Car finance
Drive your dream car, with flexible finance options
- Apply now to get your no-obligation quote
- Getting a quote will not impact your credit score
- Buy a car from any trusted dealer
Rates from 9.9% APR and representative APR 17.9%, based on all deals done between September and December 2024. Car Finance 247 is a credit broker, not a lender, and will show you products offered by lenders. To apply you must be a UK resident aged 18 or over. Credit is subject to status and eligibility.
We compare deals from 17 FCA-regulated lenders[1], including:
[1] Correct as of March 2025.
What is car finance?
Car finance is a general term that covers different ways to borrow money to pay for a new or secondhand vehicle. It’s essentially a loan that allows you to spread the cost of buying a car over several months or years.
Car finance options include personal contract purchase (PCP), hire purchase (HP), personal car loan or leasing.
How does car finance work?
It depends on the option you choose but, in general, buying a car on finance works like this:
Apply for car finance
Work out a budget and decide how long you want to pay for the car. This could be from two years up to five years. The lender will carry out a credit check on you when it receives your application to assess whether you’re a reliable borrower.
Borrow the money
If your car finance application is successful, most options require you to pay a deposit. This is followed by monthly repayments (with interest) over a fixed term.
Contract ends
At the end of the contract, depending on the type of car finance, you’ll either own the car, hand it back to the dealership or begin a new car finance deal.
We’ve partnered with Car Finance 247, a leading car finance broker, to help you find the right deal for your circumstances from their wide panel of lenders. You’ll get a decision in minutes and be paired with a dedicated account manager, who’ll be on hand to help you through your car-buying journey.
If you’re still deciding which car to buy, you can also browse the 100,000+ cars from thousands of approved dealers who feature on Car Finance 247’s car search platform[1].
[1]Correct as of July 2024
About Car Finance 247 Limited (Car Finance 247)
Car Finance 247 Limited (Car Finance 247) is one of the UK’s leading car finance brokers uniting buyers, car dealers and finance providers. Car Finance 247 acts as a credit broker, not a lender, which means they will offer you the best finance deal that you’re eligible for from their wide panel of lenders.
Car Finance 247 is authorised and regulated by the Financial Conduct Authority (653019).
Car Finance 247 is not part of Compare the Market Limited. Compare the Market receives a % of the commission that our partner Car Finance 247 earns. All applications are subject to lending and eligibility criteria.
Car Finance 247 will not charge you a broker fee should you decide to proceed with a car finance product.
What types of car finance are there?
There are several different types of car finance available. They have different eligibility criteria and are designed to suit different needs and circumstances.
Hire purchase (HP)
Pay a deposit to the finance company, followed by monthly repayments, plus interest. Once you’ve made the last repayment, the car will be yours to keep.
Personal contract purchase (PCP)
Pay a deposit, followed by monthly repayments based on the car’s depreciation (the amount of value it will lose during the loan term). At the end of the contract, return the car or make a final ‘balloon’ payment and keep it.
Personal loans
Borrow the money to buy the car outright and own it straight away. You’ll then repay the loan in monthly repayments, plus interest, over a fixed period.
0% purchase credit cards
Use a 0% purchase card to buy the car outright and then pay off the balance in full before the end of the 0% promotional period. If you can manage that and stick to the monthly repayments, you could get spread the cost of a new car without paying any interest.
You’ll need a good credit score to qualify though.
Further options, which are not currently available on a car loan comparison through Compare the Market, include:
- Personal contract hire (PCH) – pay a monthly fee to rent the car for two to five years, then return it at the end of the agreement period.
- Logbook loans – a type of secured loan that uses the car as collateral.
Is it better to get car finance or buy outright?
It depends on your personal circumstances.
If you have the money in the bank, you could save on interest by buying a car outright. You won’t have to worry about missing repayments, and how that could impact your credit score.
You also won’t have to worry about owing more on a car finance deal than the car is worth (due to depreciation). And you’ll have full say over when you choose to sell it.
But on the other hand, buying a car outright can be expensive. Car finance deals help make buying a car more accessible. And you may want to keep your savings for other things, like a deposit on your first home or an emergency fund.
If you can find an affordable finance deal or car loan, it could help you to spread the cost. And if you manage the car finance responsibly, it could help you build your credit score.
What is the best car financing option for me?
When choosing the best car-financing option for you, think about what you can afford to borrow and how long you want to pay for the car. You should also consider any other terms and conditions, such as mileage restrictions and whether you want to keep the car at the end of the agreement. Here’s a table to help you compare different types of car finance:
| Hire Purchase (HP) | Personal Contract Purchase (PCP) | Personal Loan | |
|---|---|---|---|
| Deposit needed? | Yes | Yes | No |
| Mileage restrictions? | No | Yes | No |
| Own the car straightaway? | No | No | Yes |
| Own the car at the end of the contract? | Yes | No (unless you make a final balloon payment) | Yes |
| Secured against the car? | Yes | Yes | No |
How much does car finance cost?
