Do I need a driving licence to get car finance?

Do I need a driving licence to get car finance? 

Getting your hands on a car often feels like a pivotal moment. Whether it's for tackling the daily commute or simply enjoying the freedom of the open road, having your own set of wheels can be a real game-changer. For many, the most practical route to achieving this is through car finance, a way of spreading the cost of a vehicle into manageable monthly payments.

But if you're considering car finance, you might be wondering about the nitty-gritty details. One question that often pops up is: can you secure car finance with no driver's licence? It's a fair question, and we're here to delve into it.

This guide will explore the relationship between holding a driving licence and getting approved for car finance, giving you the lowdown on what you need to know.

The basics of car finance

First things first: here's a quick recap on what car finance actually entails. Essentially, it's a way to fund the purchase of a car without having to shell out the full amount up front. Instead, you borrow a sum of money from a lender, like First Response Finance, and repay it in instalments over an agreed period, usually with added interest.

There are a few different types of car finance you might come across:

• Hire Purchase (HP): with Hire Purchase, you'll typically pay an initial deposit, followed by a series of fixed monthly payments. Once you've made all the payments, you become the legal owner of the car.
• Personal Contract Purchase (PCP): Personal Contract Purchase agreements usually involve lower monthly payments compared to HP. At the end of the agreement, you'll have the option to either purchase the car by paying a final lump sum or return it to the finance company.
• Personal Loans: to finance a car with a personal loan, you borrow a specific amount of money from a lender, such as a bank. You then use that money to buy the car outright.

Do I need a driving licence for car finance?

So, let's get to the heart of the matter: can you get car finance without a driving licence? The short answer is "not always" but it certainly helps and is often preferred by lenders.

From a lender's perspective, understanding who will be driving the car is a key part of the process. While the finance agreement is a contract between the lender and the person taking out the finance, the vehicle itself is the asset being secured against the loan in options like Hire Purchase.

While it isn't a strict legal requirement to have a driving licence to enter into a finance agreement, lenders will naturally have their own criteria and processes.

Why is a driving licence important to lenders?

You might be wondering why a lender would even ask about your driving licence if it's not always a necessity. There are a few reasons for this:

• Proof of identity: a valid driving licence is a widely accepted form of photographic identification, helping lenders to verify who you are.
• Intention to use the vehicle: while not always the case, lenders might assume that the person applying for finance intends to be the primary driver of the vehicle. Having a licence can support this assumption.
• Responsibility and stability: holding a driving licence can sometimes be seen as an indicator of responsibility and adherence to rules and regulations.

Are there any situations where no driver's licence is needed for car finance?

There are several situations where someone might apply for car finance without holding a full driving licence:

• Buying a car for someone else: you might be looking to finance a car for a family member, such as a child who has their full licence but might not have the credit history to secure finance themselves.
• Anticipating learning to drive: perhaps you're about to start driving lessons and want to apply for car finance with your provisional licence, so have a car ready for when you pass your test.
• Collectors or investors: in some cases, individuals might finance classic or collectable cars that they don't necessarily intend to drive regularly.

It's important to understand that, even in these scenarios, lenders will still need to assess the applicant's ability to repay the loan. They will likely focus more heavily on other factors like income, credit score, and affordability. You might find that the criteria are stricter if you don't hold a full driving licence yourself.

Can I get car finance on a provisional licence?

While it is possible, generally it can be harder for you to get a car on finance with a provisional licence. Here's why:

• Driving restrictions: a provisional licence comes with restrictions, meaning the holder cannot drive unsupervised. Lenders may be hesitant to finance a vehicle for someone who cannot yet legally use it independently.
• Insurance implications: insuring a car with a provisional licence can also be more complex and potentially more expensive. Lenders will want to ensure the vehicle will be adequately insured.
• Perceived risk: from a lender's perspective, someone with a provisional licence might be seen as a greater risk, as they are still in the learning phase.

While it might be more difficult, it's not always impossible to get car finance with a provisional licence. Some lenders might consider an application with a provisional licence if other aspects of your financial profile are strong, such as a good income or if you have a joint applicant with a full driving licence and a strong credit history.

What else do lenders consider besides a driving licence?

Whether you have a driver's licence or not, there are steps you can take to strengthen your car finance application:

Income and employment status 💼

Lenders need to be confident that you have a stable and sufficient income to meet the monthly repayments. Whether you're in full-time employment, in part-time work, or self-employed, providing details of your income is crucial. As mentioned in our guide for students seeking car finance, even part-time work can help strengthen your case.

Credit score and history 📊

Your credit score is a significant factor, and a good credit history can increase your chances of being approved and potentially secure more favourable interest rates. However, at First Response Finance, we also specialise in helping those with less-than-perfect credit get car finance.

Affordability and debt 💰

Lenders will assess your overall affordability by looking at your existing debts and income to ensure that the car finance repayments won't put undue strain on your finances.

Proof of address 🏠

Verifying your address is a standard part of the application process to confirm your identity and residency.

The vehicle itself 🚗

The age, mileage, and value of the car you're looking to finance can also play a role in the lender's decision.

Tips for applying for car finance

Whether you have a full driving licence, a provisional licence, or no licence at all, here are some steps you can take to strengthen your car finance application:

• Improve your credit score: if possible, aim to improve your credit score before applying. This could involve registering on the electoral roll, ensuring you pay bills on time and addressing any outstanding debts.
• Be realistic about affordability: use a car finance calculator to get an idea of potential monthly payments and ensure they fit comfortably within your budget.
• Provide accurate information: when filling out the application, ensure all the details you provide are accurate and up to date.
• Consider a joint applicant: if you only have a provisional licence or a limited credit history, having a parent or another responsible adult with a full licence and good credit who is willing to act as a joint applicant could significantly improve your chances.

Can First Response Finance help me get car finance without a driver's licence?

At First Response Finance, we understand that everyone's circumstances are unique. We have over 20 years of experience in helping people from all walks of life - including students and those with less-than-perfect credit - to find the right car finance solutions. We don't believe that a lower credit score or not yet having a full driving licence should automatically rule you out.

While a full driving licence is one piece of information we may ask for, we'll take a balanced view of your application, and we're committed to treating every application on an individual basis.

We offer Hire Purchase loans of £2,000 to £15,000, which can be repaid over 18-61 months. Why not use our free and easy-to-use car finance calculator tool to get an idea of what your agreement might cost? It's quick and simple, and won't impact your credit score.

Find out why we've been voted the No.1 motor finance lender in the UK by checking out our reviews. For more information, our handy insights and tips section is full of detailed guides all about the world of car finance.