Young Driver Car Finance

Does Young Driver Car Finance Exist?🤔

Yes, young driver car finance exists. Here at Marsh Finance, we offer finance to customers aged 20 or over, or those who have held a driving licence for 3 years.

Young drivers can absolutely get car finance but might find it harder to be approved than more experienced drivers. If you’re looking to finance your first car but are unsure if you’d be pre-approved for car finance, we can help. Simply complete our application form and receive a decision the same day, without any impact on your credit score.

Why Lenders Are More Careful With Young Drivers

Lenders assess younger drivers more carefully because they often have limited credit history and shorter employment records. The younger you are, the less likely you are to have built up disposable income and funds necessary to get car finance. There’s also the matter of credit history. As a young driver, you’re unlikely to have taken out many credit agreements, and your credit history will be limited. To a lender, a limited credit history presents a risk as there is no evidence of past repayments and financial responsibility, even if your credit score is good.

Can I Get Car Finance At 18?🚗

Yes, you can get car finance at 18, but rates will likely be high as lenders look to offset the risk of missing repayments. As a first-time borrower, lenders have less repayment history to assess, which can make them more cautious.

While some lenders offer finance from 18, others (including us) require customers to be a minimum of 20 years of age.

Check your eligibility in under 30 seconds.

What Are My Finance Options As A Young Driver?

First time getting finance? You have a few good options. As a young driver, you can choose to finance via hire purchase (HP) or personal contract purchase (PCP). Both have key differences, so it’s important to know which one suits you best.

🚀 Apply For Car Finance Today!

HP or PCP – Which Is Better For A Young Driver?

• Simple and straightforward process? HP is your option.
• Want to have plenty of choice at the end of the agreement? Go with PCP.

Choosing HP or PCP as a young driver depends on your circumstances. If you’re set on a car and want to own it at the end of the agreement, you should choose HP, which offers straightforward payments and passing of ownership. If you’re not sure what the future holds and want to keep your car options open, PCP is better suited. At the end of a PCP agreement, you can pay the final sum and own the car, trade it in for something else, or simply hand it back.

How Much Will Young Driver Car Finance Cost Per Month?

The monthly cost of car finance for young drivers depends on the car you choose. Let’s say you’re interested in a used Vauxhall Corsa. The average monthly cost for a used Corsa priced at £10,157 with 12% interest over 48 months is £267.45.

Of course, if you choose a more expensive car, your monthly payments will be higher.

How Lenders Decide What You Can Afford

When you apply for car finance, lenders don’t just look at your income.
They look at whether the repayments are realistically sustainable for you every month.

This is called an affordability assessment, and it’s a key part of responsible lending in the UK.

Rather than setting a minimum salary, lenders calculate how much disposable income you have after your normal living costs.

They may review:

• Your monthly take-home pay
• Rent or board payments
• Utility bills and subscriptions
• Mobile phone contracts
• Existing credit commitments (credit cards, loans, buy-now-pay-later)
• Regular spending patterns from bank statements

Why This Matters

Two young drivers earning the same wage could receive very different decisions.

For example:

• Someone living at home with few outgoings may comfortably afford repayments
• Someone renting, paying bills and already using credit may struggle to afford the same agreement

Because of this, a lender might approve a £6,000 car but decline a £15,000 car for the same applicant.

This doesn’t mean you’ve done anything wrong.
It simply means the lender wants to ensure the payments fit safely within your budget.

Choosing a car with realistic monthly payments often improves your chances of approval and helps you manage the agreement comfortably.

Can I Afford The Car Once Insurance Is Included?💷

When you add car insurance into monthly car costs, you could be paying £450 to £500 a month for your wheels. Car insurance in young drivers is typically higher than in experienced drivers, as there’s an increased risk of accidents due to a lack of experience on the road. Insurance for young drivers can reach £150 a month, and it’s important to factor this into a budget before applying for finance. If you enter a car finance agreement and start to miss payments, you could face financial penalties and a reduction in your credit score, reducing your chances of future credit application acceptance. 

Do I Need A Guarantor For Car Finance?