It’s hard to say exactly how much car finance loans cost as there are many different factors that can affect the total amount payable. If you’re looking for cheap car financing, here’s what will influence the cost:
- The amount you’re borrowing – simply put, the more you borrow, the more you’ll pay back.
- The APR – the higher the APR, the more you’ll pay in interest. The APR you pay will depend on your individual circumstances, credit score, and the lender that approves you.
- The type of car finance you choose – for example, a PCP agreement could work out considerably cheaper than an HP deal in terms of monthly repayments, but you may have to fork out a big lump sum at the end of the deal if you want to own the car.
- The loan term – the longer the loan term, the more you’ll pay back in interest. The best way to lower the total cost of your car finance is to pay off your loan in the shortest time you can afford.
- Your credit score and history – if you have a bad credit score, you probably won’t qualify for the best car loan rates. This could mean you’ll pay more in interest, increasing the overall cost of the loan.
- Loan fees – also known as admin or arrangement fees. Check the terms and conditions of your agreements to find out whether these costs apply. These fees should also be included in the APR when comparing loan options.
Whichever way you choose to buy a car on finance, there’s one golden rule to remember – never borrow more than you can afford to pay back.
Could a personal car loan could be the right option for you? Our car finance calculator can give you an idea of how much your monthly repayments are likely to be and how much interest you might pay overall.
What is the cheapest way to finance a car?
Unless you can find a 0% finance deal, the cheapest way to finance a car is normally to pay for it upfront in cash. However, if you need to borrow to pay for a new car, there are other considerations to bear in mind.
For example, one finance deal might offer a cheaper monthly repayment, but with a loan term that’s two years longer. This means you’d likely pay more overall, because you’re paying more in interest.
PCP car finance could provide a cheaper monthly finance option. This is because you’re only borrowing what’s known as the Guaranteed Minimum Future Value (GMFV). That is the difference between the current price and the lender’s predicted future valuation. Or in other words, you’re only paying for what the car is predicted to lose in value (plus interest).
However, if you want to keep the car at the end of your PCP agreement, you’ll need to make a large balloon payment. Bear in mind that this will be much higher than your regular monthly payments.
How to get car finance with bad credit
While poor credit can make it more difficult to find car finance, we can still help you compare car loans and finance packages to find the right fit for your financial situation.
Our partner, Car Finance 247, works with a wide panel of lenders, including those that offer bad credit car loans.
Whether you have a bad credit rating or no credit history at all, see how you can build your credit score. If you make all your repayments on time, car finance could help improve your credit score by showing that you can successfully manage a loan agreement.
What our expert says...
“Not many of us have enough savings put aside to pay for a brand-new car in one go, that’s why buying a car on finance is a popular option. But it’s important to work out the total cost of your new set of wheels. Choosing a longer term usually means lower repayments, but it could cost you more in the long run as you’ll be paying more interest overall.”
- The Editorial Team, Experts in personal finance, insurance and utilities
What should I do if I've been mis-sold a car finance deal?
If you think you’ve been mis-sold a car finance deal, you should contact your car finance provider and lodge a complaint.
You may feel the terms of your contract weren’t made clear, proper affordability checks weren’t carried out or you’ve been charged unfair interest. If the finance provider rejects your complaint, you can take your case to the Financial Ombudsman.
In January 2024, the Financial Conduct Authority (FCA) launched a major investigation into car finance mis-selling. People who bought a car on PCP or hire purchase finance (not lease) before 28 January 2021, could be due compensation for overcharged interest.
If this applies to you, it might be a good idea to lodge your complaint as soon you can. The FCA has extended the response time for finance companies, which could mean a long and drawn-out process.
Why apply for car finance through Compare the Market?
- Search for the right car loan or finance deal for your credit circumstances from a wide panel of lenders
- Choose from a range of products including hire purchase, personal contract purchase and personal loans
- Car Finance 247 considers all credit histories: getting a quote will not impact your credit score
What do I need to apply?
The documents you need to apply for car finance vary from lender to lender. But you’ll usually have to provide:
- Proof of address - for example, a recent bill
- A photo or scan of your driving licence
- Proof of income - for example, payslips or bank statements
- Your contact details.
Some car finance providers will need to know what car you want to buy upfront. However, with Car Finance 247 you can sort out the finance before you make the final decision on a car.
Your Car Finance 247 account manager will be able to let you know exactly what is required and help process all the paperwork.
Once you’ve filled in your application, Car Finance 247 will search for an approval in principle from their panel of lenders. That’s a statement that shows how much lenders are willing to offer you.
Apply nowFrequently asked questions
How long does car finance approval take?
It usually takes between one to two days to get car finance approval in the UK.
If you apply for car finance with Car Finance 247, you could get a decision in principle within the same working day.
Do I need to know what car I want to buy?
No, you don’t need to know what car you want to buy before applying with Car Finance 247.
