Used car finance: PCP and Hire Purchase

Used car finance no longer means just a car loan: PCP offers low monthly payments, HP is available to those with lower credit scores

BuyaCar team
Jul 31, 2020

Low interest rates and intense competition between lenders mean that low-rate car finance is no longer restricted to new cars. With strong value finance plus lower initial prices for used cars, opting for a second-hand car is one of the quickest ways to cut your monthly payments.

With millions of drivers purchasing used cars with finance every year, used car finance is becoming increasingly popular. This means that PCP finance - which offers lower monthly payments than traditional Hire Purchase contracts - is becoming the default way to pay for a used car.

Unlike Hire Purchase, where your deposit and monthly payments cover the full cost of the car and you own the car once you've made the last instalment, with PCP you don't own the car once you've made the last monthly payment. At this point you can either choose to hand the car back with nothing more to pay - provided you've stuck to the pre-agreed mileage limit and there's no damage to the car beyond fair wear and tear - or take ownership by making the large optional final payment.

The popularity of used car finance has grown as low interest rates have become more widely available, and you usually get the choice of whether you want to put down a deposit or not - making finance a realistic prospect for drivers who may have previously felt they couldn't afford a reasonably new car. Remember that if you don't put down a deposit, however, this will increase your monthly payments compared with paying something upfront.

The combination of PCP and the lower cash prices of used cars mean that it's possible to finance some three-year old cars for less than £80 per month even with no deposit, though something similar would have traditionally cost around £115 per month on Hire Purchase (HP). Whichever option you choose, you can vary the length of the agreement, size of the deposit and mileage allowance to find a setup that suits you.

Here you’ll find a selection of affordable used car finance options. Alternatively, click on the links below to see the cars available on finance for different budgets, ranging from less than £100 per month to more than £300 per month.

Used car finance deals

There are currently 59582 nearly new and used cars available with finance from BuyaCar, ranging from £74 per month to £3,964 per month, based on a ten per cent deposit.

Types of used car finance

PCP used car finance

Personal Contract Purchase (PCP) finance offers low monthly payments because unlike with Hire Purchase your monthly payments only cover part of the car's cost - the amount of value it's expected to lose during the contract. As a result, you benefit from low monthly payments, though you don't own the car at the end of the contract, as you would with HP.

This gives you flexibility at the end of the term: you can either hand back the car, or keep it by paying a lump sum known as the optional final payment or refinancing to pay this amount with another finance contract. Depending on the car's value, you may be able to 'trade it in' and have some extra value left in it - known as equity - to put towards your deposit on a new vehicle.

PCP is typically available on used cars that are five years old or less. Once cars are older than this, it gets more difficult to predict their value at the end of the finance agreement, which means that your monthly payments cannot be calculated accurately. Older cars, however, are often available on Hire Purchase (HP) finance. Keep reading to find out whether HP works for you.

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Hire Purchase (HP) used car finance

You can buy just about any used car with Hire Purchase finance, which is also known as Conditional Sale finance. This spreads the cost of a vehicle across a deopsit plus a series of monthly payments, then once you've made the final payment, the car is yours. Because you own the car at the end of the agreement, its future value matters much less to the finance company; you simply pay the value of the car - minus any upfront deposit - divided into monthly payments, with a little interest added on top.

Unlike most other forms of car finance, your monthly payments cover the full cost of the car (minus any deposit you put down). This makes the instalments larger than with PCP, but means that you automatically own the car at the end of the agreement once you've made all the payments, with nothing further to pay.

In the case of PCP if you wanted to buy the car at this stage you'd have to stump up the optional final payment, which often amounts to around a third to half of the car's initial price, depending on the contract terms. If you want to own the car and don't think you'll have the means to pay the PCP optional final payment at the end of the contract, going for Hire Purchase could work better for you.

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Apply for used car finance

You’ll get the most accurate finance quote if you apply once you’ve chosen a car: that's because your monthly payments will depend upon the initial price of the car, and in the case of PCP its predicted value at the end of the agreement, too. So, if you want the most accurate idea of what you'll have to pay, narrow down your car options first.

