do you have to be to get a car on finance? You can apply for young drivers’ car finance from 18. However, most young drivers at that age have not had long to build a good credit history. You might have to apply jointly with a parent or other person you trust to get car finance as a young driver.

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

Car Finance for 18-year olds

Car loans for 18 year olds

18-Year-olds can have a guilt-free drink at the pub and apply for car finances. Be aware, though, that being 18 doesn’t guarantee that you will get accepted for young driver car finance.

When applying for car finance for 18 year olds, you’ll need a solid credit rating to increase your chances of getting a young driver car finance deal. You can build credit 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.

Getting the best car finance for young drivers with no credit history is almost as tricky as having poor credit. Start improving your credit score ASAP and increase your chances of getting a car loan for an 18-year-old.

How to get a loan for a car at 18?

You also have a better chance of getting young person car finance if you have been in employment for around 6-12 months. 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 to get car loans for 18 year olds accepted. But! All hope isn’t lost!

Many lenders offer joint car finance. A parent or family member acts as a co-signer on a joint application to finance a car – this is pretty common and helps build a more robust credit profile.

young women in jeans with 18 sign in square green boarder the age you can get a credit agreement

Rates from 9.9% APR. Representative APR 19.9%

Car Finance for 19-year-olds

Car loans for 19 year olds

Car finance for 19 year olds is easier to get accepted than for 18.  Yet, credit history is still a significant issue for lenders when applying for car finance for young drivers.

Car loans for 19-year-olds are available only if you have a decent credit profile.  With a bad or fragile credit history, car finance for young drivers remains a struggle at 19.

Can a 19 year old get a car loan?

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 as a young driver.

Typically, at 19, young drivers take out a joint car finance application with a parent, which can also help build a strong credit score.

credit score dial in the green zone the score needed by 19 and 20 year olds for car finance

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 finance for 20-year-olds is undoubtedly doable with solid money management, and a reliable job can often satisfy the lender.

However, for 20 year olds with less than perfect money management, car finance may require a cosigner such as a parent to take a joint car finance agreement.

Car Finance for 21 year olds

Once you hit 21, you’re far more likely to get car finance as a young 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 PCP car finance, where you pay a smaller fee monthly but hand the car back at the end.

When applying for a car loan for young drivers 21 and over, you will likely be offered finance even with a poor credit rating.

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

hand on calculator to check car finance for 21 year old

Car finance for under 21 year olds

Under 21 car finance

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

Car finance under 21 years of age can be challenging. It is not just your age working against you. It’s also your credit history. However, car finance for a 21 year old is achievable with a good credit history and a reliable monthly income.

Types of car finance for under 21 year olds

Two types of loans are available to drivers seeking under 21 car finance HP and PCP.

Suppose you want to buy a used car, more than likely, it’ll be an HP agreement, while a PCP is the popular choice for financing a new vehicle. You’ll have a better chance of success with an HP loan when applying for under 21 car finance.

Rates from 9.9% APR. Representative APR 19.9%

Car Finance for New Drivers

New driver car finance

Nearly 70% of new drivers in the UK passing their driving test are aged 21 or under. That’s more than half a million new drivers looking to buy a car each year.

Many of these young drivers won’t be seeking car finance for new drivers. They’ll have alternatives; perhaps they have some savings hidden away for a runabout or, more likely, the good old bank of mum and dad can help.

Do lenders finance cars for new drivers?

Yes. Car finance lenders do offer car finance deals for young drivers. However, the younger you are, the more difficult of getting accepted for young driver car finance. Most car loans for new drivers go to drivers of 21 plus.

However, many young adults will apply for car finance for new drivers. If you are in your teens, your chances are less than when you reach the grand old age of 20 plus.

Car finance deals for new drivers

New drivers have two main types of car finance available to them. HP is the most likely car finance for new drivers under 21 associated with buying a used car over three years old.

PCP car loans for new drivers are the most popular way to purchase a new vehicle and demand a better credit history.

Rates from 9.9% APR. Representative APR 19.9%

Car Finance for First Time Drivers

Do lenders finance cars for first time drivers?

Suppose we split first-time drivers into groups 20 and under and 21 plus. The latter group will get offered car finance for first time drivers subject to their credit history. Age won’t play such a large part as it does for those new drivers of 20 and less applying for their first time car loans.

