Compare car finance and find a loan, hire purchase or PCP today
There are lots of ways to finance a new car.
Although there are differences between them, most deals will ask you to make an initial deposit, then set monthly payments over the time period you agree.
Whatever deal you choose, it’ll help you spread the cost of buying a car, although you’ll have to factor interest rates and fees into the total cost.
When you compare car finance with us, you’ll see all the options available to you – not just unsecured personal loans and secured car loans.
You’ll be able to compare loans against Personal Contract Purchase (PCP) and Personal Contract Hire (PCH) as well, to really help you find the right finance for your next car.
You need to know the difference between these products – you’ll own the car from the outset of the agreement with some types of finance, but with others you won’t until the end. And, in some cases, you will never actually own the vehicle.
With some deals you effectively only hire the car and will have to hand it back once the agreement ends, while with others you’ll need to make a larger final payment to take ownership.
Think about which features are important to you and choose the right type of finance.
You can take out a personal loan with a car dealer, bank, building society or perhaps even a peer-to-peer lender.
Personal loans are pretty straightforward. You borrow for a set number of months, or years, and repay a fixed amount each month. Your repayments include the interest you’ll have to pay for borrowing. This type of loan is usually ‘unsecured’ – so the debt isn’t secured against your home or car, for example.
As with all borrowing, you’ll want to keep repayments affordable and be comfortable with the terms and conditions before committing.
With PCP, a finance company buys the car. You pay them a deposit and fixed monthly instalments for a set time period, usually between one and four years – you don’t own the car.
Before the contract starts, the finance company gives the car a guaranteed final value (GFV) – sometimes called a ‘balloon payment’ - which you can pay at the end of your contract term to take full ownership of the car.
You don’t have to buy it at the end of the term. You can give the car back, or part-exchange it for another, instead.
With hire purchase, a finance company buys the car, and you pay them back for it. At the end of the hire purchase agreement, you own the car outright.
You’ll have to pay a deposit, usually around 5-10% of the asking price, and then pay fixed monthly instalments over an agreed term. The repayments cover the purchase price of the vehicle (minus the deposit), plus interest.
|Personal loan||PCP||PCH||Hire purchase|
|Deposit and/or part exchange needed||No||Usually||Usually||Usually|
|Balloon payment at the end||No||Yes||Not applicable||No|
|Excess mileage charges||No||Yes||Yes||No|
|Secured (against the car)||No||Yes||Yes||Yes|
|You own the car from the start||Yes||No||You never own the car||No|
|You own the car at the end||Yes||No - unless you pay the balloon payment||No||Yes|
It’s not so much a question of ‘best’, it’s more which is right for you.
If lower monthly payments are your priority, you might be drawn to PCP or contract hire.
On the other hand, you might be adamant that you want to own the car after the deal finishes, in which case a personal loan or hire purchase deal will be better for you.
To help you decide, ask yourself the following questions:
When you search for car finance deals with us, you can compare different types of finance against each other.
Just enter some details like your name, address and employment status. If you know it, you can tell us the number plate of the car you want to finance to help us find the most suitable deals for you.
Then you just need to choose the one that’s right for you.
When you come to actually make your application, you’ll need to have to hand:
If you’ve had credit problems in the past it might be a bit harder to get accepted for the most competitive deals, or you might have less finance options to choose from. But it’s not impossible.
Don’t make the mistake of assuming you’ll be rejected, or that your only option is to take out car finance through the car dealership – comparing will help you find the most competitive deals for you.
Some finance providers will allow you to make a ‘soft search’ application to find out if you’re likely to be accepted before you apply properly. That’ll help prevent your credit record from being adversely affected by too many unsuccessful applications.
APR stands for ‘annual percentage rate’. You’ll see it when you’re looking at loans because it basically tells you how much interest you’ll pay in one year as a percentage of the loan.
You’ll be shown either an actual APR or a representative APR. With an actual APR you will be offered that rate on acceptance. A representative APR is only offered to 51% of people who are accepted for the loan – so the APR you need to pay could be higher or lower than this.
Car finance can be used to buy a new or a used car. You might be offered different types of finance depending on whether you’re buying new or second hand. Just put in your number plate when you search to be shown the right deals for the car you’re buying.
You’ll need to be over the age of 18 and live in the UK. Apart from that, your chances of being accepted for finance products will depend on your details, credit history and the car you want to buy.
As with most things, there are a range of deals available. Some will be cheaper per month, while others will work out costing less over the entire life of the deal.
Think carefully about what the priorities are for you when you choose the type of deal you want and if you choose car finance with a balloon payment think about how you would pay for this if you want to keep the car at the end of your finance agreement.
Yes. A blemish-free credit history can unlock the most competitive deals. If you’ve had credit problems in the past, you can find out how to improve your credit score before applying. But it’s still worth comparing to see what might be available for you.