This is how the Car Financing Process Works

Rates from 8.9% APR. Representative APR 19.9%

The 3 types of car finance available to you!

FAQs How does car finance work?

Am I eligible for a car loan?
Your credit score dictates your eligibility. A good credit rating gets you a higher chance of acceptance for car finance and a better interest rate APR. Meanwhile, your affordability, the sum of your income minus your outgoings, will likely set the amount you can borrow.

You can get a head start with your affordability check and know how much you can spend on a car. Don’t forget to budget for the vehicle’s running cost and the monthly finance repayments.

A lower credit score, even bad credit, won’t necessarily exclude you from obtaining a car finance deal. However, expect a higher APR and, consequently, larger monthly repayments.

Who owns a car if it’s on finance?
You don’t own a car on finance; the Lender does – you are the registered keeper. If you take out an HP or PCP car finance loan, the ownership of the vehicle remains with the Lender through the contract term.

You’ll own the car with HP when you make the final payment. PCP is different. When the PCP ends, you’ll have the option to pay the balloon to own the car. Suppose you want to own the vehicle from the start.

Take out a  personal unsecured car loan. You’d own the vehicle outright as soon as you buy the car – this type of loan requires a good credit rating.

What credit rating is needed to get car finance?
No set credit score gets you car finance. You are more likely to gain acceptance with a better credit rating, but that does not prevent someone, even with a bad credit profile, from getting finance. Remember being approved is not just about credit scores. It’s also affordability.
Does applying for car finance affect my credit score?
No! Completing a finance application will come back as either a decline or, hopefully, an approval (in principle). Only a soft search will occur on your credit report at this application stage. A soft search does not harm your credit score nor appear on your credit report.


Only if you consent to proceed with the Approval will a hard search happen – a hard search remains on your credit report and can negatively impact your score.

Can I apply for car finance with a poor credit score?
Yes! A less-than-perfect credit score doesn’t need to stop you from getting car finance. You’ll likely have higher interest charges and maybe have to accept less than you want to borrow. However, we have lenders for drivers with bad credit on our panel. You can apply without any effect on your credit score.
Do I have to buy a car from you?
No! It’s your choice where you get your car from as long as it’s a reputable dealer. You can also browse our search with over 100,000 vehicles from trusted dealers.

Rates from 8.9% APR: the exact rate you will be offered will be based on your circumstances, subject to status.

Representative example: borrowing £6,500 over 5 years with a representative APR of 19.9%, an annual interest rate of 19.9% (Fixed), and a deposit of £0.00, the amount payable would be £166.07 per month, with a total cost of credit of £3,464.37 and a total amount payable of £9,964.37.

We look to find the best rate from our panel of lenders and offer you the best deal you’re eligible for. We don’t charge a fee for our service, but we earn a commission. This does not influence the interest rate you’re offered in any way.

Autedia Limited is a credit broker and not a lender, authorised and regulated by the Financial Conduct Authority (Firm Reference Number: 948436). You can check the authorisation on the FCA Financial Services Register.