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 9.9% APR. Representative APR 10.9%
Evolution Funding Ltd T/A My Car Credit
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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!
