Young driver
car finance

Can a young person get car finance?

Yes, young drivers can qualify for car finance, though lenders often apply stricter terms. You must be at least 18 years old, which is the minimum legal age for signing credit agreements in the UK.

One of the biggest challenges is proving your creditworthiness. Many young drivers have a limited credit history, which makes it harder for lenders to assess reliability. As a result, lenders may offer stricter terms, such as:

• Higher interest rates – To offset the perceived risk of lending.
• A requirement for a guarantor – Someone (usually a parent or guardian) who agrees to cover payments if you fail.
• Lower borrowing limits – Ensures affordability for young drivers.

Steps to improve your financial profile include:

• Register on the electoral roll – This verifies your identity and address.
• Open a basic bank account – This shows financial stability.
• Pay all bills on time – This demonstrates responsibility with payments.
• Use a guarantor loan – This improves approval chances when credit history is limited.

At Carboom, we help young drivers access flexible car finance options suited to their circumstances. Our team works with a wide range of lenders to improve your approval chances.

Is young drivers' car finance difficult to get?

Getting car finance as a young driver always comes with some challenges, but there are clear paths to approval. Why do lenders consider younger applicants high-risk, and how can these obstacles be overcome?

A big factor is risk assessment. Did you know that young drivers account for 85% of serious road accidents in the UK? This affects how lenders view your application, often resulting in higher interest rates. To offset this concern, you can opt for a guarantor—someone who agrees to cover payments if you cannot—or choose specific finance options designed for new drivers.

Another common problem is credit history. As a young driver, you might not have built up much credit history yet. Lenders use this record to assess how well you handle financial commitments. Building your credit score through a mobile phone contract or student account can strengthen your position. Many young drivers find success with a guarantor, who adds security to their application.

Employment history is also something lenders look at. As a new driver, working part-time or starting a career may make your income appear less stable. Although this does not rule out approval, it can lead to fewer options or stricter terms. Full-time employment isn't always necessary—many finance providers accept regular part-time income, as long as you can demonstrate reliable earnings.

The good news is that there are finance deals designed for young drivers. Options like Personal Contract Purchase (PCP) or Hire Purchase (HP) often come with flexible payment plans that can fit your budget. Saving for a deposit or building a credit score also improves the chances of approval.

Carboom provides expert guidance and a wide range of car finance solutions tailored to meet your needs

How do young drivers get car finance?

Young drivers often face challenges when applying for car finance, primarily due to their limited credit history and lack of financial experience. Lenders view younger applicants as higher-risk borrowers, especially if they are just starting work or do not have a guarantor.

These hurdles can make the process seem complicated, but with the right approach, securing finance is achievable.

To start, follow these steps:

1. Pass your driving test
   Ensure you have a valid driving licence before applying for car finance, as it is a basic requirement.
2. Set your budget
   Calculate what you can afford each month. Include the car finance payment, insurance, running costs (fuel, maintenance, and road tax), and other expenses.
3. Choose a suitable car
   Look for a vehicle that fits your needs. Consider affordability, reliability, and style, keeping running costs manageable.
4. Explore finance options
   Research finance agreements like Hire Purchase (HP), Personal Contract Purchase (PCP), and guarantor loans. These options cater to first-time drivers but come with varying terms and conditions.
5. Check your eligibility
   Ensure you meet the lender’s requirements, such as proof of income or deposit. Limited credit history may require a guarantor or a larger deposit.
6. Find car finance broker
   Work with a car finance broker who can match you with the right lender and explain the terms of the agreement.

If you're ready to take the next step, get a personalised quote from Carboom today and let us help you find the best finance deal for your needs.

Young drivers' car finance options available in the UK

Young drivers in the UK have several car finance options to consider. Whether you prioritise affordability, flexibility, or ownership, there is a solution to suit your needs. Here’s an overview of the five main car finance types and how they work.

If you're a young driver exploring car finance options, Carboom is here to help. Get a personalised quote today and discover tailored solutions to suit your needs.

