Car finance
for students

Car finance considerations for students and young drivers

If you're looking to get car finance for students, know what lenders expect and how to prepare.

Age and eligibility

You must be 18 or over to apply for car finance. At 17, you're not legally allowed to sign a credit agreement, so your only option is to save or ask a parent to help buy the car.

At 18, you become eligible, but lenders may ask for income proof and financial stability. Young applicants often need to meet extra conditions to secure a deal.

Limited credit history

Many students have little or no credit history, which makes it harder for lenders to assess risk and limits available deals.

You can still apply for car finance. Some lenders offer products for young drivers. Start building credit early, or apply with a guarantor (a guarantor is someone who agrees to repay if you can’t.)

With support and planning, you can still access the best car finance deals available.

Irregular income

Lenders look for steady income to ensure you can manage monthly payments. If you work part-time, show proof of income.

If you don’t have regular income, a guarantor or larger deposit may help. These reduce the loan amount and improve approval chances.

Risk and driving experience

Lenders see young drivers as higher risk due to limited experience and more frequent accidents — especially when the car is being driven in new areas.

You’re not excluded, but lenders may offer higher rates or ask for a guarantor. Choosing a safer car helps. With Hire Purchase, you automatically own the car at the end of the term.

Types of car finance deals for students

Hire purchase

Hire Purchase car finance gives you a clear path to owning your first car. You pay a deposit, then make fixed monthly payments until you’ve covered the total amount payable. Once the final instalment is complete, you own the car outright.

This type of car finance helps you budget confidently, with no large balloon payment at the end. It’s ideal if you want to own the car and keep your monthly payments consistent.

Say you’ve found the perfect car for university and work. With Hire Purchase, you can spread the total amount across fixed payments while planning around your part-time income.

Personal contract purchase

PCP car finance offers more flexibility and lower monthly payments than Hire Purchase. You pay a deposit and smaller monthly instalments, based on the car’s expected value at the end of the agreement.

At the end of the term, you choose what to do next. You can pay the final balloon payment (based on the car’s guaranteed future value), return the car, or upgrade. This gives you more freedom if you prefer to change cars every few years.

If you're a student who needs a reliable car now but isn’t ready to commit to ownership, PCP could be the right option. It keeps your monthly budget low and lets you choose your car with more flexibility.

Personal Loans

A personal loan can be used as a student car loan if you want more control over the finance agreement. You borrow the total amount you need to buy the car, then repay it in fixed instalments directly to the lender.

Personal loans aren’t tied to the car itself, so you own the vehicle immediately. But they depend more on your credit rating, income, and repayment history. A limited credit history might affect your eligibility or the interest rate you’re offered.

If you’ve got a good credit score and a steady income from work or a student loan, a personal loan could help you buy a used car privately or from a dealer.

Consider car finance with a guarantor if you are a student

A guarantor can increase your chances of being accepted for student car finance. If you're a student with a lack of credit history or a low credit rating, adding a guarantor gives lenders more confidence in your application.

Your guarantor agrees to cover your car finance payments if you can’t. This extra security helps unlock car finance deals for students who might not meet the usual criteria alone. It's a practical way to move forward without waiting to build your credit.

Many students and young drivers use guarantor finance to secure their first vehicle. It can be especially helpful if you're working part-time, relying on a student loan, or still early in your financial journey.

Before you sign a credit agreement, speak with your guarantor. They must understand the responsibility and agree to support the loan if needed. The guarantor’s financial history and credit rating will also be checked.

This part of the car finance process is important. Lenders want to know the guarantor can step in without affecting your agreement. Choose someone you trust — like a parent, guardian, or close relative.

At CarFinance, we're experienced in helping students find the best car finance with or without a guarantor. We act as your car finance partner, guiding you through every step and matching you with lenders who offer finance for students and young applicants.

Student car finance with bad credit from CarFinance!

Students get access to car finance, even if they have poor or bad credit rating. If you’ve had no chance to build your credit yet, or your score is low, you can still find car credit that fits your budget and needs. Securing car finance with bad credit doesn’t need to be difficult. We help you explore car finance deals for students that match your profile, including fixed monthly payments and transparent terms.

We work with a panel of lenders who specialise in helping students secure finance with confidence. They look at your overall circumstances, not just your credit score. This opens up options to help you find a suitable car, spread the cost, and get on the road sooner.

Before you apply, we explain how the car finance process works — from your application to your repayments. We also show you how different car finance types affect your credit score and your total cost of the car.

If you need a car for uni, work, or life — start here. At CarFinance, we're committed to helping students find fair, flexible car credit with support at every stage.

What car should you buy as a student?

Looking to find a suitable car that fits your student budget? Focus on value, reliability, and running costs.

You need a car that’s affordable to buy and economical to run. As a student, you’ll want to keep insurance costs, fuel use, and maintenance expenses low.

Used cars offer excellent value. They reduce the total upfront cost and help you manage your budget more easily. Reliable models with strong resale value also protect your investment over time.

Here are five cars students get real value from:

• Ford Fiesta – Compact, reliable, and easy to maintain. One of the cheapest cars to insure.
• Volkswagen Polo – Solid build quality, low emissions, and great fuel economy.
• Honda Civic – Roomy and dependable, with lower depreciation than many rivals.
• Toyota Yaris – Perfect for city life. Easy to drive, efficient, and affordable.
• Hyundai i20 – A well-equipped option with modern features at a fair price.

All these cars come with lower running costs and are known for strong reliability. You’ll likely pay less for car insurance, fuel, and repairs, making them ideal for students on a tight monthly budget.

How to get car finance as a student?

1. Build a credit profile

Lenders need to see how you manage credit. Start small — a student credit card or loan can help build your profile. Use it responsibly and pay it off on time.

A consistent repayment record improves your credit score. This helps you become eligible for student car finance with better interest rates and more flexible terms. If you’ve got little or no credit history, building it now gives you a head start later.

2. Have a part-time job

Lenders want proof that you can afford your monthly repayments. A part-time job shows that you have steady income, which makes you a stronger applicant.

It also proves that you’re ready to take financial responsibility. This could reduce the risk seen by lenders and help you get better deals with lower rates.

If you provide car finance lenders with evidence of income, you’ll look more reliable when applying for finance.

3. Understand your budget

A clear budget helps you avoid surprises. Work out how much you can spend each month, not just on the car, but on extras like car insurance, road tax, and fuel.

Look at the total cost of credit, not just the monthly repayments. You should understand how your car finance agreement fits into your overall student budget.

Use a finance calculator to check what you can borrow. This gives you a realistic range so you can find a suitable car that won’t stretch your finances.

4. Save for a deposit

Saving for a deposit improves your application. A larger deposit reduces the amount you need to borrow, which means lower repayments and a smaller total cost of credit.

If you're looking to get car finance with a low credit score, this step matters. A deposit lowers risk for the lender and can reduce the need for a guarantor.

You’re more likely to be accepted and may unlock better interest rates. It also shows lenders you’re serious about managing your finances.