Can I get car finance as a new driver?
Yes. You can get car finance as a new driver and use it to buy your first car.
If you’ve just passed your test and can’t wait to hit the road or had your driving licence for a while but now feel ready to buy your first vehicle, car finance can help you split the cost into affordable monthly repayments plus interest.
No matter your circumstances – whether you’ve just turned 18, have never had a type of finance before, or have missed payments in the past – we’re here to help you find the right loan for you.
How car finance works through Autedia
How does new driver car finance work?
New driver car finance works the same way as it does for drivers with many years of experience under their belt.
Start with your no obligation quote. When you apply for finance with Autedia, we’ll get you a decision from our wide panel of lenders within minutes. Simply enter a few personal details and a rough estimate of how much you’d like to borrow. We’ll use this information to run a soft credit check, with no impact on your credit score, to find out whether we can find you a car finance approval in principle.
And you don’t have to go it alone. Once you have an approval in principle, you’ll be paired with a dedicated Account Manager, who’ll be on hand to help throughout the process. They can talk you through your options, answer any questions you have, handle all the paperwork, and speak to the lender and dealer on your behalf. Think of them as your new best friend, here to help make your car finance journey easier.
Types of new driver car finance
There are three main types of car finance that typically appeal to new drivers:
Hire Purchase (HP) car finance is a popular type of loan secured against your car. You’ll borrow the full purchase amount (minus any deposit) and repay it in fixed monthly payments plus interest. Once you’ve reached the end of the agreement, you’ll become the car’s legal owner.
Personal Contract Purchase
Personal Contract Purchase (PCP) agreements work similarly to HP loans, but instead of borrowing the full purchase price, you’ll only need to borrow the value the lender thinks the car will lose during the loan term. At the end of the agreement, you can give the car back to the lender, use any positive equity as a deposit in a new deal, or buy it by paying a one-off additional ‘balloon’ payment.
With a personal loan, you’ll typically receive a lump sum that you can use to buy a car. You’ll then need to repay the loan in monthly repayments plus interest for a fixed period. As the car will be legally yours straightaway, you can sell, modify, or part exchange it at any time.
Why should you choose Autedia for your car finance?
How can I get the best new driver car finance deal?
The best new driver car finance deal for you will be a loan that’s right for your individual circumstances. It should also be affordable, with manageable monthly payments that don’t put too much pressure on your household budget.
Here are a few top tips to keep in mind:
- Apply with a car finance broker
Consider applying with an online car finance broker like Autedia. We work with a wide panel of lenders, meaning we can offer different types of loans to borrowers with a variety of different circumstances. We’ll always work to find you the best deal from our lending panel.
- Determine your priorities
Every new driver is different and will also drive their first car differently. If you plan to drive a lot of long distances, a PCP deal with a mileage restriction might not be the right option for you. Similarly, if you’re looking for a car with the most modern tech, you might prefer a PCP loan that allows you to change the car every two to four years rather than an HP, which is better suited to long-term car ownership.
- improve your credit score
While it’s not the only factor that lenders look at when deciding whether to approve your car finance application, a good credit score can make it easier to qualify for a loan. The good news is that your credit score can change over time, and there are steps you can take to improve it. Making payments on time, registering on the electoral roll, using a small percentage of the total credit available to you, and limiting the number of credit applications you make each year could all help boost your score.
Do I need to put down a deposit to get car finance?
With an HP or PCP car finance agreement, you might need to put down a deposit upfront. Typically, lenders consider 10% of the total loan value a good deposit. However, it’s not essential, and no deposit car finance loans are available.
Keep in mind that if you have savings available to put towards buying your first car, a large deposit could help you qualify for a loan. Not only can it reduce your monthly repayments and make buying a car more affordable, but it can also limit the amount you need to borrow, reducing the risk for lenders.
Car Finance Calculator
|Total cost of credit||2,125.46|
Rates from 8.9% 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 £143.76 per month, with a total cost of credit of £2125.46 and a total amount payable of £8625.46.
Can I apply for new driver car finance with bad credit?
There are many reasons why your credit score might need some work; you might have missed payments in the past, entered a debt management scheme like an Individual Voluntary Arrangement (IVA), or not had any other credit agreements before.
A bad credit score or no credit history at all can make it more difficult to qualify for finance, but it’s not impossible. At Autedia, we work with a panel of lenders, including those specialising in helping people with poor credit scores secure car finance.
Will newly qualified driver car finance affect my credit score?
As a newly qualified driver, car finance can affect your credit score in different ways. It all depends on how you manage your loan.
