How to Get Car Finance for Students

young man and lady laughing while trying to find car finance for students

If you pass your driving test before or during university, you’ll be in the advantageous position of driving as a student. That means no more buses and trains to and from campus, home or your part-time job.

Whatever the case, having a trustworthy car is a huge benefit for students, but there's just one small hurdle to address – how do you pay for it? My Car Credit explores the ins and outs of securing car finance for students.

In reality, it’s difficult for most people to cover the costs of buying a car upfront, let alone for someone prioritising their studies. However, there’s no need to fret because your student status doesn’t exclude you from purchasing a car on finance. To qualify, you’re assessed the same way as everyone else – on credit history, income and risk.

1. Credit score

A credit score is a rating based on your financial history that helps lenders to determine who qualifies for a loan, the potential risk, interest rates and credit limits.

To ensure you’re in the best possible position to qualify for finance, you’ll need some active credit history to reassure companies you can manage your money responsibly. Below, we’ve listed three simple ways you can improve your standing with lenders.

Mobile phone contract 

Most students already have mobile phones on contract but if you don’t, consider entering an agreement. They work much the same as repaying car finance, albeit on a much smaller level. Paying your monthly bills proves you’re able to budget your finances accordingly.

Student credit card

If you have a student bank account, you may be eligible for a student credit card with a low credit limit. If so, use this card to make small purchases, then settle the outstanding balance at the end of each month.

Electoral roll 

Lenders check whether you’re on the electoral roll to protect themselves against fraud. If you’re a young student, your parents will probably have registered you at your home address. However, you can also re-register at your student address.

2. Income

To qualify for finance, you’ll have to prove you have some reliable means of income. To be clear, you cannot make repayments using your student loan. If you don’t have any income, you have to honestly assess if you can afford to buy a car in the first place.

It doesn’t matter whether you have a full-time or part-time job – what’s important is how much you earn. At My Car Credit, we consider applications from students who make around £1000 per month.

3. Guarantor or Joint Applicant

If you’re a parent, you might wonder if you can finance a car for your child. In a sense, you can – while your child will be responsible for making the agreed repayments, you can bolster their application by agreeing to be either a guarantor or by making a joint application. 

A guarantor is usually a close relative, with a good credit history, who is prepared to back a loan by agreeing to continue payments if the recipient is unable to make them. They are not responsible for repaying the loan but act as a safety net to mitigate risk for lenders. However, the responsibility of being a guarantor should not be underestimated. Failure to make the monthly payments will mean that ultimately, both parties may find their credit profile affected.

A stronger option is via a joint application by both the student and a parent. This is a good solution where the student is on a good income but maybe has a weaker credit score. Again, there is a big responsibility that comes with this approach. It is therefore important to consider all options before entering into a car finance agreement.

How we can help

If you’re a student, you’re still eligible for car finance provided you have a credit history, some reliable income and, where necessary, a guarantor or joint applicant. 

Our online application form doesn’t allow for adding in an additional person. Instead, to start your journey, speak to one of our team members by calling 01246 458 810 or emailing enquiries@mycarcredit.co.uk.

Rates from 6.9% APR. Representative APR 13.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 13.9%, annual interest rate (fixed) 13.85%, 47 monthly payments of £201.38 followed by 1 payment of £211.38 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,176.24, total amount payable is £9,676.24.

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.

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!

L Plate: Tips for First Time Car Buyers

First time car buyer driving car bought on finance

Buying your first car is a major milestone, and something you’ll probably remember for the rest of your life. It’s easy to get caught up with all the exciting details such as the model, the colour and specifications – imagining yourself cruising around in your own set of wheels. However, you need to take a few important (and perhaps less fun) things into account first, to make sure that your final decision is a happy one.

Do your research

This is something we can’t stress enough. It has never been easier to find out everything you need to know about the car you want and the ways to finance it. The more research you do, the better prepared you will be to get your ideal car. It will be especially useful when it comes to discussing with your vehicle trader – if you can demonstrate your knowledge to a car dealership salesman, they will be far more likely to get the best deal possible.

Set your budget

Financing your first car is probably the biggest budgeting responsibility you’ve had. It’s vital to understand what you can afford to avoid any future financial problems. It’s best to start with any living costs you might have, such as your food, social events and rent/mortgage payments. Once that’s been calculated you’ll know how much is leftover to pay for car insurance, petrol, car maintenance and your finance plan. It’s best to be conservative with your numbers to make sure that you’re financially secure.

Car finance options

You may be purchasing your first car through a car finance agreement. There are plenty of options available to you and you should take your time to understand each one to make your final decision. Many lenders will accept first-time car buyers, especially if you have built up a good credit profile. Alternatively, you may be able to secure a Guarantor Loan, explained in more detail here.

Negotiate the price

Regardless of the fact that you’re a first-time car buyer, you should still be able to negotiate on the price of a vehicle. A lot of this comes down to your research on the vehicle – you can conduct an online investigation into the car’s true value to give you some idea. It’s also good to understand what factors contribute to the value of a car and express your knowledge to the car dealer.

Take a test drive

This is one of the final and most important parts of buying your first car – always ask to drive the car you’re looking to buy. Be wary of any dealer who offers you a test drive in a similar car when there’s no feasible reason for it, this could mean that the car you’re looking to buy has some undisclosed issues. It’s also important to test drive a car as it will most likely be very different from the car you’ve been learning on. It’s vital that you feel comfortable in your first car to avoid the chances of you driving the car improperly.

