Are you curious whether you need a licence to get car finance?
Many wonder if they can accomplish this objective and, if so, how to proceed.
Lenders typically expect finance applicants to have a full driving licence to reduce their liability. Besides proving a person’s identity, a full driving licence verifies you can legally operate a vehicle.
Young drivers without a full licence pose a higher liability to borrowers with their increased probability of having little-to-no credit history for risk evaluation. While some new drivers may have extensive credit history, their lack of experience still indicates risk.
These lender expectations don’t mean you can’t get car finance without a driver’s licence. Not having a licence will make finance approval harder, but not impossible.
Car finance applicants are interested in experiencing a seamless approval process while avoiding any limitations on borrowing amounts.
The rest of our guide will explain:
- How to optimise your chances of getting car finance without a licence
- Documentation you’ll need to apply (with or without a licence)
- Whether different licence types impact car finance
Find quick clarifications on these essential points below.
How can I increase my chances of successful car finance without a licence?
A guarantor and joint finance are the two most common routes to acquiring car finance without a licence, with guarantors being the more likely requirement. Guarantors are liable to pay for the vehicle’s finance if the borrower repeatedly misses or defaults payments. In turn, lenders are more likely to extend a loan. The borrower and their guarantor’s credit rating will take a hit if they don’t pay.
Joint vehicle finance involves two people applying for finance on a car, with both members meeting the repayment terms. Like default payments with a guarantor, repeated missed finance installments will negatively impact each borrower’s credit score.
Joint finance requires someone to file as the vehicle’s primary user. This primary user, otherwise known as a registered keeper, handles:
- Car insurance
- MOT
- Servicing
- Road tax
Demonstrating a solid credit history and reliable income will increase your chances of getting car finance without a licence using a guarantor or joint finance.
What documents do you need to apply for car finance?
The documents you’ll need to apply for car finance are generally the same whether or not you have a licence, but there are some additional considerations for those without a licence. Let’s begin with the similarities.
Besides proof of income and personal details, those applying for car finance without a licence still need to verify their identity. The most common way people prove their identity without a licence is with a passport.
However, you can also use documents like:
- A national identity card
- Birth certificate
- Government or legal documents like a marriage certificate
- Recent utility bills
Some of the above methods, like recent utility bills, likely won’t be enough alone for lenders to verify your identity. Still, they can serve as supporting documents to strengthen your application.
You’ll also need to provide an address history when applying, typically dating back the last three years. If you’re curious why lenders will request the previous three years of your address history, it’s so they can evaluate your risk. For instance, frequent moves can indicate financial stability, possibly limiting your loan amount.
Document differences without a licence and additional considerations
The specific documents you’ll need depend on the type of car finance you’re applying for. Drivers seeking finance for a business vehicle need to provide additional information, including, but not limited to, company registration details, business bank statements, and tax returns.
It’s also essential to understand the differences between hire purchase (HP) and personal contract purchase (PCP) car finance. Monthly payments for an HP arrangement pay off a vehicle’s full value, lowering your outstanding amount at a faster rate. PCP finance requires a sizable and optional final payment to attain full ownership of the car.
We mentioned how guarantor or registered keeper details are necessary when applying for car finance without a driving licence via the guarantor or joint finance route, but some people don’t realise that some lenders also require an explanation of use for the vehicle. Our next section will help with this explanation.
Why would someone want to get car finance without a licence?
While applying for car finance without a driving licence isn’t common, you or someone you know may be interested in pursuing this process to:
- Build a credit history
- Get a vehicle ready following a passed test
- Buy a car on behalf of a family member
- Purchase a vehicle for business purposes
Drivers may want to get a vehicle ready following a passed test if they find a must-have car, a limited-time deal, or wish to avoid restricting their transport options upon receiving a licence. People tend to think of business vehicles as reserved for business owners, but an employee of an organization might need to provide their own car to complete a job.
Despite being an uncommon situation, some may use vehicle finance without a driving licence to establish credit and possibly use that credit for future purchases like a home mortgage.
Do different licence types affect car finance?
Like applying for car finance without a licence, applying with a provisional licence instead of a full licence is more challenging since it poses a higher risk to lenders.
A full driving licence negates a driver needing another motorist who is at least 21 and has owned a licence for a minimum of three years. Lenders can also worry about a provisional driver’s lack of nighttime experience behind the wheel. Older applicants with a provisional licence will generally have an easier time acquiring finance since they’re more likely to check boxes like proving a stable income and extensive credit history.
Similar to applying for vehicle finance without a licence, drivers with a provisional licence can optimise their chances of gaining approval with a guarantor or joint finance.
Do I need a driving licence to get car finance through Car Finance Today?
Car Finance Today streamlines your ability to apply for vehicle finance with or without a licence via a minutes-long process allowing you to view quotes and compare loans/policies from dozens of lenders—all while protecting your credit rating.
Once you find a loan fulfilling your needs, you’ll finalize your application with a trusted lender. Try our platform today to take the stress out of buying tomorrow’s car.