You don’t need a guarantor as a young driver, but it will improve your chances of being accepted for car finance. A guarantor is like a back-up, if you struggle to make payments or have any issues, your guarantor can step in and cover missed payments. If you choose an older family member as a guarantor, they could have a greater credit history too, giving lenders a clearer picture of affordability. To a lender, all of this adds that extra bit of comfort and increases your likelihood of being accepted for finance.

In a guarantor car finance agreement, both applicants are equally liable for payments, and so both can face punishments for missing a payment.

Can I Get Car Finance If I’m A Student Or Part-Time Worker?🧑‍🎓

Car finance as a student/part-time worker is possible, but you might find it harder to be accepted than other applicants. Being accepted for car finance depends on plenty of factors, but mostly affordability and credit history. As a young driver, you might not have built up significant funds or a solid credit history. This doesn’t rule out car finance but makes it harder to be accepted. As a part-time worker, affordability is the biggest concern for a lender. If you can prove you have enough financially to afford monthly payments, you will stand a good chance of getting car finance.

Can I Get Car Finance With No Credit History?

While no credit history doesn’t eliminate you from car finance, it does make it harder to be accepted by a lender. For young drivers, no credit history is a real problem. To lenders it shows that you haven’t had experience of making repayments before, which to them presents a risk. However, if you can prove that you have the necessary funds, lenders will likely look at your application more favourably. In addition, adding an older guarantor with a more extensive credit history can help your chances of approval even more. You could also commit to placing a deposit. This is a good way of confirming your commitment to the finance agreement whilst taking a large chunk out of the required repayment.

Will Car Finance Help Or Hurt My Credit Score?💯

If you meet car finance payments every month, your credit score will improve. When you first take out car finance, your credit score will likely dip slightly, but over time will improve as you make repayments.

Building your credit history is key to helping your chances of being accepted for credit in future, and car finance is one way of doing this.

On the flip side, if you miss repayments your credit score will worsen, reducing your chances of being accepted for credit in future.

Does Checking My Eligibility Affect My Credit Score?

Checking your car finance eligibility at Marsh Finance doesn’t affect your credit score. When you apply, we only undertake a soft credit search, which doesn’t appear on your file and protects your credit score.

Check your eligibility for car finance today, without affecting your credit score.

How Much Deposit Do Young Drivers Need?

There’s no perfect deposit figure for young drivers, although a larger deposit will obviously reduce your monthly payments. Generally, young drivers need a deposit worth 10-20% of the car’s value. You do have the option to make an even larger deposit, but don’t overstretch yourself or leave you financially short down the line.

What Documents Will I Need To Apply?📇

• Passport, driving licence, any government-issued identification.
• Recent utility bill, council tax bill or bank statement (dated in the last 3 months), or driving licence showing proof of address.
• Most recent payslip or any proof of income.
• Potentially additional documents depending on your lender, but they’ll communicate which ones to you.

What If I’m Refused Car Finance?

If you’re refused car finance, don’t panic. A rejection from one finance company doesn’t necessarily mean rejection from another. Refused car finance usually comes from credit history issues or the size of loan you’re requesting. Make sure you ask for the reason behind your refused car finance so you can make changes for future.

In terms of next steps:

• Improve your credit score.
• Manage finances wisely and budget.
• Strengthen your next application.
• Choose a car well within your budget.

What Happens If I Miss A Payment?

Missing car finance payments can happen, but what you do next is important. As soon as a payment is missed, reach out to your lender and talk through next steps. Most lenders will work with you to arrange a short-term solution, which could include a reduced payment arrangement or deferred payments.

If you miss a payment and don’t do anything to correct the matter, you could face financial penalty and a down mark on your credit profile, reducing your chances of future credit acceptance.

👉 Take a closer look at refused car finance with our dedicated page.

Common Mistakes Young Drivers Make With Car Finance🔎

Getting your first car on finance is exciting, but many first-time borrowers make avoidable mistakes that can lead to declines or financial pressure later.

Here are some of the most common ones.

Choosing A Car That Is Too Expensive

A bigger or newer car isn’t always a better choice for your first finance agreement.
Higher value vehicles mean higher repayments, and this is one of the main reasons applications are declined.

Starting with a modest first car can make approval much easier.

