Car finance for young drivers

Buying a safe and modern car can be affordable with car finance for young drivers

BuyaCar team
Sep 24, 2018

Buying a first car that you can be proud of might seem like a dream if you haven't got the savings to pay in cash.

Modern, safe and reliable cars might appear to be beyond the budget of many young drivers, but car finance can bring these into reach with affordable monthly payments, below £100 per month in some cases.

Used car finance is cheapest, but if you can stretch to a brand new car, then you may want to take out a Just Add Fuel deal that combines the cost of finance, insurance and servicing into one monthly instalment.

Some young drivers will be accepted for finance, but the interest rate may be high if you haven't had a regular income or a record of paying debts - such as credit card bills. Others may be unable to get finance at all, which isn't much good if you need a car before you can travel to work.

In this situation, a guarantor car loan can open the door to finance. If you have a relative that's willing to vouch for you, and ultimately make the repayments if you are unable to do so, then lenders are generally more willing to offer finance, or reduce the interest rate they offer.

Used cars available with finance


Guarantor car finance

Young drivers can struggle to get finance at all, let alone at a low interest rate, but a guarantor can help solve both of those problems.

If you’re under the age of 21, particularly if you’re still in education, then you are unlikely to have much credit history or a regular income, so can’t prove to lenders that you can be trusted to make their payments on time.

A guarantor is someone who has that good credit history and will vouch for you, enabling you to get finance - often at a low rate. They don’t just put in a good word, though. If you fail to make your payments, then the guarantor must step in and pay them on your behalf.

Guarantors need to be over the age of 21, and have a strong credit history. It helps if they are homeowners. They can’t be financially linked to you - which would rule out a spouse - but they can be a parent: the most common type of guarantor.

In most cases, once the loan is made, the guarantor has no further involvement with the process. You make the monthly payments until the debt is cleared.

If you can't make the repayments, then the guarantor becomes responsible for them. This can be particularly uncomfortable if you live with your guarantor.

Although their home cannot be repossessed, the loan is secured on the car, which can be seized. If your guarantor fails to make payments that you miss, then both of you can be taken to court and it will affect both of your credit scores.

BuyaCar works with a panel of lenders which offer guarantor car finance. To find out more, click below or call 0800 050 2333.

Guarantor finance: more details


PCP and HP finance for young drivers

Guarantors can be used to take out the most popular types of car finance. Hire Purchase (HP) agreements divide the cost of the car into a series of monthly payments. Once you've made the final instalment, the car is yours.

Personal Contract Purchase (PCP) finance is more flexible. Your monthly payments are lower because they don't cover the full cost of the car. At the end, you have three choices: handing the car back and walking away with nothing to pay; trading the car in for another model on a new finance deal; or keeping the car, either by paying a lump sum or by refinancing it.


Just Add Fuel deals for young drivers

Available for new car buyers aged 18 and over, a Just Add Fuel finance agreement makes it easier to budget for a new car, by including the finance, insurance, servicing, tax and breakdown cover in a single monthly payment. However, young drivers are still likely to need a guarantor

Most agreements are a form of Personal Contract Purchase (PCP) finance so you'll normally pay a deposit, make fixed monthly payments for three years and then have the option of returning the car or buying it for a set amount. Depending on the car's value, you may also be able to trade it in to cover the deposit on a new agreement. Because these are only available for new cars, they are typically more expensive than buying and running a used vehicle.

Peugeot's Just Add Fuel scheme is for drivers aged 18 or over, as is the virtually-identical SimplyDrive offer from Citroen and DS. If you're under the age of 21 or have less than two years of no claim discount, then the car will be fitted with a black box to monitor your driving, and it's worth lining up a guarantor.
More details on Just Add fuel deals


Car finance for 17 year-olds

It’s difficult to get car finance at the age of 17, and many lenders will not even consider it. Using savings or getting an informal loan from parents are the most common ways of buying a car at this age.


Car finance for 18 year-olds

From the age of 18, you can be eligible for car finance, either with the support of a parent or friend, or - if your credit score is strong enough - on your own. As well as a standalone finance agreement, you also have the option of buying a brand new car with a Just Add Fuel deal from Peugeot, Citroen and DS. You'll be restricted to smaller cars, but they still include the Citroen C1 and the Peugeot 2008 crossover. 

Guarantor car finance for 18 year-olds

This is a common way to get finance, especially if you’re living with your parents who are prepared to act as guarantors for the agreement.

You should be confident that you can afford the repayments through the entire course of the agreement, which could include time away at university.

If you’re unable to pay, then your car can be taken as part-payment of the total amount that you owe. Your guarantor will be liable to make up the difference.

Standard car finance for 18 year-olds

If you are employed, with a regular income, then it may be possible to obtain car finance without the need for a guarantor. Ensuring that you are on the electoral roll will help to boost your chances, but it’s difficult to build up any credit history and improve your credit score before you turn 18.

Cars in low insurance groups


Car finance for 19 year-olds and 20 year-olds

If you’re 19 or 20, you may still need a guarantor to secure finance. You can improve your chances of being approved on your own by building up a credit history: using a credit card and ensuring that you pay the balance every month. This helps to reassure lenders that you can be trusted to make your payments in time.

Having a job with a regular income gives lenders the confidence that you have the means to repay a loan, while being on the electoral roll places you at a permanent address, making you more creditworthy.

Combined, these factors make you more likely to be approved for finance without a guarantor, but you're likely to find that you can get a better interest rate with one.


Car finance for 21 year-olds and over

Once you reach the age of 21, lenders are more willing to offer finance, which reduces the need to have a guarantor and increases your access to offers, including those for buyers with poorer credit ratings.

The advice on building your credit history (above) still applies, as it can help you to secure a lower interest rate.

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