Can I Get Car Finance If I Am Under 20 Years Old?
Awesome! You’ve just passed your driving test, and you now have a driver’s licence! 🎉 It’s an exciting time to drive around and discover new places. The next step is for you to get a good car so you can finally be independent and enjoy going anywhere at any time you want. You no longer have to commute or ask a friend to give you a lift. But is there a way to get car finance if you’re a 19-year-old?
With the car finance options from the usual lenders, it’s not always so easy to get your application approved if you’re below 20 years old. But don’t be disheartened because that doesn’t mean it’s impossible for a 19-year-old to get car finance. Let’s find out what your options are, depending on your age.
Car Financing for Age 17 Drivers
As a young driver, you should first know the challenges of getting car finance. If you’re younger than 20, it’s going to be hard for you to find a good deal since you most likely do not have any credit history yet. And as you may already know, your credit history is a big factor in assessing your eligibility to get car financing.
Another challenge you have to face as a 17-year-old applicant for car finance is that you’re not yet allowed to enter into any credit agreement before age 18. Since these are your limitations, your best option is to buy a car with cash. If you have money saved up, you can use that. You may also borrow money from your parents or family so you can make the purchase.
Car Financing for Age 18 and Older
When you’ve reached 18, you’re now in a much better position to apply for car financing. Since you’re already 18, you can enter into an agreement with a lender once your application has been approved. But again, since you’re young, it’s not going to be easy.
Many car finance companies will have a bit of reluctance to grant you car finance if you’re not employed. It would help your application if you’ve been employed for some time and that you have a regular income.
Also, you should have some credit history to help with your car finance application. It won’t be so difficult to have a credit history at this point since you probably have various expenses already.
If you’re a full-time student, however, it’s going to be more challenging. Nonetheless, don’t lose hope because there are several lenders that actually focus on students who need car finance. Just make sure to look closely at the deals to see if they’re really cost-effective.
What are My Car Finance Options?
There are two common car finance options for you, the Hire Purchase or the Personal Contract Purchase. With HP, you need to pay a deposit of 10% and then pay a monthly amount plus interest for a certain period. If you have some money saved up, you can make a bigger deposit, so you’ll pay less for the monthly payments.
The PCP doesn’t require you to pay a deposit, but the monthly payments are much higher compared to HP. However, you won’t be able to own the vehicle until you make the last payment, which could be a substantial amount. If you don’t want to own the car, you can return it. You may even enter into a new PCP agreement for another car.
How to Get Car Finance?
Car finance applicants below age 20 need to prepare their application to get the best chance of being approved by the lender. Here are the steps you can take to prepare for the car finance application.
Build Your Credit History
Building your credit history will not only help you with your car finance application but other kinds of loans as well. This is something that you should work on because it will definitely pay off in the long run.
You can start by setting up a current account and using it regularly. Pay your bills like your phone, electric, and other utilities using direct debit. Also, use your credit card so that you can make on-time payments for your financial obligations. These steps will help you in proving that you’re responsible when it comes to your finances.
Get a Guarantor
You can ask a family member with a good credit rating to be your guarantor when applying for car finance. If you aren’t able to pay the monthly amount, the guarantor will be the one to step in to take over the payments.
See to it that you do make on-time payments so that you won’t encounter any problems with your guarantor. As you know, money problems can ruin relationships among family members.
Get a Loan
You can get a personal loan; however, it may just be a small amount. It’s possible to get a loan even if you don’t have a decent credit history yet but the interest rate may be higher. This is because lenders will find your case a risky one.
If you’re ready to pay higher interest for this loan, this is an option. Otherwise, the better choice is to buy a car with cash. This way, you don’t have to worry about paying any interest, and the car will be yours immediately.
Try Carmoola’s Car Financing
Carmoola accepts car finance applications from any individual aged 21 and older. You can download the app to see if you can get car financing with us. We’ve designed the application process to be quick, smooth, and easy. All you have to do is enter your information in the app and verify your identity using your driver’s licence.
We’ll process your application online so you don’t need to show up for any personal appearances or even get on the phone for a call with us. You’ll know the result of your application within a few minutes. And once you’ve been approved, you can get the car you’ve always wanted! 👍
Want to know how Carmoola works? Check out our simple three step process.