Loans for young people

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^Correct as of September 2026.

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How old do you have to be to get a loan?

You need to be at least 18 before you can apply for a loan or any other type of credit, such as a credit card or overdraft, in the UK.

Nearly all UK lenders offer personal loans for 18-year-olds but some types of loans are only available to people aged 21 or older.

If you’re under 18 and need some cash, your best bet might be to speak to the Bank of Mum and Dad. If you’re lucky, they might not even charge you any interest.

Did you know?

On average, 18-29 year olds look for a loan of £9,139 through us. Around 33.4% apply for a car loan, making it the most popular type of loan among young people2.

How do loans for young people work?

Loans for young people work in much the same way as other personal loans. The main difference is that, with little to no credit history, you may face stricter eligibility checks and lower borrowing limits. Here's how they usually work:

Decide how much you want to borrow

Check the interest rate

See what you could be offered

Apply for the loan

Receive and pay off your loan

Bear in mind

You could pay penalties and harm your credit score if you miss a payment. This could make it harder for you to borrow in the future.

If you want to clear your debt early, you might need to pay an early repayment charge.

What type of loans for young people are there?

Aside from student loans, which are specifically for university tuition fees and living costs, young people can get other types of first time loan. These include:

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Personal loan

You can usually borrow up to £25,000 over 1-5 years.

Loan amounts may be limited if you have a low credit score and could come with higher interest rates.

Explore personal loan options
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Guarantor loan

A friend or family member with a good credit score agrees to cover your repayments if you can’t. APRs may be higher than standard loans.

Sorry – you can’t compare guarantor loans with Compare the Market.

Learn more
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Car finance

You could take out a personal loan to buy a car outright or use car finance from the dealership.

Our data shows that 18-29-year-olds apply for £11,438 on average to buy a car2.

Compare car finance
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Holiday loan

Helps spread the cost of your dream holiday. Young people typically apply for holiday loans of £3,678 through us2.

Find a holiday loan
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Wedding loan

Can help cover the cost of your big day. 18-29-year-olds ask for £10,353 on average when getting a wedding loan quote from us2.

Compare wedding loans
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Bad credit loan

Can be helpful if you have a poor credit score or limited financial history. Bear in mind that interest rates tend to be higher as you’re seen as a greater risk to lenders.

Compare bad credit loans

Bear in mind

You’ll also see payday loans advertised – be extra careful with these. They’re designed for short-term borrowing but come with very high costs.

MoneyHelper, a Government-backed advice service, warns that late repayment of these loans can cause serious problems. Always check out cheaper alternatives first.

What are the pros and cons of loans for young people?

Pros of loans for young people:

  • Get cash when you need it – can be helpful if you don’t have savings to fall back on

  • Builds credit history – managing your loan responsibly will boost your credit history and score. This can come in handy when applying for bigger financial commitments, such as a mortgage.

  • Flexibility – spread the cost of large purchases, such as a new laptop or your first car

Cons of loans for young people:

  • Higher interest rates – without a solid credit history, young people tend to get higher interest rates than older borrowers

  • Penalties for missed payments – you could face additional interest and fees if you miss your repayments. It can also hurt your credit score and make future borrowing more difficult.

  • Potential money problems – if you borrow more than you can afford to repay, you could end up in debt that leaves you a lot worse off than before.

You should never rush to take out a loan. Before applying, ask yourself:

  • Do I really need the cash?

  • How much do I actually need?

  • How long will I need this money for and how long will it take me to pay it back?

  • Can I afford the repayments?

  • Is this the cheapest way of borrowing the money that I need?

Compare the Market Limited acts as a credit broker, not a lender. To apply for a loan you must be a UK resident aged 18 or over. Credit is subject to status and eligibility.

How can I improve my chances of getting a loan while I'm young?

It can be tricky to get a loan when you’re young, starting out in the world of work and building up your credit profile. But there are ways that can help boost your chances of being approved.

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What is a credit score and how can it affect you getting a loan?

Think of a credit score as a rating that shows how reliable you are at repaying money you borrow. It’s based on your financial history, including how you’ve managed past debt.

Different providers use different scales. For example, up to 999 or 1,250. Either way, the higher your score, the better your credit rating.

