Car finance for Young Drivers Guide

Nothing beats the feeling of passing your driving test. The freedom that driving brings await – all you need now is a car.

However, getting finance isn’t always simple for newly-qualified young drivers.

Car finance can be great for young drivers who require a car but can’t afford to pay outright.  By spreading the cost into manageable monthly payments, Motorly can help you get behind the wheel of your new car.

Here, we take a look at the options available to you to make it happen.

Understand your car finance options 

When it comes to car finance, there are two main alternatives.

Hire-purchase (HP) involves putting down a deposit (usually about 10% of the total purchase price) then repaying the rest of the balance, plus interest, over an agreed period of time. 

Hire-purchase is often the best option for those with have a good deposit to put down and want to own the car outright once they have finished the monthly payments.

Personal Contract Purchase (PCP), meanwhile, requires you to make monthly repayments, but you’re only permitted to use the car until the end of the contract. 

At the end of the contract, you have a choice to make. You can return the ca, pay the ‘balloon payment’ to own the car outright, or start another PCP agreement.

Understanding your credit history

Regardless of how you choose to finance your car, there are steps you can make to improve your situation.

It’s a good idea to start establishing a credit history, as this will direct how successful you’ll be in applying for finance when you are ready.

Opening and using a UK current account will help. Paying your bills regularly via Direct Debit will also help.

Just make sure you don’t forget to pay any of your bills, as a missed or late payment will count against you.

To find out more and to apply, go to the Young Drivers Car Finance Page.