Nothing beats the excitement of clearing the driving test after turning 18. Whether you are a first-time passer or someone who nailed it just right after months of practice, the ability to grab your driving license hits differently. To use the license well, you need to have a car.
Owning a car as a youngster can be a little challenging and that too at bad credit. From finalising the car to meeting the car dealership obligations, everything is overwhelming. You need something that is reliable. First-time drivers find it extremely hard to qualify for car finance. Why?
Let’s know the reasons first.
Why securing a car on finance difficult for youngsters?
Most lenders reject the young driver’s application for owning a car on finance. Some popular reasons for the same are:
1) Prone to cause accidents
According to studies, “individuals aged 25 and below is the cause of around 85% serious road accidents in the UK.” Thus, the lender finds lending the car on finance risky to the demography.
- Limited credit history
Financial experience is critical for any lender. Youngsters lack credit history or have minimal credit history. Lenders find it hard to evaluate money management.
3) Low or no disposable income
Individuals aged 17 or 18 lack sufficient income. Without a permanent and reliable income source, no lender can provide car finance. The person should be able to afford the payments to qualify.
Another important thing that students need to know is – they cannot use student loans to finance their requirements. Your student loans cover specific costs like- maintenance and tuition costs. You cannot use it for car finance in any situation. To get a car on finance, apply and qualify for the new terms and agreement.
Can a student aged 17 get car finance?
No, you should be at least 18 years old to get the car on finance. Only limited lenders provide car finance for 17 years old students. For this, get someone as a guarantor to pay the repayments. It is important when you lack an income or credit score.
Tips to improve your chances to qualify for car finance at bad credit
Although there are limitations to securing car finance as a student, you can still get one. Below are some ways to boost your chances to get car finance:
1. Revise your credit history
Before applying for car finance, analyse your credit report and its delinquencies. If you have a minimal credit history, wait until you have a comprehensive one. It is critical to pay off some debts. It would not only improve your credit score but help you reach your goal. Keep all information up-to-date. If there is something that you need to change, contact the credit agency to update it.
2. Build your credit history
In fact, you should ensure stellar credit history that reveals perfect financial management. Individuals with low or no credit history can benefit from credit-builder loans. With regular income, you can qualify for the loan despite your poor credit history.
Credit builder loan allows one to borrow up an amount and pay comfortably. Once you pay the loan amount, you can get the amount you kept as savings plus interest earned. You can also get a mobile number or utility bill in your name and pay it timely. It would boost your credit score.
3. Get a part-time or full-time job
A car finance agreement allows you to drive the car besides paying the payments. For this, you need a regular job with a sound income. If you are in your post-graduation years, you can get one based on your skills.
If you are in the last year of your graduation, you need someone to guarantee your loan if you lack income. You can also try and get a part-time job. You can also apply for multiple part-time jobs if you can manage. It is the reason individuals first analyse the best career prospects to qualify for car finance.
4. Opt for used car finance
It is ideal for individuals with low credit history and age. If you own a regular income but cannot qualify for better rates due to low credit, check used car finance. You can get a used car at lower interest rates than a new one. Moreover, the lender may approve the loan quickly in comparison to new car finance. It is because the liability for the lender is low there.
You can run the car and pay for its maintenance out of your income. If you are yet to receive income but have some important car repairs, check unsecured loans for bad credit from a direct lender today. Get any amount for small and immediate repairs by presenting income proof. You do not have to wait until your salary credits. You can repair the seat covers, repair the engine, or car breaks, etc, without worries.
5. Evaluate the guarantor’s possibility
A guarantor can be an impactful participant in your car finance loan agreement. With someone known, you may qualify for low-interest rates and ensure payment security. He should be at least 21 years of age to qualify.
A guarantor, by providing his credit and income status proof can help you get instant car finance credit. If he meets the lender’s terms, you can both share the loan payments accordingly.
Unless you earn and dedicate a lump sum towards car finance payments, your guarantor may help you. He/she will make the payments on your behalf. Thus, the guarantor should know everything about the loan agreement and terms. Analyse whether they are willing to help you or do it out of obligation. It is important to know this as it may impact the overall loan agreement.
If you and the guarantor fail to pay, lenders grant some time. After that, he may issue a court order against you. The CCJ may impact the credit scores of both the borrower and the guarantor. So, calculate the total amount you can realistically afford before approving the terms.
6. Register on electoral roll
It is also one of the best ways to win the lender’s trust. If you are a regular citizen of the country, reveal it through the electoral roll. It indicates your nationality and permanent address proof.
It also helps the lender analyse whether you have been shifting places or have permanently lived in a rental space. The name on the electoral roll along with regular income and some credit history can help you qualify for the car finance.
These are some ways that you can try to get a car in finance. Most individuals share a common query-
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Can I get guaranteed car finance for low credit?
The approval depends on some factors like- income, length of credit history, deposit, guarantor, etc. No individuals have similar finances or circumstances.
Thus, if one qualifies the eligibility parameters, he may get guaranteed car finance for bad credit in the UK premises. For example, if you lack income and credit score, the lender mandates a guarantor on the loan. If you can get one and he meets the lender’s terms, you may get a car finance quote immediately.
Bottom line
As a young driver and excited to drive a car, you should explore all the possibilities before applying for car finance. Applying for car finance only to get rejected can be disappointing. Ensure a long credit history with well-managed finances to win the loan. If you need it urgently, a guarantor may help you qualify.