Although lenders offer car finance for first time drivers from 18, you’ll need a good credit score to get accepted at that age.

Once you cease being a teenager and reach your very early twenties obtaining your first car finance becomes much more accessible.

What are the types of car finance for first time drivers?

There are two options if you’re a new driver looking for a first-time car finance deal.

Most car finance for first time drivers is an HP contract to purchase a used car. HP car finance is a more accessible loan for a young driver with a less-than-perfect credit history.

For first time drivers with a healthy credit score, a PCP deal to purchase a newer car might be an option.

Car Finance for Young People

Lenders see car loans for young people as a more significant risk than to drivers once they reach 21.

Once you clear your teens and enter your early twenties, car finance for young people becomes much more accessible.

Typically, car finance for young people is available to those drivers with a good credit rating, provided you can prove an income that passes an affordability check.

The types of car loans for young people are HP for buying a used car and PCP for new vehicles.

Car finance for young adults

Young adults in their early twenties are at the age when a job provides a reasonable monthly income, and several years have gone by to build a decent credit score.

Credit scores remain essential to gain the best interest rates, but unlike in your teens, a less-than-good credit score need not stop you from getting car finance for young adults.

Even young adults with no credit might get a car loan if they apply via open banking, which allows lenders to see their bank account transactions.

Car loans for young adults come in several styles. An HP deal will get you a decent used car which you’ll own at the end of the contract. Alternatively, a PCP car loan for young adults with good credit will get you a brand-new vehicle.

Rates from 9.9% APR. Representative APR 19.9%

Young Person Car Finance

Car loans for young person

Many might think they are a young person, but legally in the UK, young persons typically refer to those up to 18 years old.

In the Uk, you cannot sign up for any credit until you are 18. So, when we discuss young person car finance, we refer to a driver who is 18 years old.

As we discussed earlier, see car finance for 18-year-olds. To get accepted for a car loan for young person at that age, you’ll need the following:

  1. A reliable job.
  2. A decent income.
  3. Proof you can afford the loan repayments.
  4. Oh, and good credit history.

Open Banking increases the chance of getting accepted for Car Finance!

Does my credit history affect my getting Car Finance for Young Drivers?

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

When looking for the best car finance deals for young drivers, your credit history will play a significant part in the lender’s decision to offer you a loan. 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, many car finance companies will offer car loans for young drivers, even those with a bad or non-existent credit score. Just be aware that interest rates will likely be higher, meaning paying more to finance the car.

What is the Minimum Credit Score for a Car Loan?

There is no minimum credit score for young driver car finance, and no credit score guarantees you’ll get approved for car finance.

You can find out everything you need about credit scores when applying for car finance, including all three credit agencies’ scores.

Below you can see the Experian credit scoring system


Experian’s credit score band is between 0 – 999.

The average UK score is 759*

Score Band
0-560 Very Poor
561-720 Poor
721-880 Fair
881-960 Good
961-999 Excellent

How do young drivers find car finance?

Unless you have help from a particularly savvy person, finding the best car finance for young drivers can be daunting.

And it’s understandable: car finance as a young driver is a big purchase and needs careful consideration.

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

One easy way to find the best car finance for young drivers is by using an online car finance broker. They’ll search a large panel of lenders to find you the best car finance deal available for your circumstances.

Rates from 9.9% APR. Representative APR 19.9%

Why can it be challenging to find Car Loans for Young Drivers?

Having limited options, car finance for young drivers can seem unfair – but there is a logic behind it.

Here are a few reasons it can be tricky to find car finance deals for young drivers:

No credit history or a poor credit score:

As a young adult, you have less credit history than a 40-year-old. Lenders can’t tell if you’re sufficiently reliable yet for young driver car finance! Therefore, you’re riskier than someone with 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 likely to cause an accident

We know, we know: it might not be fair! But the statistics are clear. New drivers between the ages of 17-25 cause many severe road accidents in the UK.

Unfortunately, your age will work against you when looking for car finance for new drivers. You’re considered a more considerable risk than an older person.

Young people (especially students) are skint:

Most young people 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 you young person car finance.

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 finance. But that doesn’t mean you can’t get acceptance for young driver car finance, 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.

HP Car Finance for Young Drivers

With Hire Purchase car finance for young drivers, 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 advantage of this type of finance for young drivers is that you own the car at the end of the contract. 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 of HP young driver car finance 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.