1. Hire Purchase (HP)

Hire Purchase allows you to pay for a car in instalments and own it outright at the end of the agreement. You make an upfront deposit and then fixed monthly payments until the total cost is covered.

• Benefits: Full ownership after the final payment; no large lump sum at the end.
• Considerations: Monthly payments tend to be higher because you are paying off the car’s full value.

2. Personal Contract Purchase (PCP)

Personal Contract Purchase offers flexibility at the end of the agreement. You pay an upfront deposit and monthly instalments based on the car’s depreciation. At the end of the term, you can:

1. Return the car.
2. Pay a balloon payment to take ownership.
3. Trade it for another car.

• Benefits: Lower monthly payments; flexible choices at the end.
• Considerations: Ownership only comes after paying the optional final amount.

3. Personal Contract Hire (PCH)

Personal Contract Hire works like a long-term rental agreement. You pay a fixed amount each month to use the car and return it at the end of the contract.

• Benefits: Lower initial costs; maintenance often included.
• Considerations: No ownership; mileage limits and other restrictions may apply.

4. Guarantor Loan

A guarantor loan can help young drivers with little or no credit history. This option involves a guarantor, such as a parent or guardian, who agrees to cover the repayments if necessary.

• Benefits: Makes finance accessible for those with limited credit profiles.
• Considerations: A guarantor must have a good credit rating; missed payments affect both parties.

5. Personal Loan

A personal loan allows you to borrow money from a bank or lender to purchase a car outright. You repay the loan in fixed monthly instalments over an agreed period.

• Benefits: Full ownership of the car from the start; no contract limitations.
• Considerations: Approval depends on credit history and income; interest rates can be higher for young drivers.

Should a new driver get a car on finance?

Choosing car finance as a new driver requires you to think twice before applying. While it can make owning a car more accessible, it is important to evaluate whether it suits your financial situation.

Your monthly budget is important. Finance agreements divide the car’s cost into manageable payments, but these are only part of the expense. You must also account for insurance costs, which are typically higher for new drivers, as well as ongoing maintenance and costs such as fuel and servicing.

Interest rates play a huge role in affordability of car finance. Spreading payments over time reduces the upfront cost, but you may pay more overall due to interest. Using a finance calculator allows you to see how loan terms and interest rates affect monthly payments and the total cost of the agreement.

First we advise you to consider these points:

• Your monthly budget and whether you can afford payments alongside other expenses.
• The cost of car insurance for new drivers, which is often higher.
• Ongoing costs like fuel, servicing, and unexpected repairs.
• The total amount payable over the finance term, including interest.
• The type of car finance agreement that best suits your needs.

Car finance provides flexibility and access to reliable vehicles without requiring full payment upfront. However, reviewing all costs and ensuring they fit within your budget is vital. If you feel unsure, consulting a trusted lender or advisor can help you find the most suitable option for your circumstances.

What documents do I need to apply for car finance as a first-time driver?

What cars are popular among first-time and young drivers?

For first-time and young drivers, picking the right car means finding something affordable, reliable, and easy to drive. Some models are especially popular because they tick all these boxes.

1. Ford Fiesta

The Ford Fiesta is a favourite for young drivers. It is small enough to handle city roads easily and keeps costs low with good fuel efficiency. It is also reliable and comes with lower insurance costs, making it a great option for new drivers.

2. Volkswagen Polo

The Volkswagen Polo is well-built and lasts a long time. It offers a comfortable and safe driving experience, which is perfect for new drivers. While it may cost more than some other cars, its strong reliability makes it a smart choice.

3. Vauxhall Corsa

The Vauxhall Corsa is affordable and performs well. It has low maintenance costs and works well for drivers on a budget. Its small size and easy controls make it a practical option for city and town driving.

These cars are reliable, cost-effective, and ideal for young drivers who want to get on the road without spending too much. Get a personalised quote from Carboom today to explore finance options for your ideal first car. We help young drivers find affordable deals tailored to their needs.