finance your first car

Should you finance your first car?

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If you’re looking to get a car on finance and you’ve just passed your driving test, you may be wondering whether it’s the right choice for you. When you’ve never had a car loan before, it can be daunting, however, it doesn’t need to be! The guide below looks at how car finance could benefit you and your pocket and also a few factors that you should consider first to make an informed decision.

Benefits of getting your first car on finance:

  • Spread the cost.The main benefit of car finance for any driver is the ability to pay for a car over a term that suits your budget. You can personalise your car finance payments and make affordable monthly payments over a number of years. The longer you spread your car finance over, the lower your monthly payments will be. However, you could run the risk of paying more interest so it’s worth comparing different terms and rates.
  • No deposit needed. Most car finance agreements now come with no deposit to pay at the start of the agreement. When you put down a deposit, you are reducing the loan term ad it can make it more manageable but if you don’t you can still benefit from affordable monthly payments on both new and used cars.
  • Choose new or used cars. Car finance agreements are available on both new and used cars. There are multiple car finance deals to choose from and PCP car finance can even allow you to get a brand-new car with low monthly payments! There can be some limitations on the type of car you can choose when getting a second-hand car on finance such as age of the car and mileage so it’s worth checking with the dealer first.
  • Get a newer, better car. When you buy your first car on finance, you can usually get a newer and better car than you would when compared to buying with cash alone. Even used cars can cost thousands of pounds to buy outright and it may be unrealistic for young drivers to have this kind of disposable income to hand.

Can newly qualified drivers get a car on finance?

The good news is that car finance for young drivers is possible! Newly qualified or first-time drivers should be treated like any other car finance applicant and more car finance companies than ever are making ar loans more accessible. Just like any other applicant though, car finance is always subject to status and can never be guaranteed. If you’re struggling to get approved for finance as a young driver, there are a few ways in which you can help to increase your chances of approval with the best rate possible.

How to increase your chances of getting a car on finance:

  1. Check your credit score. Many young people or first-timedriver may not even be aware of what their current credit score is. Lenders use a credit check to see how you’ve handled credit in the past and the likelihood of you being able to pay your finance back on time and in full. It can be worth checking your credit score first to see where you fall on the credit scale and make sure all your information is accurate and up to date.
  2. Build a credit history. If you have had no previous borrowing experience, you may assume it’s a good thing. However no credit can lead to bad credit as lenders can’t predict what type of borrower you will be. It can be a good idea to build a small credit history first before you get a car on finance.This can be as easy as getting a mobile phone contract in your name and paying it each and every month by direct debit and never missing a payment.
  3. Have a deposit to hand. Whilst it can be possible to get a car with no deposit needed it can also be beneficial to have a small amount of money to put towards your deal. A deposit can help if you are struggling to get approved as it instils more trust with the lender and also means you don’t have to borrow as much.
  4. Apply with a car finance broker.A car finance broker works on your behalf to find you the best car finance deal from a range of trusted lenders. Brokers can be good if you’re struggling to get approved and don’t want to make multiple applications with different lenders.

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