What Are the Best Car Finance Deals for New Drivers UK?

So, you've passed your theory and aced the practical test. Congratulations, you're a driver now. 🎉  All that's left to do is buy a new car, your first car that'll be one you remember for the rest of your life. The only problem is that vehicles are expensive. Worry not though, because the answer might lie in car finance. With that in mind, this guide has everything new drivers need to know about getting car finance in the UK.  

Should I Get Car Finance if I'm a New Driver?

As a new driver, it's worth considering your financial situation and needs before deciding to get a car. If you have the funds to purchase a vehicle outright and are okay with a large sum of money coming out of your account, buying outright might be the option for you. If, however, you don't have a large amount of savings or disposable income, getting car finance could be a viable solution. And let's be honest here, even people with disposable income are known to finance their car instead of buying outright. 

Cars depreciate significantly as soon as you drive them off the dealership forecourt, and you could lose up to 10% of the vehicle's worth the moment you turn the key. For that reason, finance makes sense on many levels as long as the deal is right. 

What is a Good Finance Deal for a New Driver

If you're looking for a good finance deal, now is the time to decide which option is the best option. But what exactly makes a finance deal "good"? There are a few key factors to consider, so let's get right into it.

First and foremost, you want to make sure you're getting a good interest rate – or, at least, an affordable one. The interest rate is essentially the amount of money you'll pay on top of the cost of the car throughout your loan. So, the lower the interest rate, the less money you'll end up paying in the long run. 

Additionally, it's essential to consider the length of the loan term. A longer loan term might mean lower monthly repayments, but it'll also mean that you will pay more interest in the long run. Another factor to consider is the overall cost of the loan. This is known as the APR and takes into account the interest rate on the loan and any additional fees or charges associated with borrowing. It may include interest, processing fees and any other charges rolled into the loan amount. 

Then there's the type of finance: do you get a straight loan from a specialist lender like Carmoola, or should you opt for a hire-purchase deal, personal contract purchase or a lease? For many new drivers, a direct loan is the best option. This is especially true if you're buying a second-hand car. With a direct loan, you pay the seller for the entire car cost upfront and repay the lender the amount until it's paid off. 

What Type of Cars Can I Get as a New Driver?

The type of car you can get will depend on several factors, including your budget, driving experience and insurance requirements. Considering many new drivers struggle to get insured for vehicles (especially younger ones), it might be a good idea to opt for something relatively inexpensive. 

Here are some popular options for new drivers include:

Small cars

Small and compact cars, such as the Ford Fiesta, are popular with new drivers because they are easy to handle, fuel-efficient and generally less expensive to insure.

Second-hand cars

Buying a used car can be a good option for new drivers as they tend to be more affordable than new cars. You can also consider purchasing a nearly-new car, which will have fewer miles on the clock and may even be covered by the manufacturer's warranty.

Electric vehicles

Electric vehicles are becoming increasingly popular and can be a good option for new drivers, as they have instant torque and offer smooth, quiet driving. They are also cheaper to run and maintain than petrol or diesel cars.

Low insurance group cars

Some cars are assigned to a lower insurance group based on factors such as their safety features, engine size and performance. Low-insurance group cars can be a good option for new drivers, as they tend to be less expensive to insure.

Can I Get Car Finance if I'm Under 18 in the UK?

That'd be a hard no. Even though the legal driving age in the UK is 17, you can't borrow any type of finance until you turn 18 and are classed as an adult in the eyes of the law. Financial institutions are required to comply with these regulations and are, therefore, unable to offer car finance to anyone under 18.

What Else Do I Need to Know About Car Finance in the UK?

Before getting car finance as a new driver, make sure you cover the basics, such as:

  • Budgets. Consider everything, from loan repayments to the cost of running the car, maintenance and fuel. 
  • Credit history. If you have a limited credit history or have had financial difficulties, you may find it more challenging to get approved for a loan.
  • Loan term. Longer loan terms generally mean lower monthly repayments but also mean you'll pay more in interest over the life of the loan. 
  • Interest rate. Interest rates vary significantly between lenders, so it's important to compare your options and choose the loan with the lowest interest rate.
  • Insurance: Consider the cost of insurance when budgeting for your car and ensure you're fully covered before taking out a loan.

New Car, Who Dis?

Getting finance as a first-time driver can give you more spending power and act as a way to spread the payments over a longer period. As long as you consider all the details involved, such as loan length and interest rate, you can find a car finance deal that helps you purchase your brand-new set of wheels. 🚘😍 And if you are still learning and want some help to pass you test, check out our top tips for learner drivers