If you’re not sure what you want, and need help finding the right car for you, your account manager at Car Finance 247 could help. Have a chat with them and let them know what sort of car you’re looking for.
Will I be charged a fee for organising car finance?
No, there are no fees or costs when you compare car finance and car loan options through Car Finance 247. Instead, they get a fee or commission from the lender for arranging your car finance with them.
In some cases, car dealers or lenders may charge an administration fee. If this is the case, Car Finance 247 will show this to you.
What happens if I fall behind with payments?
If you’re struggling to meet your monthly repayments, talk to your lender as they may be able to help restructure your payment plan to make it more affordable.
If you’re late or miss making a repayment, you could face penalty charges. If you continue to miss HP or PCP payments, the finance company could take the car back and use the proceeds to repay your debt.
With a personal loan, the lender will expect you to repay whatever you still owe. But you wouldn’t be under any obligation to sell your car.
Whichever car finance option you have, late or missed payments will hurt your credit score and could affect your ability to get finance in the future.
Can I hand the car back if I can no longer afford my car finance payments?
In some cases, you can end your contract early and hand the car back to the finance provider without having to pay a penalty.
If you bought your car on PCP or HP, you can return it if you’ve already paid off 50% of the loan, including any interest and fees. This is called voluntary termination.
If you lease your car, you could return it, but you may have to pay a hefty early termination fee. Check the terms of your lease for more details.
What is a good deposit for a car finance deal?
A typical car deposit is usually 10% of the car’s value.
Generally speaking, the bigger the deposit you can afford, the cheaper your car finance will be. This is because you’re borrowing less and could be paying less interest on a shorter loan term.
However, a good deposit is simply one you can afford comfortably. Make sure you don’t leave yourself short, because you’ll have other things to pay for with a new car. For example, car insurance, tax and more.
What is APR?
APR stands for annual percentage rate, and it tells you the cost of borrowing money for a year.
As well as the interest, APR also includes any additional fees. This can be useful to know when comparing different loan and finance deals.
Lenders will advertise a representative APR. This is what must be offered to at least 51% of customers, but it may not apply to you. The APR you are offered will depend on several factors, including your credit score.
Can I repay my car loan early?
Yes, you can usually repay a car loan or finance deal early, although you may have to pay early repayment fees.
To repay your car loan early, you’ll need to pay the finance provider’s settlement figure. To get an early settlement figure on a finance deal, contact your lender and let them know you want voluntary termination.
Will applying for car finance affect my credit score?
When you apply for car finance with a lender, they’ll run a hard credit check on you and that can affect your credit score temporarily.
When you’re first applying with Car Finance 247, they’ll run a soft credit check on you. This won’t affect your credit score. A soft credit check is used to match you with lenders from their panel that are likely to approve you for car finance.
Once you’ve submitted a formal application to a lender, the hard credit check is carried out.
What is a soft search?
A soft search is a type of credit check that doesn’t affect your credit score. When comparing quotes for money products or insurance, providers will do a soft search, which is used to check your details are accurate.
A soft search will only appear on your credit file to you and won’t impact your score. Car Finance 247 will never carry out a hard credit search without the customer’s prior consent. Simply applying to get a finance quote does not impact your credit score.
Do I need a deposit for car finance?
Whether or not you need a deposit depends on your lender.
Many lenders available through Car Finance 247 don’t require a deposit. However, if you can afford it, paying a deposit or part-exchanging will reduce the cost of your loan and your monthly repayments.
Who is eligible for a car loan?
To apply for a car loan with Car Finance 247, you must be over 18 years old and have a minimum of three years’ address history in the UK.
Different lenders will also have their own credit score and affordability requirements you’ll need to meet before they agree to give you a car loan.
How quickly can I get a car loan?
When comparing car loans with Car Finance 247, you could get a decision in minutes.
Simply fill out the online application and they’ll quickly assess your eligibility. Once you’ve been approved in principle, one of their dedicated account managers will call you to check through your details and discuss the next steps.
Can I get finance for a used car?
Yes, getting a used car on finance is very similar to buying a new car on finance.
Car Finance 247 can help you with your car finance comparison when you’re buying a used car.
I have a part-exchange, can I trade this in?
Yes, Car Finance 247 can accept part-exchanges.
You can use a part-exchange as a deposit towards a new car. Depending on how much your part-exchange is worth, it could reduce your total loan amount. This could mean you’re paying less each month.
Can I buy my car from any dealer?
Yes, you can buy a car from any UK dealership.
To help you get started, our partners at Car Finance 247 have more than 100,000 cars available to view. Once you’ve found the car you want, just let your account manager know and they’ll make the arrangements.
Can I sell a car on finance?
No, it’s illegal to knowingly sell a car with outstanding finance still on it.
You can sell a car you’ve bought with a personal loan because you will own the car straight away. But if you have outstanding HP or PCP finance to pay off, the car isn’t yours to sell.
You can only sell the car once your finance contract comes to an end, or if you settle the outstanding finance first.
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