The Car Loan Warehouse | Car Finance for 18-Year-Olds: How Does It Work?

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Car Finance for 18-Year-Olds: How Does It Work?

March 24, 2016

If you’re an 18-year-old on the hunt for your very first car and need a little help findings the funds to pay for it, the good news is you’ve got options. There’s no denying it can be harder for young drivers to get access to the best car finance deals – but thanks to the diverse range of lenders across the UK, even newbies to the world of credit can get approved and on the road in no time.

Whether you’re wondering what role your income will play in your chances of acceptance or concerned about a non-existent credit history, you should find all the answers you need right here – as well as expert information on exactly how car finance for 18-year-olds works.


Reasons you may be refused car finance

On your first adventure in the world of car credit, you may encounter some obstacles when it comes to obtaining finance. Lenders have a specific set of criteria they use to determine your eligibility for a car loan – some of which are universal, while others are unique to them. Before you attempt your first application, it will help to understand the reasons car finance for 18-year-olds can sometimes be hard to find:

  • No credit history: loans for 18-year-olds with no credit history can be more difficult to obtain, as lenders use your borrowing history as a key decision-making factor when it comes to approving an application. Everyone starts their adult life without a credit rating – and it can take time and effort to create a financial history that will work in your favour
  • Not on the electoral role: being on the electoral register confirms your personal identity and address, and lenders require this information in order to consider you for a loan – so it’s recommended that you register as soon as you’re able
  • Low income: depending on the model you want, you may find your income won’t accommodate the cost of repaying your loan. Car finance eliminates the need to buy your car up-front, but you’ll need to take your salary into account when choosing your model for the assurance that you’re financially equipped to keep up with your monthly repayments

Find out more about being refused car finance.

How to improve your credit score

A good credit rating is worth its weight in gold when it comes to obtaining car finance. If you’re a young driver hoping for a competitive rate, there’s a wide range of affordable car loans for 18-year-olds with a squeaky clean credit report. Here are some ways you can get yours off to a flying start:

  • Get registered on the electoral role: giving lenders the fundamentals they need to decide whether your application is one they can approve. Click here to find out more about getting registered
  • Build a positive credit history: prepaid credit-builder cards are an easy and effective way to get some experience paying off personal debts – demonstrating to lenders that you’re someone able to borrow responsibly and pay back what you owe in a timely fashion
  • Contact your provider when you miss payments: in the event that you’re unable to make a payment, address the issue immediately to show proactivity – and rectify the situation as soon as you’re able

For more information, visit the Money Advice Service.

Car finance for young drivers

As a young driver, buying your first car without having to fork out on the up-front price tag is an understandably appealing concept – and that’s where car loans come in. If you’re an 18-year-old, car finance can be yours as long as you’ve taken the necessary steps to become a ‘low-risk’ applicant.

If you’re currently employed and in possession of a valid UK driving licence, you should be able to get approved – but the size of the loan you’re able to get will depend on other factors, such as your credit score and income. Car finance deals for 18-year-olds may not be something every lender is willing to offer, due to a perceived element of risk, but brokers are in a perfect position to give young drivers access to the best deals – working closely with a number of the UK’s most reputable lenders.

Best cars for young drivers

The beauty of car finance is that you can get approved first and shop around second – giving you a chance to browse the car market at your leisure, with the knowledge that the funds are already in place. If you’re still making your mind up about which model you want, here are a few of the very best cars for young drivers:

  • Skoda Citigo: a five-star safety rating from the experts at Euro NCAP combined with a fun drive makes this stylish city car one of the best in its class – and an ideal first model for young drivers exploring their finance options. For more information on this economical runaround, read our full Skoda Citigo review
  • Ford Fiesta: Britain’s favourite car boasts cheeky handling, bags of interior space and head-turning good looks. Undoubtedly one of the best cars for young drivers, the Ford Fiesta is tons of fun to drive and deserving of its nationwide popularity
  • Hyundai i10: this cheap and cheerful hatchback comes with reams of kit, as well as impressive exterior styling and a range of capable and efficient engines. In creating the i10, Hyundai have given 18-year-olds an exciting entry into the world of car ownership


In your search for car finance for 18-year-olds, it’s important to know your options. At The Car Loan Warehouse, we arm customers with the information they need to find the best loan for them – with a full understanding of their rights as an applicant and our online application process.

Apply today for a decision within 60 minutes, and a chance to talk through your options with one of our experienced finance advisor’s – or if you’d rather start with a quick quote, you can check out our online car finance calculator to find out how much you could borrow.
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About The Author

Jon Le Roux is co-founder and company director of The Car Loan Warehouse. Being a mad engineering and motorsport enthusiast, I spend more hours than is healthy, watching, reading or talking about cars, boats, motorbikes…..basically anything with an engine.