GOOD, FAIR & BAD CREDIT CAR FINANCE

Car Finance Deals UK

Rates from 7.9% APR. Representative APR 19.9%

6 Easy steps to Applying for Car Finance

Open Banking Increases your Chance of getting Approved for Car Finance

How does Car Finance Work?

Car finance works by borrowing money from a lender to cover the cost of your new or used car and then paying it back in affordable fixed monthly repayments. There are several types of car loans available. Car finance is the generic term for borrowing money to buy a car.

When financing a car, you need to know how much to borrow and the length you want the loan to help you get the best car finance deal for your circumstances. 

Working out a simple budget of the amount you can pay monthly is a great help. That includes the monthly payments for the vehicle, insurance, fuel – the lot!

Lenders look more favourably at your application if you have a vehicle to part exchange. Alternatively, you can pay a deposit towards the car. Either will reduce the total loan amount.

Providing your loan is approved, you’ll make monthly repayments, plus interest charges, for the duration of the loan, typically a length of between one to five years. With most car financing, the lender will secure the loan against the vehicle,

Working out a simple budget of the amount you can pay monthly is a great help. That includes the monthly payments for the vehicle, insurance, fuel – the lot!

Rates from 7.9% APR. Representative APR 19.9%

Types of Car Finance Deals

There are two popular types of car finance to choose from, hire purchase (HP) and personal contract purchase (PCP). A third option is a personal car loan; however, you will typically need a good credit rating to get accepted.

Hire Purchase

HP is the standard loan type when financing a used car. Not many new vehicles are purchased with an HP car loan.

The car secures the finance, You don’t own the vehicle until the end of the agreement by making the final payment, or you may have to pay an Option to Purchase fee. You might need to pay a deposit; however, unlike other types of car finance, you won’t have mileage restrictions.

 Personal Contract Purchase

Are you buying a new car? Personal contract purchase loans are the most popular way to buy a new vehicle. Large brands, such as Ford, BMW and Vauxhall, will also offer “Approved Used” cars up to 3 or 4 years old on a PCP agreement. Most cars bought from independent dealers sell on HP loans.

With PCP deals, you don’t own the vehicle at the end of the contract, but you have options. You can return the car, put any positive equity as a deposit towards a new deal, or buy the vehicle outright by making the balloon payment.

Monthly repayments for PCP loans are lower than other car finance. Still, you are liable if you exceed the agreed mileage or give back a damaged vehicle.

Personal Car Loan

A personal car loan is unsecured. You receive the money in one upfront payment and own the car outright as soon as you purchase from the dealer.

However, getting accepted for a personal car loan requires a good credit score. Monthly repayments on a personal loan are similar to those for an HP loan but somewhat higher than a PCP. You won’t have any restrictions like other types of car loans that use the vehicle as security.

Choosing the Best Car Financing Option for You

How you decide on the best car finance option depends very much on what benefits you want from having a car.

For most of us, it comes down to a choice of Hire Purchase HP or Personal Contract Purchase PCP, with Personal Car loan a distant third option.

  • Do you want to drive a brand-new car? It’s a PCP, or perhaps save some money and get a nearly new car, also a PCP. Maybe you’d like to save a lot of cash and buy a decent used car! Now that’s an HP?
  • Have you thought about if you want to own the car when the agreement ends? That’s an HP. However, if you will be happy to give the car back when the contract ends? Go for a PCP, and take out another car finance loan when that finishes?
  • If you are happy to accept restrictions like mileage and where you service the car, it’s a PCP. However, if you don’t want rules, take out an HP.
  • Are you thinking with your head or your heart? Does the car you like have a low depreciation rate? Either an HP or PCP is OK. Or will the value drop like a brick? A PCP might be best.

Many other factors affect your choice of car finance, so think through the pros and cons. When you’re ready, make an application to find the best deal from the panel of lenders. You’ll have a car finance expert guide you through the financing process.

Car Finance with Bad Credit

Having bad credit need not stop you from getting car finance. Our partners work with lenders to secure car finance deals for drivers with poor credit.

Finding a car loan for bad credit can be more difficult than with better credit. However, getting accepted is possible, even if you’ve been unsuccessful in applying for car finance elsewhere. You can apply for a no-obligation quote that will not affect your credit score and take it from there.

FAQs - Car Finance Deals

What is the cheapest way to finance a car?
The cheapest way to finance a car is to avoid paying out interest charges, which usually means raiding your savings or borrowing from a family member or friend. However, more likely, you’re looking to take out car finance with a lender offering the cheapest monthly payments you can find.

Note: Don’t assume the car loan with the lowest monthly repayment is the cheapest finance option overall. You may have paid more interest charges by the time the contract ends.

A PCP loan will give you the cheapest monthly repayments. Still, the downside is you won’t own the vehicle because you only borrow the amount the car will depreciate over the contract period. You are not repaying the total value. You’ll have to pay the balloon payment if you want to own the vehicle.

