Car Finance Loans For Young People

Car Finance Loans For Young People

Blog / Car Finance Loans For Young People


In this article, we are going to be taking a closer look at the most suitable options when it comes to car finance loans for young people. This includes the different plans that are accessible for those who are in the 18-21 age range, as well as understanding what each of the deal methods would involve, and how these can also have a positive impact upon their credit rating as they begin to build their finances for the long run.

Car Finance For 18+ Year Olds

Eighteen is a key age when it comes to car finance because it is the earliest point that somebody can apply for car finance; even a fully qualified driver who has passed their test at the age of 17 is legally unable to sign a credit agreement, so while they could buy a vehicle, it would have to be cash in hand. At 18, a driver is now legally allowed to sign up for a car finance plan. However, those who are in the 18-21 age range should not assume that, just because they are old enough to be accepted for car finance, this would equate to them actually being accepted. There are other factors that impact the eligibility of a new driver for a car finance plan that goes beyond merely their age bracket.

Indeed, the most crucial aspect will be the driver’s financial situation. In typical circumstances, the motorist will have to prove that they are capable of handling a major vehicular purchase based on their bank balance, their income, and their general expenses, all of which impact their credit score. If they are in positive credit, there’s a high chance that they would be accepted for their preferred plan, but if they happened to be in negative credit, this could damage their chances of having their application approved. Now think about how this could be for someone who is aged between 18 and 21, who may only have a very limited employment history and, as a result, a more moderate income stream and bank balance, as well as potentially having student loans from any ongoing university studies (admittedly a student loan does not have to be paid off right away, but it still looms over their finances nonetheless). This does not necessarily mean that the young person would be in negative credit, but it could mean that their credit score is almost non-existent, partly because they do not have sufficient funds coming in to cover major purchases and partly because they have yet to begin really building up the cash-flow that would even determine what level of credit they were actually in.

Understanding Your Finance Options

Therefore, a young person should think carefully about what type of finance plan they were willing to sign up for at that stage, especially if we assume that it would be their first car purchase. A Hire Purchase (HP) would be a good road to go down (no pun intended), because this would reduce the cost of a car in terms of the monthly payments, since they would not legally own the vehicle until the agreement had come to an end, and it would also open the door for them to change course at the final stage if need be at no extra cost; alternatively, once they make that final payment, the vehicle is theirs, no additional payment required. A Personal Contract Purchase (PCP) is the most common option amongst drivers, but the early deposit and final significant balloon payment may be beyond the young person’s financial stability at that point. A Personal Loan (PL) is not really worth considering for someone who has yet to make major headway with their career and who may have already recently taken a student loan. A HP or a PCP would be the recommended paths for a new driver of a young adult age to go down, but it is worth stressing that the first car a driver buys is often a way of introducing them to life alone on the road behind the wheel, so it is not worth stretching their finances beyond an acceptable limit and splashing out massively for the vehicle of their dreams at this stage. Keeping costs down and going for a more reasonably-priced motor as a starting point is wiser, and it also shows the provider that the driver is capable of handling a finance plan, which helps in later years when they come to purchase their actual preferred long-term vehicle.

How To Improve Your Credit Rating As A Young Adult

The best advice is to keep major spendings to a minimum and to generally be in control of finances from the start. If a young adult seems to be managing their income and expenses well in their late teens and early twenties, this projects the message that they will be capable of completing major finance contracts in later years as well. It is also important to look for significant work experience as early as possible; if they are in university or college, then a part-time position will be the best route to go for so as not to impact their studies, but if they can work towards building a sustainable income as quickly as they can, this will begin to result in real money coming through on a consistent basis, which then helps to build a positive credit rating for the long run.


Young people can certainly consider finance plans as long as they are realistic about what they can afford and knowledgeable about what car finance really involves. It pays to do your homework, and if a young adult aged 18-21 conducts sufficient research, they can end up with their first car via a finance plan while steadily building their bank balance and general worth to the stage where they can use this as a springboard to a more significant finance plan for an even better vehicle by the time they reach their mid-twenties.

Further Information

To find out more about car finance loans for young people, contact our Cheshire based team who will happily assist you with our most attractive finance offers on some of the most sort after car brands, visit the links below:

So, these are just some of the reasons why we are considered a leading car finance specialist, but you can learn more by contacting our vehicle financing team here or if you just want to browse our stock page first, feel free. For an instant, No Obligation quoteApply today. Want to know more? call us on 01925 230360.

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