A good credit score can:

  • Boost your chances of being approved for loans

  • Help you qualify for lower interest rates

  • Improve your likelihood of better deals on other borrowing, such as car finance and mortgages.

But a poor credit score could mean:

  • You get turned down for loans and credit cards

  • If approved, you’re charged higher interest rates (meaning you’ll pay more in the long run).

Quick tip

You can check your credit score for free through a credit reference agency. The main agencies in the UK are Experian, Equifax and TransUnion.

How do I get my first loan with no credit history?

A lack of credit history doesn’t mean your first loan is out of reach, but it does limit your options.

You’ll usually face higher interest payments. The amount you can borrow will also likely be lower than someone with an established credit history.

This can seem unfair but, because you’re a new borrower, lenders can’t predict how you’ll manage credit in the future.

Got a student loan?

While a student loan is a form of debt, it doesn't impact your credit score. It won’t improve your credit history either.

Sajni Shah

What our expert says...

“If you’re borrowing for the first time, think about the term as well as the amount. A shorter term usually means paying less interest overall, so choose the shortest one where the repayments still feel comfortable within your budget.

“A smaller loan repaid on time could help you build a credit record faster than a large one, as it shows you can manage repayments without taking on more than you need. Get on the electoral register and check your credit report first too, as lenders use both when they assess applications.”

Sajni Shah, Personal finance expert

Alternatives to loans for young people

If you’re looking to borrow money, a personal loan isn’t your only option. Explore these alternatives too:

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Student credit card

Designed for students, often with no annual fees. Can come with perks like rail discounts.

Credit limits tend to be low, so may not be suitable for big purchases.

Learn more
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Credit builder card

Suitable if you have poor (or no) credit history. Can help improve your credit rating slowly but surely.

The maximum spend limit is usually lower than other credit cards and the interest rate will be high.

Learn more
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Arranged overdraft

Lets you borrow money through your current account.

Only use your overdraft for the short term and avoid using it for big spending, as it can get expensive.

Learn more

When taking on any form of debt, think carefully about whether you really need it. Consider whether:

  • You have any spare cash to save up for what you want

  • You can save money by cutting costs, reducing your outgoings and increasing your income.

Need financial support?

If you’re having problems with debt, seek help. Find out where to get free debt advice on the MoneyHelper website.

Loans for young people

Find out what young borrowers need to know, from eligibility and costs to building a strong credit history

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Personal loans for students
See which loan options may be open to you while you study
Small loans
Understand how they work and what you'll need to apply
Loan types
Guarantor loans
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Personal loan calculator

Estimate monthly repayments and compare loan costs over time

Loan eligibility checker

Check which loans and rates you could be offered before you apply

Car finance calculator

Estimate personal car loan payments and see how much you could borrow

FAQs

Can I get a loan if I've just started my first job? 

Yes, some lenders might consider a loan application if you’ve recently started working, provided you have a regular income and can afford the repayments.  

But having a longer employment history could improve your chances of getting a loan and a better interest rate. 

Can my parents help me get a loan?

Your parents can’t take out a loan in your name, but you could consider taking out a guarantor loan. This involves a parent or close relative agreeing to cover the loan repayments if you can’t make them. 

Can I get a loan if I work part-time? 

You might be able to get a loan with a part-time income. Lenders usually look at how much you earn, your regular outgoings and whether you can comfortably afford the monthly repayments when deciding whether to offer you a loan. 

Can I get a loan after graduating from university? 

Yes, you can apply for a loan when you’ve graduated. Lenders typically look at your income, employment status, credit history and whether you can afford the repayments when deciding whether to accept your application.  

Some banks may also offer graduate-specific loans to customers who hold a current account with them. 

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Charlie Evans
Reviewed 11 Nov 2026 byCharlie EvansPersonal finance expert

Charlie is a senior commercial leader with almost a decade's experience across the UK’s leading personal-finance and comparison platforms. Before joining Compare the Market as Head of Commercial in 2024, he held senior commercial roles at TotallyMoney and MoneySuperMarket Group.

Methodology

1 Based on Trustpilot ratings (October 2026).

2 Correct as of September 2026.