Car finance for new drivers
Being a new driver often means being newer to credit too, and figuring out what lenders need from a first-time applicant can feel like a guessing game. This guide covers age requirements, what lenders look for from someone with a limited financial track record, why a guarantor is not needed for hire purchase, and how to put your best foot forward as a first-time applicant.
Generally yes, though most lenders, including AutoMoney Trust, need to see at least a little credit history before they can assess an application properly. This does not need to be a long history or a particularly impressive one. A completely empty credit file, with no record of managing any credit at all, is difficult for any lender to assess, since there is nothing to base a decision on.
The good news is that a small amount of credit history is easier to build than people often think, and does not require taking out a loan or credit card you do not need. For more on how lenders assess applications and what soft and hard searches involve, see our guide on credit checks for car finance.
Credit history is not just about loans and credit cards. Several everyday things contribute to your credit file and can be enough to give a lender something to assess:
If you have little or none of these yet, a mobile phone contract is often the quickest and most accessible way to start building a credit file, since approval criteria are generally less strict than for credit cards or loans. Even a few months of a positive record can be enough to give a lender something to work with.
Once you have some history in place, a soft search lets you check your eligibility without it affecting your credit file. For more on how this works, see our guide on credit checks for car finance.
You need to be at least 18 to enter into a credit agreement in the UK, including car finance. This applies regardless of when you passed your driving test, someone who passed at 17 will still need to wait until they turn 18 to take out finance in their own name.
Once you are 18, age itself is not a barrier. What matters more is whether you have an income that can support the repayments, since this is what affordability assessments are based on. Many 18 and 19 year olds successfully get car finance, the application process is the same as for any other adult applicant.
With a limited credit history to go on, lenders typically pay closer attention to:
AutoMoney Trust offers hire purchase finance from £4,000 to £25,000 over 36 to 84 months with no deposit required. For a full walkthrough of what information you will need and how the process works, see our guide on how to apply for car finance.
AutoMoney Trust does not require a guarantor on any application. Hire purchase is secured against the vehicle itself, the car belongs to us until the agreement is paid off, which means we do not need a second person to underwrite your application the way an unsecured personal loan or guarantor loan might.
This is one of the practical advantages of hire purchase for first-time applicants. You are not relying on a parent, family member, or friend being willing and able to act as guarantor, and you are not asking them to take on responsibility for your payments. Your application is assessed on your own income, outgoings, and circumstances.
If you have looked into guarantor loans elsewhere and would rather avoid involving someone else in your application, hire purchase with a direct lender is worth considering as an alternative. Check your eligibility on our apply for car finance page with a soft search that will not affect your credit file.
Being a student often means having a limited credit history and an income that looks different to a typical full-time salary, maintenance loans, part-time work, or a mix of both. Neither of these rules out car finance, provided you have at least some credit history in place (see above) and your overall income supports the repayments.
Students who are 18 or over can apply in the same way as any other first-time applicant. The same documents apply: proof of identity, proof of address, and evidence of income, which for a student might include a part-time job, a student loan statement, or support from family, depending on what the lender accepts as evidence of affordability.
A soft search, used at the initial eligibility stage, does not affect your credit score and is not visible to other lenders. This is particularly useful as a first-time applicant, since it lets you see whether you are likely to be approved, and roughly what for, before committing to a full application and the hard search that comes with it.
Once you do proceed with an agreement, making payments on time is one of the most effective ways to strengthen a thin credit history. A 36 to 84 month hire purchase agreement, paid consistently, can have a meaningful positive effect on your credit profile by the time it ends.
For more on this, see: How car finance can affect your credit score.
Once you have an idea of what you could be approved for, the next step is choosing a car that fits your budget once running costs are factored in. Insurance in particular tends to be the biggest additional cost for new drivers, and varies hugely depending on the car. Our guide on cheapest cars to insure for new drivers covers what to look for, including how insurance groups work and how to weigh up insurance cost alongside your finance payment.
Use our car finance calculator to see what monthly payments would look like for different loan amounts and terms before you start looking at specific cars.
AutoMoney Trust is a direct lender, regulated by the FCA under firm reference number 912573, offering hire purchase finance from £4,000 to £25,000 over 36 to 84 months with no deposit required, and no guarantor needed. We consider applications from people with poor credit and part-time income, provided you have at least some credit history in place and a regular income from employment. Check your eligibility on our apply for car finance page with a soft search that will not affect your credit file.
Car finance can affect your credit score in both directions. Consistent, on-time payments build a positive credit history and may improve your score over the life of the agreement, demonstrating to future lenders that you can manage credit responsibly. Missed or late payments have the opposite effect, they are reported to credit reference agencies and can lower your score, making future borrowing harder or more expensive. Applying for finance also creates a hard credit search, which may cause a small short-term dip. Settling your agreement in full further strengthens your credit profile. For more detail, read our guide to Credit Checks for Car Finance.
A fixed rate keeps your interest rate and monthly payments the same throughout your agreement, giving you predictable costs from start to finish. A variable rate can rise or fall during the term, usually tracking the Bank of England base rate or the lender's standard variable rate, which means your payments can go up or down. AutoMoney Trust offers fixed interest rates only, so you know exactly what you will pay each month. Fixed rates provide certainty but may start slightly higher than introductory variable rates; the trade-off is protection from future rate rises. For more detail, read our guide to What Is Car Finance APR?.
Your loan term directly affects both your monthly payments and the total cost of borrowing. A longer term, such as 60 or 84 months, spreads the cost over more payments, lowering the monthly amount but increasing the total interest you pay across the agreement. A shorter term, such as 24 or 36 months, means higher monthly payments but a lower overall cost. AutoMoney Trust offers terms from 24 to 84 months, so you can balance monthly affordability against total cost. Use our finance calculator to compare different term lengths before applying.
Fully comprehensive insurance is required throughout your finance agreement with AutoMoney Trust, because the vehicle legally belongs to us until your final payment is made. Comprehensive cover protects both you and the lender against damage, theft, fire, and accidents, ensuring the asset is protected for the full term. It is typically more expensive than third party or third party fire and theft cover, so factor this into your monthly running costs when budgeting. Many drivers also consider GAP insurance, which covers the difference between an insurance write-off payout and the outstanding finance balance.
