Car leasing for young drivers

If you're a young driver and you're looking to change your car regularly, leasing could be the answer - especially if you use a guarantor

Matt Rigby
Jun 29, 2021

Leasing a car can be a great route for young drivers to secure regular access to a new vehicle. Because you’re likely to be leasing a brand new car, it’s likely to be both reliable and safe - not something you could necessarily say about the bargain-basement bangers you traditionally associate with young drivers' first cars.

Opting for a lease rather than buying a cheap car outright also means you don’t have to save up thousands of pounds - all you need to do is find the cash for the initial payment and then ensure you can keep up with the subsequent monthly payments.

Car leasing for new drivers

Another bonus of leasing a car as a young person that many people don’t think about is that it can be a good way to build up your credit score - as long as you have enough of a personal financial history to pass the initial credit check required, that is.

Read our guide about how to get car finance to find out what you can do to improve your chances of being approved for finance or a car lease. Young drivers may face additional challenges compared with older motorists who have more established credit histories, but there are things you can do to boost your chances.

Is there a minimum age for leasing a car?

Generally, you won’t be able to lease a car if you’re under 18. This is because you can’t get credit until this age. So just as you can’t take out a mobile phone contract or get a credit card, you can’t get a lease on a car until you’re 18.

Even if you’re under 25 and thinking of leasing a car, you should still check your credit score, because you may not have much of a credit history - so it’s worth doing your research beforehand, as applying for a lease and being refused could adversely affect your credit score. If you don't have much of a credit history, read our guide to how to build your credit history.

What do young drivers need to get approved for a car lease deal?

If you want to lease a car as a young driver, there are a few things you’ll need to ensure you get approval. Firstly, you should have enough financial history to pass the leasing company’s credit check. To help build this up you should ensure you have a personal bank account, and make sure you are on the electoral roll. Any bills you have should also always be paid on time. These steps should help you build a decent credit history relatively quickly.

With any form of finance for a car - and leasing is included in this, though it is classed as a form of rental rather than a finance product - the lender will want to ensure you have some form of income, to establish that you'll be able to make monthly payments. Normally they will want either proof of employment, or proof of income in the form of bank statements.

Alternatively, you may be able to sign up to a lease with a guarantor. This is somebody who can assume financial responsibility for payments if you cannot meet them. This could be a family member or a close friend - or even your boss if it’s a business lease. They must be over 21 and have a good credit score. Be warned, though - the lease company will carry out a credit check on them, and they will be liable for any debts if you fail to make payments.

What costs should a young driver think about when leasing a car?

There are plenty of different costs associated with running a car that you'll need to bear in mind when thinking about how you're going to pay for your next car. Here are the main ones.

Insurance

This is a potentially significant cost if you are a young driver or have little in the way of no-claims bonus, but there are always ways to help you cut this cost. Before you go ahead with any lease deal, you should make sure you can afford the insurance costs of the model you are considering, and check which policies offer the best value to you.

It's not always easy to predict which cars will be more affordable to insure than others, so it's worth spending some time looking into specific models you're considering to see exactly what you can expect to pay to insure these; it's not always the case that the smallest, least powerful and cheapest models cost the least to cover.

Maintenance

One of the advantages of a leased car is that it tends to be brand new, so there should be little in the way of unexpected maintenance costs, though you'll need to factor in the cost of servicing the car. Most leases and finance deals will dictate that you must service the car on time to avoid end-of-contract charges.

Be aware that all cars need servicing, so budget for this when you look at overall costs. Some manufacturers offer servicing packs or servicing can be included in some leases, so it's worth seeing if this is an option to understand exactly what this would cost you.

Fuel

It sounds silly, but it’s easy to forget that the cost of fuelling your car is one of the biggest expenses - even an electric car will cost you some money to charge up, especially if you mainly fill up at motorway service stations, which are likely to cost you far more than charging at home would.

So, make sure you work out roughly how many miles you’re likely to drive and calculate how much that’s going to cost you in fuel, by establishing your likely annual mileage, the fuel economy of your car and the likely fuel cost. There are online calculators available that can help you with this if you're struggling to work out a figure.

Initial payment

The lease deal itself will generally require you to pay an upfront sum, a bit like a deposit. Normally this is a multiple of the monthly payment - payments equivalent of three, six or nine monthly payments are the most common formats.

If you have a good credit score, you may be able to find a deal that requires no, or very little, deposit. However, do bear in mind that the less you pay upfront, the more you'll have to pay over the rest of the contract.

Monthly cost

Finally, there is the monthly payment cost of the lease itself. The longer the lease agreement, the less you’ll pay every month - though the more you're likely to have to pay in total - while the lower the annual mileage limit, the less you can expect to pay every month.

Remember, that the lower the initial payment, the higher your monthly payments, so it's worth considering both the size of the initial payment and the monthly payment to get the best balance of both, based upon the amount of cash you have to hand and your monthly budget.

How to get the right lease deal for you as a young driver

Budgeting is the most important part of working out how to get the best lease deal, so work out how much you can afford to spend - both upfront and as a monthly payment - before you start looking at deals and set your searches according to these parameters.

Do this and you shouldn't end up being tempted into a car that’s unaffordable, but should be able to take your pick of the most appealing cars for your budget.

 

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