Car Finance for young drivers

Thankfully though, getting the best car finance for young drivers isn’t half as tricky as getting your first home, and it’s often possible to get the car you want without a deposit.

In general, deposits aren’t mandatory for car finance. However, just because you don’t need one doesn’t mean you shouldn’t put one down – as tempting as that might be!

If you have some savings available to contribute as a deposit on your car finance, you can end up paying less over each month.

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.

Another benefit of putting a deposit down is that you can be approved for a better loan with a more generous interest rate. Remember that you can trade your old car in and put that money towards your new car – reducing your monthly payments.

There are lots of lenders out there who will have no-deposit car finance options, so don’t think you will have to save for months and months to finance a car.

No matter where you are in the UK, the documents you’ll need to make a car finance application are similar. In general, the lender needs to see three things: proof of license, proof of income, and proof of address.

Proof of licence

Proof of license is simple and is exactly what it sounds like – just pass on your driving license details. Likewise, it doesn’t take a genius to figure out what you need for proof of address’ – usually, just a utility bill will do the job.

Proof of address

As with most credit applications, though, you’ll need to be at your address for three years, or you’ll have to provide proof of your previous address. If you’re struggling to find this, the lender can help you out. Each lender has different criteria for what they’ll accept, but it shouldn’t be a big problem.

Proof of income

Finding proof of income can be a little bit more tricky, though, depending on your circumstances. In most instances, you just need your payslips and bank statements, but if you’re self-employed, for example, it can be more difficult, as you may have to juggle statements from personal and business bank accounts.

Of course, the exact documentation you’ll need depends on your lender and can vary – if you have a low credit score, for example, you might need a little bit more information on proof of income to make sure you can make the monthly repayments. If you have had previous driving convictions or bans, you can still get car finance: you might just have to reach out to more lenders.

Remember: no car finance provider will ever guarantee the offer of a car loan. However, they want your business and will work hard to try and get you signed up!

In any case, you will need to demonstrate your ability to make the repayments convincingly.

With most lenders, you’re going to need to be employed in some capacity – whether that’s part-time or full-time. Your total income will greatly impact whether you can be accepted for a car finance deal.

That being said, though, there are lenders out there who can help you if you’re not on regular hours or a salary. For instance, some lenders can offer you deals if you are :

• A student
• Self-employed
• A carer
• Disabled
• A taxi driver
• About to start a new job
• A housewife
• An agency worker or freelancer

…and much more. Of course, whether you get accepted or not depends on other factors, like your credit score. But you can rest easy knowing that there are lenders out there who can help: even if you’re not in steady full-time work.

Similarly, there are lenders out there who can offer you a deal if you have a low credit score. Your interest rate will likely be higher, or you may require a deposit, but it is possible!

 If you’re a student, you will admittedly find it harder to get a car finance deal. However, if you have a decent credit rating (maybe you have a phone contract and a few payments on your first credit card), you have a chance!

In general, if your overall income is good, and you can prove a reliable paycheck, you can find lenders who will give you a car finance deal. Just be aware that car finance for students will likely mean you will pay a higher interest rate than if you were a bit older (due to having more income and credit history).

As there are so many lenders out there with such different criteria, it’s impossible to put a number on the minimum amount of income required for the best car finance. While some lenders might need loads of payslips, some might not require any – it’s tough to say.

No matter which you apply with, you will have to declare your income and likely support this with documents and evidence. The lender will want to make sure you receive this income regularly and at a consistent amount: meaning that you’re capable of paying the loan back over several years.

It’s important to note that this income doesn’t just mean your full-time employment. Self-employed and part-time/side-job income counts, too!

If you receive working tax credits, child benefits, job seekers allowance, DLA – you can still be considered for a loan. Many lenders consider ‘income’ to be a blanket statement: sometimes, and not worried where it comes from, as long as it’s consistent and of a decent amount to cover the loan!

If you have a larger income, though (congrats!), you’re likely to be offered a lower interest rate, meaning you’ll be less over the long-term. If you’re desperate for a car but are a low-earner, don’t worry: you’ll likely still find a deal to get yourself on the road.

If you have good credit, you may be eligible for some of our lowest rates. We have great finance options for those with less than perfect credit histories, including those with CCJs, defaults, or ex-bankrupts.

The vast majority of lenders will indeed require a full driving license. But there are finance options for those who have provisional licenses – or even no license at all!

However, it’s essential to be realistic and be aware that these kinds of lenders are in the minority. It will become even more important for you to have a good credit score, a high income, and often a deposit in these instances.

 If you’re looking for a loan for young drivers, the process isn’t any different than if you were an experienced driver. When many younger people find it difficult to find car finance, it isn’t due to their age but their income and credit score.

If you’ve got a decent credit history (and have a credit card or a phone contract, for instance), you stand a good chance of getting a decent car finance deal. Of course, you’ll need to pair this with a decent income, too.

If you’re like most 18-year-olds, though, your bank account is probably reasonably slim, and your credit score is in its infancy. In this scenario, you can apply for something called a guarantor loan.

A guarantor loan is where someone who has a solid financial record (good credit rating etc.) can guarantee to make the credit payments if you fail to. Usually, a parent or guardian – however, this person can’t be any older than 80.