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Car Finance for Young Drivers

Car leasing is an increasingly popular method of funding a car, with the worldwide share of leasing expected to grow to 14.6 million by 2023. Although some people might assume leasing is only an option on new vehicles, exploring car finance on a used vehicle can be an excellent and affordable option for young drivers looking at their first or second cars. 

The costs of running a car as a young driver

As a young driver the monthly payments might seem a little daunting, but running a car on finance is more economical than you think.

Inflated insurance prices

Many young drivers are put off purchasing a car because of the expensive cost of insurance. Not only do you have to fund a car, you also have to pay a car's worth of insurance over the course of a year. In fact, a driver in their 20s will be paying 24.5% more in insurance than those in their 30s and just under 50% more than drivers in their 40s. 

This might seem unfair, but insurance is based on risk and unfortunately for young drivers they are much more likely to have an accident. This is demonstrated in the claim rate, where 25% of all claims are made by drivers under the age of 25. 

The good news for young drivers is that these insurance costs can be cut. Additional items such as a black box, or adding a responsible 2nd or 3rd driver can help bring down costs. In addition, with our annual motor insurance we give you the flexibility to pay yearly or monthly, so you can make the most of your budget. 

With our Cosmetic Repair Cover you can save further money in the future. With this cover the cost of repairing light scratches, bumper scuffs, chips, and minor dents are taken care of, you may need to pay a small excess. This will help maximise your vehicle's future part exchange or resale value. 

The rising costs of fuel

It comes as no surprise that another factor putting young drivers off running a car is the rising costs of fuel. Based on cars with a standard fuel economy, motorists spend on average £1,288 a year to fuel a standard petrol car and £1,795 for a diesel. For young drivers this may be less of an issue in the future as half of all cars in the UK are set to be electric by 2030, with a full ban on new fossil fuel cars set for 2040.  As a young driver, car finance is a great way to get your hands on a top of the range electric vehicle. We have extensive financing options across our range of vehicles, with electric and hybrid vehicles made affordable for all drivers.

Car tax, servicing and maintenance costs

Alongside fuel, other expensive outgoings when running a vehicle are the servicing and maintenance costs.

Car tax, for example, must be paid on all vehicles in the UK, unless:

  • The vehicle is registered as off-the-road (SORN).
  • The vehicle is brand new and produces 0 grams of carbon dioxide (CO2) emissions – and costs less than £40,000.
  • The vehicle was registered between 1 March 2001 and before April 2017 and produces up to 100 grams of carbon dioxide per kilometre driven.
  • The vehicle is a ‘historic vehicle’. This is a vehicle which is over 40 years old. 

The amount you will pay for car tax will depend on its car tax band. This is measured by the amount of CO2 per km it produces. For example, a car emitting zero emissions per km will not pay any tax, while a car producing 191 to 225g of CO2 per km will have to pay £1,420. 

For a more detailed explanation of car tax bands, head over to

Another cost to consider are MOT tests which are mandatory for all cars over three years old. An MOT ensures that all cars on the road are safe and will not endanger the driver and other motorists. The standard cost for an MOT test is around £54.85.

A young driver can end up spending a lot of money maintaining their car, only to see the car's original value depreciate over time. By choosing a car on finance, you can minimise many of these costs. 

For example, the Peugeot Just Add Fuel® deal includes the expensive routine servicing of your vehicle. However, any damage caused by the wear of parts will have to be funded by the driver. 

Why should young drivers apply for car finance?

Stellantis Financial Services has a range of additional benefits which make choosing finance as a young driver a smarter choice. 

Just Add Fuel® 

Just Add Fuel® is an innovative car finance deal that includes insurance, car tax, warranty, servicing and roadside assistance in one 37-month package. The only cost you’ll have outside of your finance agreement is the fuel. 

For drivers 18-20 or those with less than 2 years no claims discount, Just Add Fuel® comes with a fitted telematics device. 

Flex & Free

For young drivers who like the idea of regularly driving a brand new car, Stellantis Financial Services Flex and Free lets you do just that. 

Flex and Free itself is no different to a standard contract hire agreement. It’s like a Contract Hire agreement, but with the option to change your vehicle from month 6 of your contract without penalty (subject to condition and mileage).

This makes it a great option for those who love the feel of a new car or want to try going electric before making a longer commitment.

Just Add Fuel® and Simply Drive

Just Add Fuel® and Simply Drive offers a package that covers the costs of your brand new vehicle in one monthly payment. The cost includes tax, insurance, roadside assistance and servicing for the duration of the contract. ​ If you’re aged 18-20 or have less than 2 years No Claims Discount we also have these packages with Telematics specifically for you. Terms and conditions apply. Speak to your local retailer for more details.

What should young drivers be aware of when thinking of car finance?

To make sure you make the most of your finance deal you should consider the following:

1. Planning your finances

Keep an eagle eye on your incomings and outgoings. Although monthly payments are more affordable than buying a car in one large sum, as a young driver you will still need to be aware of your bank account activity. This way you can get most out of your monthly budget without any surprise costs.

2. Find a job, even part-time

Being in work, part-time or full-time can boost your chances of getting a car on finance. This regular source of income, particularly if you are under the age of 20, will help lenders see you as trustworthy and reassure them that  you can afford the monthly payments. 

3. Improve your credit rating

Unfortunately, a poor credit rating can make it difficult to find a car on a finance deal. A strong credit score will help convince lenders that you are trustworthy when it comes to repayments. 

Before applying for finance, check your credit score for free on credit reporting sites such as Experian and Clearscore. You can easily build up your credit score by registering to vote, paying your bills on time, and even spending moderately on your credit card.

What car finance options are available to young drivers?

There are several options available to young drivers when looking for their ideal car finance deal. 

Personal Contract Hire
Personal Contract Hire (PCH) is a long-term leasing arrangement. This means that although you won’t own the car at the end of your contract, you’ll be making a fixed monthly rental for the vehicle while you use it.

Personal Contract Purchase
With Personal Contract Purchase (PCP), you can purchase your vehicle with a deposit, monthly payments and, if you wish to own the vehicle at the end, a balloon payment (also known as the Guaranteed Future Value). Since you won’t have to pay for part of the car until the end of the contract, this gives you additional flexibility.

Conditional Sale
Conditional Sale is a traditional way of purchasing a car on finance, offering a straightforward agreement that involves paying a deposit followed by equal monthly payments, similar to a personal loan.

Personal Finance lease
Personal Finance Lease (PFL) agreement is similar to PCP however, PFL offers a fixed monthly rental payment without the option to purchase the car at the end of the contract.

Find the right car finance option for you 

Stellantis Financial Services have an incredible range of accessible plans available, so driving away with your ideal car could be well within your reach. Before making the decision, make sure you calculate how much deposit and monthly payments you can afford.