Lenders are likelier to offer HP car finance deals for young drivers with a lower credit score. Your credit history will impact the interest rate you’ll receive – the better your credit, the lower the APR.

PCP Car Loans for Young Drivers

PCP car loans for young drivers are slightly more complex than a Hire Purchase in how it works.

A PCP is the go-to finance for buying a new car, the most keenly sought amongst car loans for young drivers. Monthly repayments are less than HP because you don’t own the vehicle at the end of the agreement. You only pay the value the car is estimated to depreciate over the term – usually 3-5 years.

After your finance agreement is up, you have several options. You can:

  • Hand the car back and walk away.
  • Pay the GMFV (affectionately known as the balloon payment) to own the vehicle outright.
  • Give the car back for another PCP deal.

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

Rates from 9.9% APR. Representative APR 19.9%

How do PCP and HP Car Finance Deals for Young Drivers Compare?

What are the advantages of PCP car loans for young drivers?

  • 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.
  • A PCP young driver car finance deal will likely leave some positive equity in the car at the end of the contract. You won’t get the cash but can put it towards another car finance contract.

The downside of PCP:

  • You’ll have a mileage limit and face harsh penalties if you drive over it.
  • Similarly, suppose you hand the car back. In that case, you could face charges for any damage to the vehicle – including excess wear and tear.
  • When the contract ends, you lose the car unless you pay up the cost of a large lump sum balloon payment.

Why could HP car loans be better than PCP for most young drivers?

  • Typically HP loans have the highest approval rate of all car finance types and are often available to young drivers with a less-than-perfect credit score.
  • The monthly repayments are more than PCP but have a distinct advantage you’ll own the car at the end of the contract. And you can sell it if you want.

Any downsides?

  • You don’t own the car until you make the final payment, and you may have to pay a deposit, but these also apply to PCP.

Which is the best car finance deal for young drivers?

Rather than consider which type of car finance is best for young drivers. The kind of car you want and, in no small way, your financial circumstances can dictate the loan type. Let us, therefore, consider what is realistic for most young drivers.

Suppose your income and credit rating will not be terrific as a young person. You’ll probably be looking at purchasing a car several years old. PCP is available on new cars and vehicles up to three /four/five years old. After that, you might achieve a PCP on older cars but from an ever-decreasing number of lenders.

HP Hire Purchase is the go-to for most used car finance.

Rates from 9.9% APR. Representative APR 19.9%

Can I get a No-Deposit Car Finance for a Young Driver?

Yes, you can get no-deposit car finance even as a young driver, subject to status.

  1. 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. Work out your monthly budget for car finance and adjust 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 paying a deposit 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.

Can you get Personal Car Loans for Young Drivers?

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

However, personal car loans for young drivers are difficult to obtain unless you have a solid credit history. Due to this, it’s pretty uncommon for young drivers to finance a car using this method.

How does a personal car loan work?

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 pay interest on top of the money you owe the bank. Once you buy the vehicle, it’s yours: you owe the bank the money back, not the car, so you can modify it and sell it if you don’t want it anymore.

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

Finally, it’s not a guarantee the bank will offer a better interest rate than an online broker or dealer offering you a Hire Purchase – do your homework.

What are the Benefits of Car Loans for Young Drivers?

The main benefit of car finance for a new driver is affordability! Even if you have hard cash in the bank, spending it all on a car can be nerve-wracking.

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 zero-deposit car finance deals for young drivers. 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.

Rates from 9.9% APR. Representative APR 19.9%

What are the Best Cars for Young Drivers to Finance with a Car Loan?

Reality check time: as a young driver, you will not be driving a Ferrari or Range Rover. And if you can afford those cars, you probably don’t need this website! As a young driver, you need a ‘sensible’ car, 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 more than 20% of your income on your car.

You must also 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 for narrow city streets. They’re the most affordable car type, 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 want to carry around many 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.

Typically, many first-time drivers will finance a City car with a car loan.


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 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.

The Supermini is the most popular style of car purchased on young driver car finance.

How Old can a car be to Finance?

Are you considering getting a young driver’s car finance deal, and if so, are you looking at a new or used car? Read on if you want to apply for a used car finance deal.

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 9.9% APR. Representative APR 19.9%

FAQs - Car finance for young drivers

Rates from 9.9% 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.