We understand that buying your first car is a very exciting experience, but it’s also important that you go through all the necessary processes before you sign on the dotted line. We hope that our tips will help to make this easier for you and (more importantly) we hope that you get the perfect first car for you!

Rates from 6.9% APR. Representative APR 13.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 13.9%, annual interest rate (fixed) 13.85%, 47 monthly payments of £201.38 followed by 1 payment of £211.38 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,176.24, total amount payable is £9,676.24.

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.

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!

How to Boost Your Credit Score in Your Mid-Twenties

Young woman in mid-20s thinks about improving credit score

When you reach your mid-twenties, your financial life really starts to go up a notch. This is usually the time when you receive your first considerable paycheck, apply for a credit card and begin to take full responsibility for your expenditure. An important part of this step is establishing and building your credit score. We take you through the ins and outs of how to boost your credit score.

What’s a credit score?

Your credit score is a three-digit number used by lenders to determine your eligibility for finance such as a car loan. It is made by taking into account your credit history, which is a record of how you’ve managed your lines of credit in the past – the most common for people in their twenties being an overdraft, credit card, mobile phone contract and/or utility bill.

Your credit score affects what type of finance products you can get, and what interest rate you end up paying. Those with a higher credit score, for example, are seen as being a lower risk to lenders and so are more likely to be accepted for finance on a lower interest rate.

What’s a good credit score in your twenties?

Credit scores range from 300 to 850 – the lower your number, the worse your credit rating is. There are different evaluations of what determines a good credit score. One of the main credit reference agencies, Experian, generally considers a score of 700 or above as good. Having a credit score that is this high in your twenties is very difficult to achieve, as often there have been fewer opportunities to prove your creditworthiness. At this time, the average credit score is usually hovering around the 630 mark, so anything higher than this is highly beneficial.

How to boost your credit score

When it comes to improving your credit score, there are three essential rules you have to follow: make all your payments on time, optimise the way you use your credit and don’t open too many lines of credit.

Making all your payments on time is the important part of building a good credit score and is the first thing lenders will look at when evaluating you for a car loan. If you have a bad history of paying your utility bills, paying your rent, or making contract repayments (e.g. paying excess charges on your phone contract), there’s no reason for a lender to trust that you will make your repayments on a car finance agreement.

Optimising the way that you use your credit essentially means being sensible with your money. It’s a vital part of improving your score as it proves that you are financially responsible. You may well make all your payments on time, but if you’re maxing out your card every month or stretching your overdraft to the absolute limits, this is a warning sign for lenders. They could argue that the additional money to pay back on a car finance agreement, would be one step too far.

Opening many lines of credit (especially over a short period of time) can look suspect to lenders and could indicate to them that you need extra revenues of money to support your lifestyle. So, whilst it’s ok to have a few lines of credit, it’s best to only have what you need.

Whilst it’s not good to have too many lines of credit, you can improve your credit score by opening a credit building credit card account. This a card with smaller amounts of money on it, which you can use as an example to lenders of you being financially responsible. However, if you don’t make your payment and use the credit on this card excessively, you will harm your credit score. This is only recommended for those people that are financially secure, disciplined with managing their budgets, and want an additional way to improve their credit score.

Building a good credit score in your twenties is no easy task – you’ve just begun your financial life and you might not have had enough financial responsibilities to establish a good credit score. Don’t panic, there will be plenty of time to prove your creditworthiness, and as long as you follow the rules outlined above, you’ll get there in no time!

Rates from 6.9% APR. Representative APR 13.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 13.9%, annual interest rate (fixed) 13.85%, 47 monthly payments of £201.38 followed by 1 payment of £211.38 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,176.24, total amount payable is £9,676.24.

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.

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!

How Can I Improve My Credit Score as a Student

students gather around laptop to research how to improve your credit score

For many people, becoming a university student is the first time you are given serious financial responsibility. You have to manage your student loan and any income you might have independently from your parents. Whilst this might seem to be a fairly brief period of your life, the way you handle your finances as a student can have a big impact on your credit score.

1. Make all your payments on time

Repaying your bills on time when you rent at university is an absolute must for a positive credit score. They are one of the main things credit agencies look at to judge your financial responsibility and give you a credit score. Take the responsibility for paying one of the bills and make sure that you always pay it on time. Setting up a direct debit is a good way of making sure this happens.

2. Register on the electoral roll

Putting yourself on to the electoral roll is another way to improve your credit score. It allows credit agencies the reassurance that you are who you say you are and that all the information you have provided to them is accurate. Without it, credit agencies can be wary of the potential for fraudulent activity, lowering your credit score as a result.

3. Keep any credit card limits and usage low

If you have a credit card: good. Having a line of credit which you repay punctually each month is a good way to prove your responsibility and improve your credit score. However, it’s important to keep your balance and usage as low as you can. This just helps to hammers home the point that you can be trusted with additional money.

4. Be good with your bank balance

Almost every student has an overdraft limit – it’s borderline necessary to have one if you are to make the most of a university lifestyle. However, whilst it might be tempting to see this as ‘free money’, managing it in the right way is essential to your credit score. So, don’t be silly with your spending. Make sure you have a comfortable amount in the bank each month.

Student life is a major turning point for lots of people: you’re constantly learning new things about your subject as well as about yourself. This learning process extends into how you look after your money. Being financially responsible as a student sets a precedent for the years to come and is the first real chance you get at improving your credit score. So, make it count.

Rates from 6.9% APR. Representative APR 13.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 13.9%, annual interest rate (fixed) 13.85%, 47 monthly payments of £201.38 followed by 1 payment of £211.38 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,176.24, total amount payable is £9,676.24.

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.

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!