Student Car Finance

The three most popular forms of car finance for students are:


• HP (Hire Purchase) - Hire Purchase gives you the opportunity to own your car at the end of your financial agreement. The total car price (plus interest) is spread over manageable monthly payments for a set time period, usually ranging from one to five years. As well as these payments, there’s also a deposit paid up front. When your final payment is made, you’ll own your car out right, making HP one of our most popular financing methods.


• PCP (Personal Contract Purchase) - PCP deals are somewhat similar to HP, but typically involve lower monthly payments. The main difference between the two is that, at the end of the contracted period, you don’t automatically own the car. Instead, you can choose to pay a ‘’balloon payment’ to become the car’s owner. However, if you’d rather not keep the car, you can return it to the dealer without the need for an extra payment. If you wish, you can explore another financing deal with CarFinance 247 afterwards.

 

• Personal loan - As the name suggests, a personal loan involves you borrowing money for your car, usually from a bank or another reputable lender. With a loan, you own the car from the beginning of your contract, but you still need to ensure your loan payments are paid on time.

Here’s a breakdown of the typical steps involved when applying for student car finance:


• Online application: First, you need to complete our online application form. Honesty is key here, as it allows us to fairly assess your situation. Nevertheless, we’ll always try to find you the best deal possible from our wide panel of lenders.

• Expert guidance: Next, one of our skilled account managers will promptly contact you to discuss your options and find the perfect deal. We understand the importance of a fast response, ensuring your student car finance deal is ready to go when you need it. Your account manager will compare lenders for you and manage any admin tasks that crop up.


• Car selection: Now it’s time for the most exciting part of the financing process - choosing your ideal vehicle. Once your finance has been approved, you have access to over 100,000 car models when using our car search option.


• Checks and paperwork: Once you’ve found the perfect car, you can sit back and relax as we run through our internal checks. We’ll also complete all the paperwork for you, as well as liaising with your dealer and lender. 


• Contract Signing: Finally, it’s time to sign your contract, before jetting off in your new vehicle.


As you can see, the student car finance process is incredibly easy when working with CarFinance 247, as we’ll handle most of the work for you. We understand that every situation is different, so your application may differ slightly depending on your individual circumstances. 

If you want to improve your credit rating, there are several actions you can take. Not only will these top tips increase your chances of being approved for a deal, but you might also find more favourable rates for your agreement. 

Use a guarantor


As a student, you’ll likely need to use a guarantor at some point in your university life. Many student houses and flats require a guarantor when signing a tenancy agreement, so you may already have some idea of what they are.


However, if you’ve never had experience with a guarantor before, we’re here to help! Essentially, a guarantor is someone who kindly agrees to cover your car finance payments if, for whatever reason, you are unable to pay them yourself. Once a guarantor agreement is in place, it’s legally binding, so it’s important you find someone capable of managing your payments, if needed. Most people choose to use a family member, but anyone can be a guarantor. Your guarantor should be someone who can vouch for you, as well as having the means to cover your car finance payments.


Using a guarantor can increase your chances of being accepted for student car finance, and may even help you get a better deal than if you applied solo. 


However, if finding a suitable guarantor is a challenge, please contact us and we’ll see what we can do to help.



Improve your credit score



As a student, you may find that you have either a low credit score or, in some cases, no credit history at all. Having a poor credit rating may limit your chances of securing a student finance deal, and you may end up paying higher interest rates.


If you want to improve your chances of getting a good financing deal, an effective approach is to work on enhancing your credit score. Whilst building good credit takes time, it’s a worthwhile endeavour if you’re considering applying for finance in the future. Simple ways to bolster your credit report include:

• Registering to vote on the electoral roll
• Paying your bills and rent on time
• Having a mobile phone contract in your name that’s paid on time
• Using a student credit card that’s paid off each month

Each option will help you to build a stronger credit report, offering more flexibility when it comes to your student car finance. However, if you have a poor credit rating or you’re eager to get your new car, we can still offer you a finance deal. Please visit our Bad Credit Car Finance page for more details.



Get a part-time job and learn to budget



If you’re new to university life, mastering the art of budgeting may be a shock to the system. It’s a necessary skill, as budgeting accurately ensures you stay within your financial limits and never overspend on things you can’t afford. By tallying your budget each month, you’ll know how much you have left, which can be allocated towards your student car finance. All you need to do is add all your income sources together (student loans, wages, maintenance grants), before subtracting your outgoings from the total sum. 


Don’t forget to work out the other costs of running a car, including:


• VED (Vehicle Excise Duty, also known as road tax)
• Car insurance
• Fuel costs
• MOT and servicing fees, as well as funds for repairs

As you can see, the costs of running a car can soon add up! You need to make sure you have enough money to cover all of these things, as well as your monthly payments and your deposit. However, if an upfront deposit doesn’t suit your current situation, we also offer several no deposit car finance options. 


This brings us nicely to our next piece of advice - securing a part-time job. Of course, this tip depends on your current university schedule, as students with intensive courses may have limited time. Not only does having a job boost your income, but it also makes you look better to potential lenders. This is because it shows that you have a regular and reliable income, making it easier to afford your monthly repayments. 


However, if finding a job isn’t feasible due to your university commitments, we also offer car finance options for unemployed people, so there’s no need to worry! Want to find out more about our no deposit deals and unemployed finance options? Get in touch here.