When you apply for your first car finance deal with Autedia, the lenders on our panel will run an initial soft check to assess your eligibility, but this shouldn’t impact your credit score. If you choose to proceed with a loan option, a hard credit check will take place. This will be marked on your credit report for up to 12 months and can impact your credit score if you have several hard credit searches on your report in a short time.
Once your finance agreement starts, you might see your credit score dip slightly. This is because a large new debt has been added to your credit report. Don’t panic; when you start making your repayments on time, your credit score should recover and could even improve over time. However, if you fall behind with your payments, your credit score could be negatively impacted.
Should I finance my first car?
Car finance can help you buy your first car and split the cost into affordable monthly repayments, plus interest. It could be the right solution for you if you don’t have cash saved to buy a car outright, want to have options at the end of a finance agreement, or are looking to improve your credit score.
However, it’s important to keep in mind that car finance is a big commitment that can last up to six years. Make sure your monthly repayments are affordable and that your budget also accounts for additional costs like insurance, fuel, car maintenance, and repairs.
Buying a car in cash is the cheapest option, but as the car’s legal owner, you’ll be impacted by depreciation (the value it loses over time), as well as covering all the running and maintenance costs. It may also take you several months or years to save the full purchase price of a new or used car, delaying your ability to get on the road in your first car.
Can I get car finance as a young driver?
Yes, you can get car finance as a young driver. In the UK, you must be over 18 to sign a car finance agreement. If you’re under 22 years old, you might find it hard to secure a loan, but it’s not impossible.
There are many reasons why it can be difficult to get car finance as a young driver; you may not have built any credit history, your income might be low or unstable, and your affordability can also be low.
Should I buy or lease my first car?
When deciding whether to buy or lease your first car, consider your individual circumstances, budget, and personal priorities.
Leasing or Personal Contract Hire (PCH) is a long-term rental agreement. They typically last two to four years, and you’ll pay a fixed monthly amount to have exclusive use of a car. During the lease term, you’ll be responsible for the car’s upkeep and any parking tickets or speeding fines, and you’ll have to agree to a mileage restriction. Once you reach the end of the lease, you’ll simply hand the car back and walk away.
Leasing might be the right option for your first car if owning a car isn’t important to you, you don’t plan to drive a lot of long distances, and you would like to drive a new or nearly new model.
Buying could be a better choice for you if you do want to own your car eventually, don’t want to be restricted on how far you can drive, and plan to keep your car for several years. Certain types of car finance, such as HP, can also be more accessible to new drivers with bad credit scores.
What are the best types of cars for new drivers?
As a new driver, the best type of car for you will be one that meets your needs, is affordable, and is relatively easy to drive.
New drivers will often look to buy a used car as these can be much more affordable than new models. Not only can cheaper cars be cheaper to insure, but they can also free novice drivers from the fear of accidentally scratching or scuffing a brand-new vehicle.
However, a very old second-hand car might be more trouble than it’s worth. A newer used vehicle with driver assistance technology, such as power steering and a reverse camera, can sometimes be a more practical choice for newly qualified drivers, even if they’re a little more expensive to buy.
Small cars like the Toyota Aygo, Honda Jazz, and Vauxhall Astra can be cheaper to insure for new drivers as they often fall into the lowest insurance groups. They can also be easier to drive as their size makes them easy to manoeuvre, especially if you often drive in the city and need to squeeze into tight parking spaces.
How can I get cheap car insurance for new drivers?
New driver insurance can be expensive. Unfortunately, newly qualified drivers are more likely to end up in an accident in their first few years on the road, and insurers charge a premium to reflect this risk.
However, there are steps you can take to secure the cheapest available insurance for your first car:
- Shop around
- Choose a small car
- Choose a used car
- Limit your annual mileage
- Keep your car secure
- Avoid modifications
- Pay annually
FAQs – New Driver Car Finance
What is APR?APR is short for Annual Percentage Rate, and it’s the amount you’ll be charged to finance your car each year. It includes your interest as well as any additional charges. The exact APR offered will depend on the overall market and your individual circumstances, but typically, drivers with a good or excellent credit score will qualify for a lower APR than drivers with bad credit scores.
How much does car finance cost?The cost of car finance is made up of the monthly repayment plus interest. The longer your loan term, the more you could pay overall due to the interest charged. Check out our car finance calculator to get an estimate of what your monthly repayments might look like.
What documents do I need for new driver car finance?Different lenders might request different documents during your car finance application, but you’ll probably need to supply: • Proof of ID – a passport or driving licence • Proof of address – a Council Tax statement or utility bill • Proof of income – recent payslips or bank statements