Cheapest cars to insure for new drivers
The cheapest cars to insure for new drivers are typically small vehicles in lower insurance groups, with modest engine sizes and lower repair costs. Insurance is often the biggest single cost shock for new drivers, sometimes costing more per year than the car itself. The good news is that the car you choose has a huge effect on that cost.
This guide covers how insurance groups work, what kinds of cars tend to be cheapest to insure, what else affects your premium as a new driver, and how to find car finance for young drivers once you have chosen a suitable vehicle.
Insurers price risk based on data, and statistically, new and young drivers are involved in more accidents and make more claims than experienced drivers. This is reflected in higher premiums regardless of how careful an individual driver actually is. The lack of a personal claims history also means insurers cannot price based on your own track record yet, so they fall back on the wider statistics for your age group and experience level.
This does not mean nothing can be done about it. The car you choose, how you are insured, and a few other factors all have a significant effect on the premium you are quoted, often more than people expect.
Every car sold in the UK is placed into an insurance group, numbered from 1 to 50. Group 1 cars are the cheapest to insure and group 50 cars are the most expensive. The group is worked out based on a combination of factors including the car's value, performance, the cost of parts, repair times, and how likely the car is to be stolen.
For a new driver, the difference between a group 3 car and a group 20 car can be hundreds of pounds a year in premium, even if the cars are a similar age and price to buy. Checking the insurance group before buying a car, not after, is one of the simplest ways to control costs as a new driver.
| Insurance group | Typical car type | Why it is cheaper to insure |
| 1 to 8 | Small city cars and basic superminis with small engines | Lower value, cheaper parts, smaller engines, lower performance, generally cheaper and quicker to repair |
| 9 to 15 | Mainstream superminis and smaller hatchbacks with mid-size engines | Still modest performance and value, a common range for practical first cars |
| 16 to 25 | Larger hatchbacks, small SUVs, higher trim levels | Higher value and more equipment increases repair costs and theft risk |
| 26+ | Larger SUVs, performance models, premium brands | Higher value, performance, and repair costs push these well above what most new drivers want to pay |
Generally, the cars that are cheapest to insure as a new driver are small, have modest engine sizes, are not in high demand with thieves, and are cheap and straightforward to repair. This often overlaps neatly with cars that are also cheap to buy and run, which matters when you are financing the purchase too.
The car matters most, but several other factors also have a big effect on the premium you are quoted:
Yes. Comprehensive insurance is a standard requirement under a hire purchase agreement, and it needs to be in place from the day you collect the car. You cannot drive a financed car away without valid insurance, so it is worth getting quotes for the specific car you are considering before you finalise your finance application, not after.
This is also a practical reason to check the insurance group early. If you are approved for finance on a car but the insurance premium turns out to be far higher than expected, your overall monthly outgoings, finance payment plus insurance, may end up being more than you budgeted for. Checking both together avoids that surprise.
For more on the insurance requirements under HP, see: You'll need comprehensive insurance.
When you are choosing your first car, it makes sense to think about the insurance group and the finance cost together rather than separately. A car that is slightly cheaper to buy but sits in a much higher insurance group could end up costing more overall once you add up the monthly finance payment and the insurance premium.
Our guide on the best second-hand cars to buy on finance breaks down what kind of car suits different budgets when financing a used car. Combining that with an insurance group check for any specific car you are considering gives you a much more realistic picture of what it will actually cost you each month.
Use our car finance calculator to work out the finance side, then get an insurance quote for the same car before deciding. Comparing the combined monthly cost across a few different cars often reveals options that are noticeably cheaper overall than the obvious first choice.
New drivers are often also first-time finance applicants. This does not need to be a barrier. AutoMoney Trust considers applications from people with poor credit.
Hire purchase finance is available from £4,000 to £25,000 over 36 to 84 months with no deposit required. The initial check is a soft search that will not affect your credit file. For more on what is involved in a first application, see our guide on how to apply for car finance, which covers the process for first-time applicants specifically.
Start your application on our apply for car finance page to check your eligibility before you start looking at cars.
Yes, if you finance your car with AutoMoney Trust, you'll need to maintain fully comprehensive insurance for the entire duration of your hire purchase agreement. This is because the vehicle remains the property of AutoMoney Trust until you've made your final repayment and ownership transfers to you.
Comprehensive car insurance provides protection against a range of situations, including accidental damage, theft, fire and third-party claims. Keeping the vehicle insured for the full duration of your agreement helps protect both you and the lender by ensuring the car remains covered throughout the finance term.
When budgeting for a financed car, it is important to consider insurance as part of your overall running costs. Fully comprehensive cover is often more expensive than third party or third party fire and theft insurance, so make sure you include this alongside your monthly finance payments, fuel, servicing, and other vehicle expenses.
Some drivers choose to consider GAP insurance, which can help cover the difference between your insurer's settlement value if the vehicle is written off and the remaining balance on your car finance agreement when the outstanding balance may be higher than the vehicle's market value.
The length of your car finance agreement can have a significant impact on both your monthly payments and the total cost of borrowing. Choosing a longer finance term, such as 60 or 84 months, spreads the cost of the vehicle over a greater number of payments. This can make your monthly payments more affordable, but it may mean you pay more interest overall throughout the agreement.
A shorter car finance term, such as 36 months, usually results in higher monthly payments because the balance is repaid over a shorter period. However, paying the agreement off sooner can reduce the overall amount of interest paid, making it a potentially lower-cost option over the full term.
When choosing the right finance term, it is important to consider your budget, monthly affordability, and how long you plan to keep the vehicle. The best option is one that allows you to comfortably manage your payments without putting unnecessary pressure on your finances.
AutoMoney Trust offers car finance terms from 36 to 84 months, giving you flexibility to choose an agreement that suits your circumstances. Use our car finance calculator to compare different term lengths and understand how your monthly payments and overall costs could change before applying.
Car finance can affect your credit score positively or negatively depending on how you manage your agreement. Making regular, on-time payments can help build a positive credit history and demonstrate responsible borrowing, while late or missed payments can negatively affect your credit score and make it more difficult or expensive to access credit in the future.
If payments are not made on time, they may be reported to credit reference agencies, which can lower your credit score and make future borrowing more difficult or potentially more expensive.
When you apply for car finance, a lender may carry out a hard credit search, which appears on your credit file and can cause a small, temporary change to your credit score. This is a normal part of the application process and helps lenders assess whether finance is affordable and suitable for you.
For more information about how applications are assessed, read our guide on Credit Checks for Car Finance.
The main difference between fixed and variable car finance rates is whether the interest rate can change during your agreement. A fixed interest rate means your rate and monthly car finance payments stay the same throughout the finance term, giving you certainty over what you'll pay and making it easier to budget. In comparison, a variable interest rate can rise or fall over time, meaning your monthly payments may change.
AutoMoney Trust offers fixed-rate hire purchase car finance only, so you know exactly what your monthly repayments will be for the full term of your agreement. While fixed rates may sometimes be higher than an introductory variable rate, they provide protection against future interest rate rises and make it easier to plan your finances with confidence.
When comparing car finance options, it's important to consider not only the interest rate but also the APR, total amount payable, and the overall cost of borrowing. For more information read our guide on What Is Car Finance APR?.
