Finance
Car finance makes getting a new set of wheels far more achievable for most drivers. Rather than having to save up for years to get enough cash together, finance enables you to pay for your car with affordable monthly payments.
Not only could this help you to get a better car, but it allows you to budget more easily as well, as you know exactly what you need to pay each month.
Finance can also offer greater flexibility - potentially enabling you to hand the car back without the faff of having to sell it or being able to choose to buy it at the last minute. Go for PCP finance and you get low monthly payments plus you can choose to return the car when the PCP contract ends or make the optional final payment to buy it.
Opt for Hire Purchase and you should pay less interest overall to own the car (assuming the same interest rate and deposit contributions for PCP and Hire Purchase options). Leasing, meanwhile, works like long-term car rental, with low monthly payments, but no option to buy the car - even if you love it. You simply hand it back and start again.
One of the key factors to bear in mind when considering car finance deals is the APR figure - which shows how much extra you have to pay in interest and other compulsory charges - along with the availability of deposit contribution discounts.
Interest rates have risen substantially in 2022, so you can expect to pay more for finance than in previous years. However, you can still often find incentives such as deposit contributions, no deposit offers and - for some new cars - 0% APR, also known as interest-free credit. Bw aware though, you have to balance the value of this with the higher cost of a new car and the consequent need to finance a larger amount.
With so many options, things can get confusing and to get a feel for which car or deal offers you the best value, it’s always good to get like-for-like finance quotes with the same type of finance, contract length, deposit amount and mileage allowance. Keep reading to work out the best finance option for you.
What is PCP car finance?
Fancy low monthly payments with the option to buy the car when the contract ends? Check out PCP finance - available for new and used cars
What is Hire Purchase (HP)?
Hire purchase offers you the ability to buy your car outright with affordable monthly payments and no large final payment. We reveal all
What is Car Leasing?
Leasing – where you effectively agree a long-term rental of a car – is one of the cheapest ways to get into a brand-new car
What is Lease Purchase?
Regular, low monthly instalments with one large final payment: how financing a car on Lease Purchase compares with other types of finance
What happens at the end of a PCP finance agreement?
Coming to the end of your PCP finance deal and not sure what happens next? Keep reading to find out your options
Car finance: What is APR?
APR figures compare finance costs, reflecting the interest and fees charged. They don’t account for deposit contribution discounts, though
Halal car finance: interest-free leasing and finance options
Halal car finance – or Islamic car finance – can spread the cost of a car with no interest being charged, but there are other costs.
Bank loan or car finance?
Spread the cost of your car over a series of monthly payments, but should you choose a bank loan or car finance
Can I get car finance on benefits?
Receiving benefits shouldn't stop you getting car finance, but there are some important facts to think about. Keep reading to find out more
What is business car leasing?
Low monthly payments in exchange for a brand new car or van: find the right kind of business car leasing for you
Should I refinance my car?
Cut your monthly finance payments or keep your vehicle at the end of a PCP contract by refinancing your car
What is Personal Contract Hire (PCH)?
Want low monthly payments on a brand new car but don't want to own it? Personal Contract Hire - also known as leasing - could be for you
Can I get car finance if I'm a student?
At uni and looking for more freedom with your own set of wheels? Find out all the ins and outs of getting car finance as a student
Can I get car finance if I'm unemployed?
It can still be possible to get a car finance deal if you’re unemployed - provided you're well prepared. Here’s how it can be done
Can I get car finance if I'm self-employed?
If you're self-employed, you may not think you can get car finance. That's not necessarily true, though. Keep reading for all the details
Should I lease or buy a car?
If you’re looking to finance your next car, you may be considering whether to lease one or to buy it outright. Here are your options
Negative equity car finance
Need to change your current car but can't afford to settle your current finance deal? Negative equity finance is one potential solution
What is GAP insurance?
GAP insurance pays the difference in amount between an insurance payout and the outstanding finance - covering you in the event of a claim
Car finance for drivers with a provisional licence
Have a provisional licence but want to finance a car now? There are several options available. Keep reading to see which works best for you
What is a car finance broker?
Exploring your finance options? If you've heard of finance brokers, but are unsure what they do, let us explain
Finance a car: your options compared
If you're looking to buy a car on finance, these are the main three options you'll find available on new and many used cars.
Personal Contract Purchase (PCP)
PCP is a flexible form of car finance for new and used cars with low, fixed monthly payments. When the PCP contract ends, you can return the car, buy it by making the large optional final payment or trade it in for a new car - using any value in the car over the remaining debt (known as equity) towards your next finance deal - making it easy to regularly upgrade. Read our full guide to PCP
Hire Purchase (HP)
This spreads the cost of a new or used car across fixed monthly instalments. Once all payments are made, you automatically own the car. With no large optional final payment deferring some of the cost, monthly payments are higher than with PCP, though as a result you also pay less interest overall - as you're paying off the finance balance quicker. Read our full guide to HP
Leasing (also known as PCH)
Leasing, also known as PCH (personal contract hire) is like long-term car hire with low, fixed monthly payments. This is normally only available on new cars and you have to return the car at the end of the contract with no option to buy it. Read our full guide to leasing
An alternative option is to take out a personal loan. This doesn't offer the low monthly payments of leasing or PCP but is more similar to Hire Purchase, enabling you to access a car for a series of fixed monthly payments.
If you can access lower APR figures with a loan than with Hire Purchase, and there are no deposit contribution discounts available with Hire Purchase (which you wouldn’t be able to access by taking out a loan), you’re likely to be better off choosing a loan rather than Hire Purchase.