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Can You Use Your Student Loan To Buy A Car?

Having a car while you’re a student opens up a whole new world of freedom. Not only does it make it easier to travel home or visit family when you need to, but it can also give you better opportunities for part-time jobs or apprenticeships. 

A car can even make the task of travelling from university or college with a bag full of books much less tiresome.

So if you’ve passed your driving test before or during your studies, you’ll be in a great position to get a car and be able to say farewell to public transport and hello to the open road.

There’s just one small problem to overcome first – how are you going to pay for it?

Should you use your student loan to buy a car?

The simple answer to whether you can buy a car with your student loan is yes. You can use your student loan to pay for whatever you like, the money is yours. The question you need to be asking, though, is should you pay for a car with your student loan?

While it’s up to you how you spend it, your student loan is ideally there to support your education experience. That means using it to help with general living costs, textbooks, stationery, food and – let’s be honest – a bit of socialising.

It doesn’t really stretch that far once you take all your expenses into account, so while you can buy a car with your student loan, it’s probably not the best idea to use all your money in one go.

Can you get car finance if you’re a student?

For most, it’s difficult to cover the costs of buying a car upfront. For students, with the expense of studies and perhaps without a full-time job, it can be even harder.

However, being a student doesn’t mean you can’t buy a car on finance. Your application for finance will be assessed in the same way as anyone else’s – based on your credit history and affordability.

Do you need a deposit for car finance?

There are several types of car finance and which one you choose depends on your personal circumstances. With some dealers, you’ll have to make a deposit if you choose hire purchase, personal contract hire or personal contract purchase finance. 

However, here at Hippo Motor Finance, that’s not the case. All our vehicles come with a £0 deposit option, meaning you don’t have to face any big costs upfront. 

But remember, a deposit isn’t an additional fee – it’s actually a percentage of your overall payment. So the bigger your deposit, the smaller your monthly repayments will be. And vice versa.

Whatever your situation, though, there will be an option for you. If you’re thinking about financing a car, it’s ideal to talk to a specialist first, like someone from the team here at Hippo who have years of experience in dealing with all types of financial situations and can help find a solution for you.

Do you need a job to get car finance?

For most students, it’s near impossible to hold down a full-time job while in education. And while many students have part-time jobs, your earning capacity is naturally limited this way.

However, just because you don’t have a job doesn’t mean you won’t be accepted for car finance. What’s important is evidence of affordability. So as long as you receive some form of regular income and can show that you are in a position to make your repayments, that can be enough. 

How important is your credit score in getting car finance?

Your credit score is a rating based on your financial history. This score helps lenders to determine the potential risk you pose as a borrower and which interest rates you qualify for. 

And although a credit score is only one of a few things lenders look at when deciding whether to approve your application, it’s quite a big one.

The problem of applying for car finance when you’re younger is that you haven’t had the time to build up much credit history, and that can have a negative impact on your score. 

Of course, this doesn’t mean that you can’t improve on it to reassure the lender you can manage your money responsibly.

Top tips to improve your credit score fast

Register on the electoral roll Open a bank account
Avoid missing payments Take out a credit card

Register on the electoral roll

The chances are, you’ll already be registered on the electoral roll at your home address. However, you can also register at your student address. This helps lenders easily find you when you apply for credit and it’ll also bump up your credit score.

Open a bank account

Building a good financial history all starts with managing your money well. And one of the easiest ways to do that is with a bank account. 

Set up direct debits from your account and make sure you always have enough money in there to cover bills.

An overdraft facility will help build your credit score. If you have a student overdraft with no fees, though, make sure you can pay it off before the promotional offer ends and the bank starts to charge you. 

Avoid missing payments

It’s not only credit cards that show up on your credit report. Utility and mobile phone contracts often appear there too. 

If you miss a payment or are late, it’ll show up on your credit report and lower your score. It’s a good idea to get into the habit of setting up direct debits and making payments on time.

Take out a credit card

If you qualify, taking out a credit card to help you build up a credit history is an option. Make sure you always use a comparison site with a soft search to find any offers, as hard searches for credit will show up on your report and again impact your score.

