Car Finance for Young Drivers in the UK: A Complete Guide

Buying your first car is a major milestone, but for many young drivers, paying the full price upfront isn’t realistic. That’s where car finance for under 21s comes in. Whether you’re 17, 18, 19, or 21, there are specific options available — though eligibility depends on age, credit history, and income.

This guide explains everything you need to know about car loans for 18 year olds, whether you can get car finance at 17, and how to compare deals for young drivers.

Can You Get a Car Loan at 17?

In the UK, you can legally drive at 17, but most lenders set their minimum age requirement at 18. This means that car loans for 17 year olds are extremely rare.

However, there are still options:

• Buy a car outright with savings.

• Get a parent or guardian to take finance in their name (with you as a named driver).

• Use a guarantor loan, where someone else agrees to cover repayments if you can’t.

For insurance rules and licensing details, check GOV.UK – Driving and Transport.

Car Loans for 18 Year Olds

Once you turn 18, you’re eligible to apply for finance in your own name. But lenders may see you as a higher risk because you have limited credit history.

Types of Car Finance for 18-Year-Olds

• Hire Purchase (HP): Pay monthly until the car is yours. Often easier to get approved for.

• Personal Contract Purchase (PCP): Lower monthly payments, but you’ll need a final balloon payment to own the car.

• Personal Loan: Borrow a fixed amount from a bank or lender to buy the car outright.

To compare, see MoneySuperMarket – Car Finance.

Tips for 18-Year-Old Borrowers

• Choose a cheaper, reliable car to keep repayments low.

• Build your credit score by paying bills and small credit responsibly.

• Consider adding a guarantor to improve approval chances.

Car Loans for 19 Year Olds

By 19, you may have a stronger income record or some early credit history, making car loans for 19 year olds slightly easier to access.

Lenders may still charge higher interest rates due to age, but shopping around can reveal competitive deals. Using a car finance calculator UK helps estimate what you can afford monthly.

See Compare the Market – Car Finance to check options.

Car Finance for 21 Year Olds and Under

Once you hit 21, your chances improve significantly. More mainstream lenders and dealerships are willing to offer finance, especially if you have a stable job and clean credit history.

Car finance for 21 year olds may include:

• Low-interest personal loans if you’ve built some credit history.

• Dealer finance packages with flexible terms.

• Guarantor loans if you still face difficulty getting approval alone.

At this age, you’re also more likely to be considered for longer-term loans, reducing monthly costs.

Eligibility Criteria for Young Driver Car Loans

Most lenders in the UK will consider applicants aged 18–70, but for young drivers, approval often depends on:

• Age – Must be 18+ for most lenders.

• Income – Steady employment improves your chances.

• Credit history – Even a mobile phone contract can help establish credit.

• Deposit – A larger upfront payment reduces risk and can lower interest.

Challenges of Car Finance for Under 21s

• Higher APRs – Lenders see younger borrowers as higher risk.

• Limited lenders – Fewer options exist for those under 21.

• Guarantor requirement – Some lenders won’t approve unless you have a guarantor.

• Insurance costs – Car insurance for young drivers is already expensive, so finance repayments add to the overall cost.

For insurance comparison, visit GoCompare – Young Drivers Insurance.

Alternatives to Car Finance for Young Drivers

• Save up – Buying a used car outright avoids debt and interest.

• Family support – Parents may help with either finance or a private loan.

• Credit builder loans – Smaller loans designed to build credit before taking on car finance.

FAQs

Can you get car finance at 18 with no credit history?
Yes, but approval may be limited, and APRs higher. A guarantor or larger deposit can improve chances.

Are there car loans for 17 year olds UK?
Not directly — you must be 18. At 17, a parent or guarantor is needed.

Do young drivers pay more interest on car finance?
Yes, younger drivers typically face higher rates due to limited credit history.

What’s the best car finance for under 21?
This depends on your circumstances. For many, Hire Purchase (HP) is the easiest to obtain at 18–19, while Personal Loans become more accessible by 21.

Should I use a guarantor for car finance?
If you’re 18 or 19 with no credit history, a guarantor can help secure approval and lower APRs.

Conclusion

Getting car loans for 18 year olds or car finance for 19–21 year olds in the UK is possible, but it requires planning. Lenders consider young drivers high risk, so interest rates are often higher, and guarantors may be needed.

The best approach is to:

• Build your credit score.

• Save a deposit.

• Compare lenders using trusted UK comparison sites.

• Always check affordability before signing.

With the right preparation, young drivers can access finance responsibly and get behind the wheel sooner.