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Zuto is a credit broker, not a lender. Our rates start from 8.9% APR. The rate you are offered will depend on your individual circumstances. Representative Example: Borrowing £9,000 over 60 months with a representative APR of 20.9% the amount payable would be £234 a month, with a total cost of credit of £5,047 and a total amount payable of £14,047.

Zuto Limited. Registered in England under number 05722976. Registered office: Winterton House, Winterton Way, Macclesfield, Cheshire SK11 0LP. Zuto Limited is acting as a broker and not as a lender. Authorised and regulated by the Financial Conduct Authority, registration number 452589. Zuto can introduce you to a limited number of finance providers, based on your credit rating, Zuto won't charge you anything for this service, but do get a fee from the lender which varies based on the product or amount borrowed.

Should I finance a car through a dealer or a bank?

There are a number of ways you can get the finance you need to buy your next car. The question is, should you look into bank loans – or stick to the finance package your dealer puts together for you?

We’ll explore the subject in a little more detail – and look at some of the pros and cons associated with each option.

Do I have to finance through the dealership?

We’re often asked if you’re obliged to use the finance that a dealer offers – and the answer’s simple; no. 
Car dealerships like it when you use their finance products – as they have targets to meet and it means they earn a commission – but you’re free to choose from a wide range of possible products.

Should you finance through the bank?

In the past, banks were generally only able to offer personal loans for people looking to buy cars. This has changed though – and now, most of the high-street banks can offer the same kind of finance products you’d expect to find if you talked to a dealer.

So, you can apply for a Personal Contract Purchase (PCP) plan or Hire Purchase (HP) through the bank – but if you do, you’ll need to buy your next car through a dealer, as the money will be paid directly to the company you’re buying from.

On the other hand, banks will let you explore personal loan options that’ll mean you can purchase your next car from anywhere you want. Rather than make any arrangements with the dealership, the bank will pay a personal loan directly to your account, so you’re effectively approaching your purchase as a cash buyer.

Since the money is paid directly to you and not secured against the car you buy, a personal loan gives you the freedom to explore a wider range of cars.


Well, it’s all to do with how PCP and HP plans work. If you were unable to pay for your car, the finance company would look to repossess your vehicle, to recoup the money they’re owed. As such, they will only offer finance for cars that meet their lending criteria – usually cars that are intended for the UK market that are under a certain age.

A personal loan means you don’t have to worry about the finance being secured against your car. So – if you fancy an older car, a classic, an import, or anything else a finance company might not be able to help with, then a personal loan from the bank can make a lot of sense.

Should you get financing through a car dealer?

Since many banks can now offer PCP and HP deals – what’s the benefit of getting your finance through a dealer? 
Well, since dealers work closely with finance companies, they can often offer a range of products that banks can’t.

For instance, there are some special offers where dealers can offer 0% APR (also known as interest-free) finance on select new models. While this usually means putting down a big deposit, it’s a great way of keeping your monthly costs as low as possible.

Another perk that sometimes comes when you finance through a dealership is the possibility of a discount on the overall price of the car. Now, you shouldn’t expect to knock huge figures off the purchase price – but since dealerships get a small amount of commission when they sell a finance package, it sometimes gives them a little room for manoeuvre. Generally, a salesperson won’t offer that discount – but there’s no harm in asking.

Which is right for you?

So, should you finance your next car through the dealership or through the bank?

Ultimately, the choice is yours. If there’s a specific package that a dealer is offering that you won’t find elsewhere, then the dealer option could be right for you. Then again, shopping around different banks might mean you get a better rate compared to limited options within the dealership.

If you want to make sure you’ve got the very best option for you, why not compare quotes with our handy finance tool? You’ll be able to select the amount you’d like to borrow, the term you’d like to make repayments over – then browse an enormous selection of finance options. That way, you can take a few test drives, safe in the knowledge that you’ve found the best finance option for you.

Other related FAQs

Looking for more related content to this? We’ve picked a selection of related topics that you may find helpful

Applying for a car loan in someone else’s name is referred to as ‘accommodation finance’. This is likely to be against the finance company’s terms and conditions – and, in some cases, it could be considered to be fraud.

In many cases, yes, changing or part-exchanging a car with outstanding finance is possible. Since car finance can’t be moved from one car to another, you (or a dealership you’re getting your next car from) will have to settle the current loan and begin another on your next vehicle.

You can approach lenders directly to get a car loan for a used car. However, it’s often best to use an online broker instead. This approach can save you time and help you to find the most competitive deals.

If you want to sell a used car with a loan, check the details of your agreement carefully. Unless you’re the legal owner of the car, you won’t be able to sell it until you’ve paid a settlement figure.

Settling a car finance agreement is usually just a case of paying back the amount you borrowed, plus any additional fees. If you want to settle early, you may face extra charges.

No, you cannot transfer your car finance to another car. However, depending on your circumstances, you may be able to settle your current finance agreement and begin a new one on a different vehicle.

In the past, car finance companies sometimes offered payment protection insurance (PPI) with their products. This is no longer the case – and the deadline has now passed for making a claim for mis-sold PPI.

Car loans are calculated according to a number of factors, including the type of loan you take out, the term of the loan and your credit rating.

One of the easiest ways to check if you can get car finance is to use online affordability calculators.

Whether or not you can return a financed car depends on the type of agreement you have. If you’ve got a hire purchase (HP) or personal contract purchase (PCP) plan, you’re allowed to hand it back – as long as you have paid off at least 50% of the loan, including any fees and interest.