Once you have the card, aim to only use a small percentage of your credit limit and make sure you make repayments on time.

Are there options for students with bad credit?

Unfortunately, if you have a bad credit rating, you may find it a little harder to find a good car finance deal. It takes time to build up a good credit rating, but we appreciate that not everyone can wait.

If you’re worried about bad credit, Hippo can help. We specialise in helping customers with bad credit get better car finance deals. 

Our soft search eligibility check will allow you to find out your best options without harming your credit score. You’ll have access to a large range of specialist lenders who understand your position, so bad credit won’t necessarily hold you back.

Can I use a guarantor?

One final option you have as a student to improve your chances of being accepted for car finance is by using a guarantor.

Typically a close relative, like a parent, a guarantor will act as someone who is prepared to pay your loan should for any reason you be unable to. It’s important that they have a good credit history, as the lender wants to minimise the risk.

Remember, if you fail to make payments, both your and your guarantor’s credit score can be negatively impacted, so it’s important not to go into this lightly.

Choosing the right car for you

If you’re a student and would like to find out whether you qualify for finance, you can do it all online for free. 

Simply click Apply Now below, fill out our short form and we’ll let you know if you’ve been approved without affecting your credit score. 

Representative Example of Credit

We expect more than 51% of our customers to achieve this rate.

Loan Amount Total Cost of Credit Representative APR 60 Monthly Payments Deposit Amount Loan Term Total Amount Payable
£7,500 £3831 19.1% APR £188.85 £0 60 Months £11,331

All offers are subject to change at any time, you must be 18 or over and finance is subject to status, vehicle availability and terms and conditions apply. We can introduce you to a limited number of finance companies, a commission may be received. Failure to maintain payments may result in termination of your agreement and the vehicle being returned, this could affect your credit rating and make it more difficult to obtain credit in the future. All prices correct at time of publication.

We purchase a wide variety of vehicles from all over the country to ensure the best quality and value for our customers, all of our cars go through a thorough inspection process and if they do not meet our standards we do not sell them. We endeavour to inform our customers (where possible) the provenance of the vehicle they are buying and as such we will always inform you if the vehicle has previously been either an ex fleet or hire car. Should your vehicle be an ex hire/fleet car please do not be concerned as we would never value this vehicle differently when you come to part exchange it and there is no difference to the CAP valuation either.

You should try and estimate the distance you will travel as accurately as possible to try and avoid excess mileage charges at the end of your contract.

All pictures and/or photos and car descriptions on this site are for illustration and reference purposes only and are not necessarily the vehicle on offer. All offers are subject to change at any time and are subject to finance approval and vehicle availability. All prices correct at time of publication. E & OE.

Hippo Vehicle Solutions t/a Hippo Motor Finance is authorised and regulated by the Financial Conduct Authority. FRN 658076. We are a Credit Broker not a Lender and can introduce you to a limited number of lenders. Subject to status and to UK residents only (excl. the Channel Islands). Individuals must be 18 or over. Guarantees and indemnities may be required. We typically receive a fixed commission calculated by reference to the vehicle model, product or amount you borrow, for introducing you to a lender but this does not affect the interest charged on the agreement, all of which are set by the lender. Images for illustrative purposes only. Hippo Vehicle Solutions t/a Hippo Motor Finance is an Appointed Representative of AutoProtect (MBI) Limited for insurance distribution purposes. AutoProtect (MBI) Limited is authorised and regulated by the Financial Conduct Authority. Its firm reference number is 312143. You can check this at

We endeavour to ensure that all information including the specifications and finance availability are accurate. Whilst we make every effort to display correct information we are aware that errors may occur occasionally. We are not able, therefore, to guarantee the accuracy of all information especially when given to us by third parties. If you do require clarification of some information you have seen on our website, please email us at . This does not affect your statutory rights.

We are a broker not a lender and our registered office is Unit 26 Trident Park, Trident Way, Blackburn, BB13NU.