The market for car finance is competitive and it usually takes just a few minutes to get a finance quote. BuyaCar works with a panel of lenders to provide low-rate finance for a range of circumstances. You can apply for finance on any car on the website, call on 0800 050 2333 or send us a message.

Once accepted for finance, it’s normally straightforward to transfer the agreement onto another car without having to go through the application process again - as long as your monthly payments remain affordable.

Just as with new car finance, the better your credit score, the more likely you are to be accepted with the offer of a low interest rate. Being on the electoral roll (meaning that you are registered to vote at that address) and having a track record of paying debts (such as credit card bills) on time, will help.


Used car finance vs new car finance

One major difference between new and used car finance is that manufacturer incentives are rarely available for used cars. This means that 0% interest deals and large deposit contribution discounts aren’t normally offered on used models. However, new cars are the ones with the highest prices, so even with these savings, they normally have the highest monthly payments.

If in doubt, get like-for-like finance quotes for new and used models (the same type of finance, contract length, deposit amount, mileage allowance etc.) to see which offers you the lowest monthly payments.

Meanwhile, if you're considering leasing it's unusual to find a leasing option for used cars. If you want a used car with the lowest monthly payment, look at PCP finance instead, as you can run the car for the length of the contract and then hand it back, as you'd do with a new car lease. Remember that the far lower cash prices of used cars normally mean that monthly payments will work out far lower than for a new equivalent.


Used car finance for under £100 per month

There's a surprising amount of choice among the 183 cars currently available for under £100 per month on BuyaCar - as long as you don't need anything too big. The list is dominated by city cars, such as the Citroen C1, Peugeot 108, Skoda Citigo and Volkswagen Up. There are also some small hatchbacks, such as the Vauxhall Corsa and Dacia Sandero.

The finance prices are based on a 10% deposit, which is typically less than £1,000, but these cars are often available with a no-deposit option. Click below to search all deals for under £100 per month, or scroll down for more examples.

Citroen C1

Latest BuyaCar prices
from £87 per month.

Vauxhall Corsa

Latest BuyaCar prices
from £76 per month.

Fiat 500

Latest BuyaCar prices
from £93 per month.


Used car finance for under £150 per month

With £150 per month to spend, your options broaden, with the choice of larger family cars and some seven-seat people carriers. There are even 29 tall sport utility vehicles (SUVs) available in the price bracket.

In total, you'll find 6751 cars available for sale today from BuyaCar, which cost less than £150 per month. Click the button below to search them all or see some examples underneath.

Mini Hatchback

Latest BuyaCar prices
from £117 per month.

Volkswagen Golf

Latest BuyaCar prices
from £130 per month.

Ford Focus

Latest BuyaCar prices
from £119 per month.


Used car finance for under £200 per month

If you're able to spend up to £200 per month, then you'll have the pick of 19267 cars that are on sale now from BuyaCar. That number includes 4416 nearly-new cars that were registered this year, some with just a handful of miles on the clock. You can choose from 108 BMWs or 447 Audis.

Many vehicles in this price bracket still have a year or more to run on their manufacturer warranty and include the latest technology, such as Apple CarPlay or Android Auto for easy control of your phone apps using the car's touchscreen media system or with voice commands. Scroll down for a selection of the cars available.

Audi A1

Latest BuyaCar prices
from £137 per month.

Nissan Qashqai

Latest BuyaCar prices
from £124 per month.

Mercedes A-Class

Latest BuyaCar prices
from £153 per month.


Used car finance for under £300 per month

A modern Range Rover for under £300 per month? You can choose from dozens or go for something else from other luxury brands such as Jaguar, Lexus and Mercedes.

Some of the most appealing options are below, or you can click the button below to search for all vehicles below the £300 per month mark.

Range Rover Evoque

Latest BuyaCar prices
from £275 per month.

BMW 5 Series

Latest BuyaCar prices
from £197 per month.

Volvo XC60

Latest BuyaCar prices
from £217 per month.


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