Your guide to car finance. Find out how to get your next car on finance, understand your options and get the right deal for you.
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What type of car finance should I choose?
When choosing how to finance your purchase of a car, it’s important to understand what options are available to you. There are several options to choose from to finance the purchase of a car, the best one will depend on your individual needs. Comparethemarket.com can help with:
- A personal loan – Financing your car purchase with a loan could allow you to spread your payments over as many as seven years, often with lower APRs and without the need to secure it against an asset. (APR stands for annual percentage rate - the yearly rate of interest that borrowers are charged.)
- A credit card – this could be an option, provided you use a card with a 0% purchase period and pay off the loan before it ends. However, some dealers won’t accept payment by credit card.
At comparethemarket.com we don’t compare car finance deals, but we have partnered with Zuto, who do. Zuto can help with:
- Hire purchase (HP). With this type of car financing, you spread monthly payments over a set period of time. Once you’ve made the last repayment, the car is yours to keep.
- Personal Contract Purchase (PCP). This works very much like HP, but the finance is based on the car’s depreciation, rather than its total value. At the end of the term, you can pay off the remaining value of the car – you’ll hear this called the Guaranteed Minimum Future Value (GMFV) or balloon payment – and keep it. Alternatively, you can give the car back to the finance provider, or part exchange it using the equity you have in it as a deposit on your next car.
Other options, which are not available through comparethemarket.com or Zuto, include:
- Personal contract hire (PCH), where you pay a monthly fee to rent the car and give it back at the end of a set period.
What happens if you fall behind with payments?
When choosing how to finance your car, it’s good to understand what happens should you fall behind with payments. With HP & PCP, the finance company could take the car back and use the proceeds to repay your debt. With a personal loan or credit card, the lender will expect you to repay whatever you still owe. But you wouldn’t be under any obligation to sell your car.
Why use car finance?
Using car finance is a popular way to buy a new or used car without paying for everything up front. You usually pay a deposit and the rest in monthly repayments over a fixed term.
You can usually choose how long you want to be paying off the car finance. That might be from one year through to five years. The length of the term will affect the fixed monthly payment you sign up to.
Make sure you never borrow more than you can afford to pay back.
And please note, you can only apply for car finance if you’re aged 18 and over.
One simple way of getting car finance is by using a car finance broker such as Zuto. They could arrange a deal that’s right for you.
Alternatively, you can compare loans with Compare the Market.
How to get great-value car finance
Applying with Zuto is easy. Just give them a few details and they’ll give you a quick decision, so you know how much you have to spend. And if you’re not sure exactly what you’re after, Zuto can suggest new and used cars within your budget.
They have a range of trusted lenders who can finance cars, motorcycles, vans and caravans and there are no broker fees.
Another added benefit of using Zuto is that they check the history of the car you’re looking to buy, and the dealership you’re planning to buy from, if applicable.
Do I have to put down a deposit for my car finance?
Putting down a deposit may reduce your monthly repayments, but with Zuto it isn’t always necessary. Many of the lenders they work with don’t require a deposit. This means that, provided you can afford to make the monthly repayments, you may be able get on the road without having to save up.
Why choose Zuto for your car finance?
Get a decision in minutes
All credit histories considered
Wide range of products available
Looking for simple car finance? Apply today without impacting on your credit score.
First, to get an idea of how much you could borrow, try Zuto’s handy car finance calculator. To get a quote, you’ll need to tell Zuto how much you want to borrow and provide:
- your monthly income after tax
- three years’ worth of address history
- information about your employment
Frequently asked questions
Can I get finance for a used car?
Yes, you should be able to, although it depends on your own personal circumstances. Car finance isn’t just for new cars. Many people choose to finance buying a used car in the same way as they would a new one. Zuto can search hire purchase and personal contract purchase arrangements for buying a used car.
Alternatively, financing your car using a loan may help you to even out the cost - usually with a lower annual percentage rate and without having to secure the loan against an asset.
Do I need to know what car I want to buy with Zuto?
Not necessarily. As well as searching its panel of lenders, Zuto can search its panel of verified dealers and recommend some cars for you.
Will Zuto charge me a fee for organising car finance?
No. There are no fees or costs when you use Zuto to find car finance. Zuto gets a fee or commission from the lender for arranging your car finance with them and that’s how they get paid. In some cases, car dealers or lenders may charge an administration fee. If this is the case, Zuto will let you know what to expect.
Can I get car finance with bad credit?
If you have a bad credit record, you might be worried that you won’t be able to get car finance. Although this can be challenging, Zuto has a record of helping drivers with a poor credit history to find an arrangement to buy the car they want. You won’t necessarily need a guarantor to get a deal.
If you haven’t yet built up a credit history yet, Zuto could help you too.
Taking out car finance, or any other type of credit arrangement, and meeting all payment obligations, could also help you repair your credit report. If you make all your repayments on time, you’ll demonstrate that you’re capable of being responsible with money.
Will applying with Zuto impact my credit score?
Your initial application will let you see whether you’re eligible for finance, without impacting your credit score. Zuto will only do a hard credit check once you’ve agreed to go ahead with an offer – and they’ll always ask you first.
What documents will I need to show to get finance?
The documents you need can vary from lender to lender. But there are a few bits of paperwork that most car financing companies will want to see.
All lenders will want you to be able to prove that any personal details you’ve supplied are accurate. Expect to be asked to provide a photo or scan of your driving licence. To make sure you can afford the payments, Zuto or the lender may need to see payslips or other proof of income.
Zuto will recommend the right lender for you, from its panel, then let you know exactly what’s required by them.
From the Motor team
“Car finance can be complicated, but Zuto do most of the legwork for you, from finding a deal to checking the car’s history. Partnering with them can give our customers the chance to get on the road in the car they want, with financing deals that could be right for them.
“Be sure to compare a few options as you’ll need to understand the total amount you’ll pay, and whether the monthly repayments will be affordable for you.”
Both Compare The Market Limited and Zuto Limited are credit brokers and not lenders. All finance is subject to status and income.
We introduce customers to Zuto Limited, which is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 452589). Compare The Market’s relationship with Zuto Limited is purely that of a business relationship and no common ownership or control rights exist between us.