As a student, getting a car finance deal may seem difficult, but this doesn’t have to be the case. At Choose My Car we can help students find a car finance deal. We understand that a car is important, whatever stage of life you are at.
Most students are aged between 18-21, which means that they haven’t had a chance to build up their credit history yet. Alongside this, some lenders may worry about a student’s chance of a regular income as they are studying. When you combine these factors together, you can see why some lenders are reluctant to offer students car finance deals, but we’re here to help students get behind the wheel of a car.
If you are looking for student car finance, we recommend reading up on our car finance guides before you apply, so you can understand the ins and outs of buying a car on finance, as well as the different types of car finance we have available. We’re here to help you when you are ready to apply for student car finance.
Car finance for students with bad credit
As a student, you may not have effectively built your credit history to a point where you have a good credit score yet. This is common with younger drivers as they’ve not had an opportunity to build their credit score up through the usual methods. This often means that students are treated as having a bad credit score, even if they don’t.
While this is the case some students may still have a bad credit score. We are here to help them find the best bad credit car finance deal possible and make owning a car accessible for them.
Student car finance with a guarantor
As a student, you may find that using a guarantor can improve your prospects of being approved for car finance. Even if you’ve been refused car finance in the past, you may find that using a guarantor will give you a better chance of successfully applying for student car finance.
A guarantor is someone who will act as a reassurance to the lender that the borrower will continue to make payments in full and on time. As a student, it’s something that you may already have to use when signing a rental agreement. A guarantor is usually someone in your family, but it can be anyone you know. They’ll be able to vouch for you and step in if any payments are missed.
Check out our guides for more information on guarantor loans for student car finance, including information on who can be a guarantor.
Types of car finance deals for students
The car finance deals that are generally available for student car finance are Hire Purchase (HP) and Personal Contract Purchase (PCP).
Hire purchase for student car finance
A hire purchase agreement allows you to potentially own the car outright at the end of the agreement. You’ll split the full cost of the car between the deposit and the monthly repayments, and then have the option of paying a small fee known as ‘option to purchase’ at the end of the term.
For more on hire purchase agreements check out our guide.
Personal contract purchase for student car finance
PCP is a form of car finance that will allow you to pay a little less in monthly fees. With these lower fees you won’t automatically own the car at the end, but you’ll have three options; paying a fee based on an agreed guaranteed future value to own it, returning the car and walking away or upgrading to another car and keeping an agreement going.
For more on the ins and outs of PCP car finance, check out our guide.
Ways to increase your chances of getting credit
Car finance for students doesn’t have to be difficult to obtain. To put yourself in the best situation to be approved for student car finance, there are a number of things that you can do.
Improve your credit score
Getting to know your credit score, and what can affect it, is an incredibly important thing to do. This will help you with things beyond just car finance.
Improving your credit score is a long term project, but there are a number of things that you can do to kickstart the process. As a student, these are things that may not have seemed like a priority, or particularly important, but they can help lay the foundation for a solid credit score in years to come.
Read our full guide on improving your credit score, but a few quick things you can do to start with include:
- Getting yourself on the electoral roll
- Get a credit card and pay it off regularly - as a student, we’d recommend caution. You don’t want to rack up debts, but using it for small purchases each month and paying it off completely will help with your credit score
- Make payments reliably - this includes your bills and any other credit agreements you may already have
Get a part time job
Having a part-time job that provides you with a regular income will make you significantly more attractive to a potential lender. If you show that you are making money regularly, they are more likely to approve you for an ongoing credit agreement, like car finance.
Fitting a job around your studies can be tough, but the benefits can go beyond that of purely financial gain.
Know your budget
Understanding your budget, and what your limits are, can help you with getting approved for car finance.
If you apply for an unrealistic car finance deal, then you’re likely to be rejected as the lender will think you can’t afford the repayments. Being rejected will show up on your credit report, and this may affect future applications.
Work out what you can afford to spend, both upfront and on monthly instalments. Take some time looking at the cheapest cars to buy on finance. Know what your budget will be for a deposit and work out how much you can afford to pay off monthly. We have a car finance calculator that you can use to help you with this.