Buying your first car is an exciting milestone. It comes with a newfound sense of freedom and options to go wherever you want, whenever you want. What’s not to love? Of course, for most Brits, purchasing a new car outright isn’t realistic. Cue car finance for first time buyers.

Bankrolled by trusted lenders, car finance fills the gap between your initial cash down payment and the actual price of the vehicle. It’s hugely popular in the UK, with the latest statistics revealing 92% of new private cars are purchased using finance.

Want to know more? Read on for our complete guide, covering everything you need to know about car finance for first time buyers.

The benefits of car finance for first time buyers

First, let’s take a look at some of the key benefits of financing a car as a first time buyer:

Expand your options

Many first time buyers think they’re limited by a cash budget when shopping for a car. The truth is most new private cars in the UK are purchased using car finance. As mentioned earlier, this is a great way to boost your budget and unlock access to more desirable models.

Most Brits don’t have tens of thousands of pounds to spend on a new car. Instead, they partner with lenders to cover the cost of a car that would otherwise be out of their cash price range. We’re not saying car finance should be used to spend beyond your means. For example, buyers on entry-level salaries shouldn’t be eyeing luxury SUVs. Instead, car finance for first time buyers is simply a clever way to stretch out your payments over a pre-set timeframe.

Improve your credit score

Credit scores have to be earned, which can make things difficult for Brits without a solid borrowing history. If you have a limited financial paper trail, car finance for first time buyers can be a great way to improve your credit score and prove to lenders that you’re a responsible borrower. Moving forward, this will help you secure other loans like a house mortgage.

Stretch your insurance budget

New drivers are usually hit with sky high insurance rates. On average, motorists aged 25 or younger pay around £158 per month in premiums. If you’re wondering where you’re going to find an extra £1900 a year to cover your new driver insurance, car finance can be a great way to free up cash. You can’t spread out the cost of your annual insurance premium, but you do have options when it comes to the cost of car ownership.

Factors to consider for first time car finance

Can first time drivers get a car on finance? The answer is ‘yes’, but there are a couple of factors to consider first…

Age and eligibility

Can you get car finance at 18? Absolutely. At My Car Credit, we specialise in pairing young buyers with trusted lenders across the UK. 18 is the minimum age you can sign a contract, though we’re happy to get the ball rolling when you’re 17. On your 18th birthday, we give your application the green light.

Credit score

We touched on how car finance for first time buyers can improve your credit score earlier. But what if you have a poor credit score? With the right support, it’s still possible to secure car finance. You may need to put down a slightly larger cash deposit and be willing to accept a higher annual percentage rate (APR) but in many cases, car finance is still possible with a poor credit score.

Types of car finance for first time buyers

When shopping for car finance, you’ll see a variety of different options. They can be a little hard to decipher at first, which is why we’ve put together a quick and easy guide covering your options.

Personal Contract Purchase (PCP)

PCP contracts are one of the most widely used car finance options in the UK. Benefits include low monthly repayments and lots of flexibility. You start with a cash deposit, then repay the rest of the loan in fixed monthly payments, plus interest. Instead of purchasing the car, your repayments cover the cost of depreciation.

Because of this, most PCP loans have mileage caps to limit depreciation and minimise wear and tear. When your contract ends, you can choose to return the car and start a new contract on a brand new vehicle, or you can make a final ‘balloon payment’ and own the car outright.

Hire Purchase (HP)

HP loans generally start with a 10% deposit, followed by monthly instalments, plus interest. Unlike PCP contracts, your fixed monthly payments are put towards the total value of the car, not depreciation. This means you don’t have mileage caps and you’re the legal owner of the car at the end of the contract. No balloon payment necessary. You can either sell the car and start a new HP loan or keep it with no ongoing payments.  

Personal Contract Hire (PCH)

Unlike PCP and HP loans that give you the option to own the car at the end of your contract, PCH agreements adopt a lease model. Your repayments aren’t put towards depreciation or the total cost of the car. Instead, you’re simply renting a vehicle for the duration of your contract. 

Purchase your dream car with auto finance

Now we’ve got the formalities out the way, it’s time to get stuck into the fun side of car finance – shopping for your dream set of wheels! Whether you see yourself behind the wheel of a zippy Mini or a spacious SEAT SUV, we’re here to help with tailored auto finance solutions. Give us a call on 01246 458 810 to find out more about car finance for first time buyers or email us at

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating


  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed


  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs


  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit


  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past


  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan

X monthly repayments of

Typical rate

Loan amount

Total payable




*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!