Forgetting About Insurance Costs

Insurance is often the largest motoring cost for young drivers.
In some cases, insurance can cost as much as — or more than — the monthly finance payment.

Always check insurance quotes before applying for finance.

Applying To Multiple Lenders At Once

Submitting several applications in a short period can leave multiple credit searches on your file.
This may make lenders think you’ve already been declined elsewhere and can reduce your chances of approval.

Using an eligibility checker first can help avoid this.

Taking The Longest Term Available

Long agreements can reduce monthly payments but increase the total amount you repay.
It’s important to choose a repayment term that is affordable but not unnecessarily long.

Not Budgeting For Running Costs

Servicing, tyres, fuel and repairs are part of owning a car.
If you only plan for the finance payment, you may find the car harder to afford than expected.

Taking time to plan before applying often leads to a smoother approval and a more manageable agreement.

Can A Parent Help Their Child Get Car Finance?

Yes, a parent can help their child get car finance by signing as a guarantor. Adding yourself onto your child’s car finance application increases their chances of being accepted, providing you have solid finances and a decent credit history. For many young drivers, a lack of funds and a limited history of meeting repayment schedules are often the reasons for failed car finance applications.

As a parent though, adding yourself onto their car finance application can provide extra reassurance to a lender, increasing your child’s chances of being accepted for car finance.

It’s important to bear in mind that the guarantor and the original applicant are equally liable for making payments, and missed payments will both customers’ credit scores.

Best Cars For Young Drivers🚨

• VW Up
• Hyundai i10
• Kia Picanto
• VW Polo
• Seat Ibiza
• Renault Clio
• Kia Rio
• Skoda Fabia

Before Applying, Work Out Your Monthly Motoring Budget

Before you apply for car finance, it helps to understand the true monthly cost of running a car, not just the finance payment.

Your total monthly motoring cost may include:

💳 Finance repayments
🚗 Insurance
⛽ Fuel
🧾 Road tax
🔧 Servicing and maintenance
🛞  Tyres and repairs
🅿️ Parking or permits

For example, a £220 monthly finance payment could realistically become £400+ per month once insurance and running costs are included.

A Simple Budgeting Approach

A good rule is to make sure your car costs leave you with money left over each month after essentials like rent, food and bills.

Ask yourself:

• Would I still afford this if my hours changed?
• Could I manage an unexpected repair?
• Would I still be comfortable paying this in 12 months?

Car finance should make life easier, not stressful.
Choosing a payment that fits comfortably within your budget helps you keep up repayments, protect your credit score and enjoy your car with confidence.

FAQs

What Age Can You Get Car Finance In The UK?

You must be 18 years old to apply for car finance in UK. Some lenders, like Marsh Finance, require lenders to be at least 20 years old to apply for car finance.

Can An 18 Year Old Get Car Finance With No Credit?

Yes, but it may be difficult to be accepted. An 18 year-old driver is less likely to have significant disposable income, and a limited credit history presents a potential risk to lenders. While it’s not impossible to get car finance as an 18-year-old with no credit history, it is very difficult to be accepted.

Is Car Finance A Good Way To Build Credit?

Yes, car finance can be a good way to build credit, provided you make all repayments on time. Completing a car finance agreement shows that are responsible financially and can meet repayment requirements. This builds your credit score and adds evidence of successful payments to your credit file.

Do Students Get Approved For Car Finance?

Students can get approved for car finance, but will find it harder than older customers with a stable income. Students likely have a low to minimal income, which to a lender is a sign that they may not be able to meet repayments. If however, you can provide proof of necessary funds, or even add a guarantor to your agreement, you have a good chance of being approved for car finance.

How Long Does Approval Take?

Apply for car finance with Marsh Finance and receive a decision the same day.

Pre-approval also has no impact on your credit score, helping your protect your file whilst checking your eligibility.

Do I Need A Deposit?

Deposits aren’t mandatory, although they’re very helpful in bringing down monthly costs. If you put down a large deposit, the amount you still owe comes down significantly, and when spread over months, can see you paying affordable chunks per month. If you choose not to pay a deposit, your monthly payments will be higher down the road.