Car finance for provisional licence holders
Can I get car finance with provisional licence?
Yes, it’s possible to get a car loan with a provisional licence.
Whether you’ve been learning for a while and want to buy your first car so it’s ready when you pass your test or would like to learn to drive in your own vehicle, you might be eligible for provisional licence car finance.
However, it’s worth keeping in mind that this might be easier said than done. Not all lenders will offer finance to people without a full UK driving licence, and those that do may restrict the amount you can borrow or the type of car you can buy.
But that doesn’t mean you need to give up your dreams of buying a car on finance; there are steps you can take to improve your eligibility for car finance for provisional licence holders.
With Autedia, you can apply for a no obligation quote and receive a decision in minutes!
Can I finance a car without a licence?
Yes, if you don’t yet have a full UK driving licence, you may still be able to get a car loan.
Every lender has different requirements; some may need you to have a provisional licence to be eligible, and others may ask that you’ve held that licence for less than five years.
Is there an age limit for car finance with a provisional licence?
Yes, in the UK, you must be over 18 to sign a finance agreement. So, while you can get a provisional driving licence and even pass your test at 17, you’ll need to wait before you can buy a car on finance.
As a young driver with a potentially limited income and credit history, you may find it more difficult to find a car loan – but it’s not impossible.
Types of provisional licence car finance
There are several different types of car finance that may be suited to a learner driver:
Hire Purchase (HP)
Hire Purchase (HP) is one of the most popular car finance types. It lets you split the cost of a brand-new or used car into fixed monthly payments spread over up to six years.
You may need to put down a deposit upfront, but once you’ve made all the payments, plus the Option to Purchase admin fee, you’ll become the car’s legal owner.
HP loans are secured against the car, which means you won’t own the car during the loan term.
Personal Contract Purchase (PCP)
Personal Contract Purchase (PCP) loans are also secured against the car, but they don’t necessarily lead to car ownership.
Instead, when you reach the end of the loan term, you’ll have the choice to hand the car back, buy it by paying the one-off balloon payment, or use any positive equity as a deposit in a new loan deal.
PCP car loans can offer lower monthly repayments than HP finance, but you may have to agree to an annual mileage restriction and pay for any damage to the vehicle if you wish to return it.
Joint and Guarantor Car Finance
If you’re looking for finance with a provisional licence, opting for joint or guarantor car finance might increase your chances of securing a loan.
With both options, you don’t need to go it alone. Instead, you’ll team up with another person who will either take out the finance with you or agree to act as a guarantor. If they have a good credit score and a full UK driving licence, the second person can improve your eligibility.
Joint car finance is a type of loan agreement signed by two people who are jointly responsible for the repayments. Both your credit histories and affordability will be considered by the lender. If one of you stops making payments, the other person will still be responsible for the full monthly amount.
Guarantor car finance is a loan agreement in your name only, but you’ll need to appoint a guarantor who agrees to step in and cover your repayments if you can’t. This is usually a close friend or family member with a good credit history. Some lenders may also require the guarantor to be over 21 and a homeowner.
Can I get PCP car finance with a provisional driving licence?
Most car finance companies will only offer a personal contract purchase (PCP) agreement to people with a full UK driving licence.
If you can find a lender willing to offer you a car finance without a full driving licence, remember that you’ll need to have learner driver insurance and be accompanied by a licence holder aged over 21 every time you get behind the wheel.
If I already have insurance will that make a difference?
While there are no guarantees it will improve your car finance eligibility, lenders may look more favourably on your application if you already have been insured on another vehicle. For example, you might be a named driver on your parent’s car.
However, being a named driver won’t affect your credit score or build up your own no claims bonus.
How can I improve my eligibility for car finance with provisional licence?
If you’re looking to improve your chances of securing provisional licence car finance, there are a few steps you can take:
- Put down a large deposit
The more deposit you can put down upfront, the lower the loan amount you’ll need, minimising the risk to the lender. - Improve your credit score
Building a solid credit history, especially as a young driver, can improve your financial eligibility. Making payments on time, registering on the electoral roll, and not maxing out your credit cards can all help. - Choose a cheaper car
A small used car can be cheaper to insure and buy, reducing the amount you need to borrow. - Appoint a guarantor
Having someone with a good credit score willing to step in and make your repayments can reassure lenders and improve your car finance eligibility.
