Passing your driving test is one of the best feelings in the world. You’ve ripped up your L-plates; the open road is calling, and you’re ready to get your freedom. There’s just one hurdle left between you and your independence: sorting out your first car.
Buying a car outright can leave you completely skint, which is why thousands of young people look into spreading the cost. But when you start looking into finance, you might hit a bit of a brick wall. Many lenders will take one look at a new driver and say “no”, not because you’ve done anything wrong, but simply because you have a bad credit score or no credit history at all.
At Refused Car Finance, we don’t think that’s fair. We believe that your ability to afford the monthly payments is what matters most.
If you’re wondering how car finance for young drivers can actually work for you, here is how you can beat the credit trap and get behind the wheel.
Why is it so hard for young drivers to get finance?
If you’ve already been declined for a loan, don’t take it personally. When it comes to first-car finance, lenders look at two main things:
- Lack of credit history: If you’re 18 to 24, you probably haven’t had a chance to build up a credit score yet. You might not have had a credit card, a mobile phone contract in your name, or utility bills. Because you have a “thin” credit file, lenders can’t predict what type of borrower you will be. To them, no credit history can look just as risky as bad credit history.
- Lower affordability: Being a student or working your first job usually means you have a lower income than older drivers. A smaller budget can naturally limit your options with traditional banks.
How young drivers can beat the credit trap
The good news? Your driving journey doesn’t have to stop before it’s even started. There are plenty of ways to boost your chances of getting approved.
1. Look into Hire Purchase (HP)
Hire Purchase is one of the car finance agreements we specialise in, and it’s absolutely ideal for a new driver. Because HP is a secured loan (meaning the lender owns the vehicle until the final payment is made), it represents a lower risk to finance companies. You get to benefit from fixed interest rates and affordable monthly payments over a flexible term length. Once you make that final payment, the first car is officially yours!
2. Get on the Electoral Roll
This is a quick, free, and incredibly easy way to boost your credit score. Lenders use the electoral register to confirm your identity and address. If you aren’t registered to vote at your current address, it can cause your finance application to be instantly rejected.
3. Consider a Guarantor
If your credit history is holding you back, having a parent or guardian act as a guarantor can work wonders. They essentially agree to step in and cover the payments if you ever fall behind. Because it gives the lender extra peace of mind, it can unlock much better rates.
4. Keep your car choice realistic
We all want a flashy motor, but when you’re looking for your first car, think small, reliable, and cheap to run. Choosing a low-insurance city car like a Vauxhall Corsa, a Ford Fiesta, or a Suzuki Swift keeps the loan amount lower, which makes it much easier to prove you can afford the monthly payments.
Why sort your finances with Refused Car Finance?
Many people still have the misconception that you have to walk onto a dealership forecourt and accept whatever finance rate they throw at you. But doing that can leave you seriously out of pocket, especially if you have a less-than-perfect credit file.
When you apply with us, we break the whole process down into 3 easy steps:
- Tell us about you: You fill out our short, free online application form. Crucially, this is a “soft search”, meaning it will not affect your credit score or be recorded on your credit file.
- We find the right lender: As a specialist broker, we work harder than anyone else to put your application in front of the most suitable lender from our wide panel. We look at your individual circumstances and focus on your affordability, not just your credit score.
- Shop with confidence: Once we’ve secured your approval, you have the freedom to shop for your car from any reputable, FCA-authorised dealership across the UK.
Ready to get on the road?
Don’t let a lack of credit history put the brakes on your freedom. Your chances of getting approved have never looked better!