Car Finance for Young Drivers

Looking to buy your first car? Explore the best car finance options for young drivers with Zuto and our experts will help you find the funds for a better set of wheels.

Getting accepted for car finance can be difficult when you’re a young driver. Having little or no credit history can make a lenders decision more challenging as they'll be unable to see how you’ve handled credit in the past.

Here at Zuto, we believe that everyone should be considered for car finance. We compare from a range of lenders to help us find accessible and affordable finance solutions.

Yes, young people can get car finance, but there are a few things that make getting accepted a little more tricky, including:

• Little or no credit history - Although you can start building your credit history before you’re 18, your options are limited and most young drivers have little or no credit history. This means lenders will struggle to see how you’ve handled credit in the past.
• Age restrictions - Although you can own and drive a car when you’re 17, you can’t sign a credit agreement until you’re 18. This means you won’t  be eligible for car finance until then.
• Affordability issues - Lenders need to be confident that you’ll be able to keep up with your regular repayments. If you’re in part-time employment or you’re not working at all, this could make affordability an issue. High insurance costs could also impact your ability to meet monthly car finance commitments.

Having a good credit score can help you secure car finance, so it’s worth getting into good financial habits from an early age. This could include things like opening a bank account and not dipping into your overdraft, making regular Direct Debit repayments on a mobile phone contract, and making sure you’re on the electoral roll at your current address.

If you’re a young driver looking for car finance, there are a few options to consider, including:

• Hire purchase (HP) car finance - Pay for your new car, plus interest, in regular monthly instalments over a set period, instead of paying in one lump sum. This type of loan uses the car as security, which can help your application get accepted, and you’ll  own it when  the last repayment is made.
• Personal contract purchase (PCP) car finance – Spread the cost of the car's estimated depreciation value over a set period, plus interest, then either hand it back or make one final balloon payment to take ownership of it.
• Personal loans – Use the loan to pay for your chosen car outright and you’ll own it from day one. You’ll then need to keep up with the monthly repayments to your chosen lender.

Here are some of the key things to think about as a young driver looking for finance:

• Affordability - Spreading the cost of a car over a longer period can make buying a new car more affordable than if you need to pay the full price upfront in cash. But you need to make sure you can afford the monthly repayments and bear in mind that a longer repayment period usually means you’ll pay more in interest.
• Get a better car - Using car finance could mean you can buy a newer, safer, and more reliable car that would otherwise have been out of your price range. Buying a newer car can also help to cut down on maintenance and repair costs, so could prove to be a more cost-effective option in the long run.
• Build your credit history - As with most types of credit, taking out car finance and keeping up with your regular monthly repayment can help you build a positive credit history and a better credit score. This can help with future credit applications, including mortgages, credit cards, and personal loans.
• Lower upfront costs - If you’ve got little or no savings, then car finance could be a good option as it often requires a smaller initial payment or deposit compared to buying a car outright.

Flexibility - Car finance options like PCP or Hire Purchase offer flexible terms. This means if approved you can choose the length of the contract and the size of the monthly payments to suit your financial situation and preferences.

If you’re in full or part-time education, Zuto could still help you find car finance. Even if you’ve little or no money for a deposit, have a limited credit history, and are only in part-time employment, we can compare from our panel of lenders to help you find finance to fit your budget and lifestyle.

Find out more at our guide to car finance for students.

You need to base your decision to take out any type of finance on your current circumstances, paying particular attention to the affordability of any loan you apply for. When considering a car, young drivers also need to factor in potentially high insurance costs, as well as fuel, maintenance, and other costs.

If you’re unsure how much the interest and monthly repayment will be, our car finance calculator can help you budget. You can then make a more informed decision based on your current credit score and affordability.

Buying a car on finance is a way to buy a car without having to pay the full amount upfront. It can allow you to spread the cost over a longer period of time, making it more manageable to fit into your monthly budget.

But it's important to keep in mind that financing a car also means that you'll be paying interest on the loan, which can make the overall cost of the car higher than if you were to buy it outright. Additionally, you'll need to factor in other costs such as insurance, fuel, maintenance, and repairs, which can add up over time.

Ultimately, whether or not you should get a car on finance will depend on your individual circumstances, such as your budget, driving experience, and personal preferences. It's a good idea to do your research, compare different options, and weigh up the pros and cons before making a decision.

You need to be over 18 before you can sign a car finance credit agreement. This means that new drivers aged 17 won’t be eligible for finance. 

But even if you’re old enough to enter a credit agreement, this doesn’t mean your application will be accepted. Lenders will look at your current situation and credit history to help inform their decision - having a low income and a poor credit history can make getting finance more difficult.

At Zuto, we’re committed to making car finance simple and accessible. Our team will help you find the right lender and guide you through the application process. You can find out more in our guide to applying for car finance.

There’s nothing to stop provisional licence holders from applying for car finance. Some of our lenders will consider applicants with a provisional licence. 

You can find out more in our guide to car finance for provisional licence holders.

If you’re a young driver that’s out of work - possibly because you’re a full-time student - then it is possible to get car finance. But being unemployed will impact your chances of being approved. 

This is because lenders need to be confident that you can keep up with your monthly repayments, and not having a regular income makes this less likely.

Any decision to lend will be based on your current circumstances and credit history. If you need some guidance before applying, give the team at Zuto a call on 01625 619 944 or get a quote using our online application.