Car Finance for young drivers

Once approved for finance, you’re free to choose a vehicle from any reputable UK dealership. 

three £ symbols and five cars representing car finance for young drivers
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.

At what age can you get car 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 be offered finance!

green 18 in a blue circle
red no entry sign representing no credit for 17 year olds

Can a 17-year-old get a loan for a car?

No. Sadly, getting car finance in your own name isn’t possible as a 17-year-old. This is because you’re not legally allowed to sign a credit agreement until you’re 18! You can drive a car, but you can’t finance one – go figure!

However, this doesn’t mean it’s impossible to get a car at 17, but you may need to lower your expectations. If you’re desperate to get yourself in a vehicle as soon as you pass, consider buying a used car with cash, either from your savings or from the good old bank of Mum and Dad!

Car finance for 18-year olds

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

To increase your chances of getting car finance, you need to have a solid credit rating. You can build this up by paying for your own 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 at 18 is almost as bad as having a terrible one, so start improving your credit score ASAP and increase your chances of getting a good car finance deal.

You also have a better chance of getting a car finance deal if you have been employed for a decent amount of time, 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, all hope isn’t lost – it’s common for lenders to offer a joint or cosigner 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

Can a 19 -year-old get a car on finance?

Car finance becomes a little bit easier to get accepted for once you get to 19. However, your credit history is still significant. If you’re 19 or 20 with a bad/non-existent credit history, you will struggle to get a car finance deal without a guarantor.

However, if you’ve made an effort to build a credit rating and have a stable job that provides a regular income, you could have a good chance of getting accepted for car finance.

Car finance for 21 year olds and over

Once you hit 21, you’re far more likely to get car finance. At this age, you can apply for various types of finance, including a traditional Hire Purchase (HP) deal, where you pay 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.

At 21, you’re more 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 should still focus on building a solid credit history to be offered the best rates.

hand on calculator to check car finance for 21 year old

Am I eligible for car finance?

Can I get car finance with no deposit?
Whether it’s for a house or not, the word ‘deposit’ can inspire fear in the younger generation.

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.

What documents do I need for car finance?
Finding the best car finance for young drivers can be stressful. You will have to have some documents handy, like proof of income, utility bills, all while making sure your credit score is solid. As long as you organise, though, financing a car can be painless.

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!

Do I need to be employed to get the best car finance?
Credit income requirements can sometimes be frustrating. For instance, you might be someone who works part-time, but you receive working tax credits, so you can easily afford the payments.

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!

Is there car loans for students?
You might only work part-time but will be receiving a cheeky student loan for the next few years. Don’t worry. There are car loans for 17-18-year-olds out there!

 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).

Can I apply for car finance with low income?
Just because you’re in full-time employment, sadly, doesn’t guarantee you a car finance deal. The total amount of income is a huge factor. Don’t stress, though, as you don’t need to be on a fat salary to get a good car finance deal!

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.

Can I get car finance without a driving licence?
If your test is coming up and you’re feeling confident, you might be tempted to sign up for a suitable car loan for young drivers early as motivation. Bold – but you can do it.

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.

Is there an age limit for car finance?
What’s that old saying – age is just a number? It might be, but sadly, you’re not getting a car finance deal if you’re under 18! When you are, though, you’ll probably be able to find a deal, even if you only have a little credit history.

 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.

Am I eligible for car finance as a young driver?

Unless you’re one of the lucky people who can jump straight onto the property ladder, financing a car is likely to be your biggest and most intimidating purchase.

But don’t worry: whether you’re a young driver who’s just passed your test, or you’ve 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 what 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 are aware that many young drivers with bad credit need a reliable vehicle – and even some who don’t have a credit rating.

With that in mind, there’s plenty of car finance companies who 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 pretty 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’s plenty of cars out there that fit the bill.

Buying and running a car is a bit of 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 is to use a comparison tool, which looks at all the finance providers who will give you a credit agreement and finds 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 a lot 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 longer 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, this means that your age will work against you when you’re looking for car finance, as you’re considered a bigger risk than an older person.

Young people (especially students) are skint. In general, 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, then 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 young drivers (mainly 17-21-year-olds) high risk. 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.

I’m a new driver looking for a suitable car finance agreement – what are my options?

There are quite a few options for finding a suitable car finance agreement for young 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 who’s in a new car (but not necessarily)!

In general, we’d recommend that you find a reliable used car. But unfortunately, if you’re like most young drivers, you won’t be able to buy it outright. So thankfully, there’s a bunch of car finance options 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 what it sounds like. You hire the car over a long time and make monthly repayments to own the car eventually. The car finance term is typically around 3-5 years.

The big 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, then 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 nicer car.

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

What’s a PCP (Personal Contract Purchase) deal, and is it worth it 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 payments every month 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. As such, the vast majority of young drivers tend to hand the car back at the end of the term.

The advantages of the PCP deal for young drivers is that the monthly repayments are cheaper than with an HP or Personal Loan. As such, 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 you’ll 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 cosmetic. If you hand the car 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.

Simply put, 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 as you wish and sell it on 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’s a Car Lease deal, and is it worth it as a young driver?

Car leasing is probably the car finance option that comes up the least for young drivers. That’s because it historically requires a relatively high income and credit rating.

Recently though, many leasing companies have been targeting young drivers and offering pretty tempting finance deals. Car leasing is basically a car hire, but long-term. You put a deposit down, pay a set fee every month for your contract term, and hand the car back.

The advantage of a car lease deal for young drivers is that it will be on a brand new car, so you get the latest technology and safety features. Also, as you’re not paying to own the vehicle (only the depreciation), you’ll have much lower monthly repayments than if you took out a personal loan or hire purchase.

The disadvantage is that you have less freedom. Your mileage will have a cap, and you’ll pay harsh penalties if you go over your allowance. Also, you need to be careful with your car, as you could face fines if the vehicle goes back to the dealer with damage.

Car leasing is similar to a PCP: it’s usually on a new car, and you have no option to buy at the end.

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

Arguably the main benefit of car finance for a new driver is the affordability! Even if you have hard cash in the bank, it can be nerve-wracking to spend it all on a car. By financing, you can keep your savings for emergencies and pay off your vehicle in a manageable monthly repayment. While you might need a deposit, there’s 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 to 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! 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 25% of your income on your car finance repayment.

You also need to factor insurance, fuel, road tax, MOT, servicing, breakdown cover, and any unexpected costs into your budget. 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 quite 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.

Supermini: 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: there’s plenty of small families who get by no problem with 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.

Autedia Limited is an appointed representative (for consumer credit) of Financial Compliance Limited which is authorised and regulated by the Financial Conduct Authority under Firm Reference Number 772721.