Your other finance option, an HP, or personal loan, has a higher monthly repayment. Still, you will own the vehicle on the final payment.

Does applying for Car Finance affect your credit score?
No! When you apply for car finance with an online broker,  they do a soft credit check to find approval from lenders. A soft check won’t affect your credit score; a hard check happens only when you decide to continue with the approval offer.
Do you have a finance calculator?
Yes! You can use our calculator to estimate what your monthly repayments could be. Enter the car’s total price (how much you want to borrow), the years you wish to repay the loan, and your credit profile, either Excellent, Good, Fair or Bad. The calculator shows the full repayment, the total cost of credit and the monthly repayments.

Note: The calculator is an estimate repayments could be lower or higher subject to personal circumstances. The brand, model and age of the car you purchase will also impact the final figure quoted.

Am I eligible for car finance?

For eligibility to apply for car finance in the UK, you must be at least 18 years old and have been a resident of the UK for a minimum of three years.

How long does it take to get approved for a car loan?
You can get a decision of approval in principle in a few minutes. Your account manager gives you a call to verify your details and the way forward.
How much does it cost to finance a car?

The interest charges are the cost of borrowing the finance to buy your car. Monthly repayments over the loan term comprise a portion of the amount you borrow and the interest charged.

The amount of interest you pay on borrowing is the APR Annual Percentage Rate. Your credit rating helps lenders decide the interest rate to offer you. A good credit score will likely attract a lower APR.

What details do I need to get car finance?
Once you set a car budget, you’ll know how much you want to borrow. You can then apply for car finance, starting with an online quote. You’ll need to supply personal details, the last three years of address history, employment status and monthly income. You must be 18 to have credit in the UK. We require this information to get “approval in principle” from the panel of lenders. See here for more details of the paperwork necessary to get car finance.
Can I part exchange my current car as a deposit on a car finance agreement?
Yes, we can accept part exchanges.

A part-exchange is an upfront payment towards your next car, like a cash deposit. Using your current car as part payment will reduce your monthly repayments on a car finance agreement.

Lenders can act favourably when you part-exchange towards a new car, making the approval more likely. Requesting a lesser loan may also give you more options. The traditional deposit of cash towards the vehicle will be equally as welcome.

What if I've already been 'refused' car finance?
Getting a refusal for car finance will most likely be for bad credit. What can impact your credit score? All the following: exceeding your credit limit, missed loan payments, an outstanding CCJ, bankruptcy or having a joint account with someone with a credit score.

If you’ve applied elsewhere (such as a bank, car dealership or even another car finance broker) and been refused car finance credit. We are often able to help if you have not succeeded elsewhere. Many lenders on the panel specialise in assisting drivers with bad credit scores.

Can I get car finance with a fair credit rating?
Working with a large panel of lenders allows access to buyers with a range of credit histories to get car finance. Drivers with a Fair credit score are no exception. Everyone has a different credit story, so each application for car finance is reviewed to offer a quote to match your requirements. If you have Fair credit, then it’s likely we’ll be able to find you a competitive car finance loan.
Can I buy my car from any dealer?
Yes, your car can be from any reputable UK dealer!

Once you have “approval in principle”, you’ll be given access to more than 100,000 vehicles to view on the car search. When you’ve found your dream car, you’ll need to pass on the car’s details to your account manager, sit back, and we’ll do everything else.

Alternatively, you may select a car from another search, such as AutoTrader. Remember, your account manager is on hand to assist you in sourcing the car that matches what you want.

What is deemed a decent deposit for a car?
Although car finance loans with no deposit are available, paying a deposit reduces the amount you need to borrow and encourages the lender to look favourably on your application.

If your loan is for a lesser amount, your monthly repayments are lower as well; alternatively, you could reduce the length of the loan.

While there is no set amount for putting down a deposit when buying a car on finance, typically, 10% of the car’s value is considered good. However, don’t leave yourself short; you’ll need to consider insurance and running costs.

Can I pay back my car finance loan early?
You can pay the settlement figure on a finance deal to end the loan early. The settlement amount equals the sum of the outstanding balance less the future interest charges – some finance contracts charge a fee for settling early. Paying off the loan early saves money and looks good on your credit report.
What is APR?
APR means Annual Percentage Rate. It’s the cost of borrowing over a year on a credit card or loan like car finance. APR includes interest and other charges you may have to pay, such as an annual fee. Your credit score will dictate the percentage of an APR on any offer.
Is buying a car on finance a good idea?
Yes! By buying a car on finance, you pay for a vehicle monthly, allowing you to drive a newer or better car than you might otherwise afford by paying cash. A better car will save you on maintenance and give the advantages of added safety features.

Although getting a car outright with cash savings is the cheapest option, with no interest charges. You’ll likely restrict yourself on the choice of car you can drive unless you are loaded.

Rates from 7.9% APR. Representative APR 19.9%