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Car finance made easy

We make getting car finance simple so you can be on the road in no time with over 17 lenders and 70 products compared.

  • Get a free no-obligation quote - no impact to your credit file
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Car finance calculator

I would like to borrow
£1,500
To pay back over
3.5 years

Representative Example: Borrowing £5,500 over 48 months with a representative APR of 19.8%, the amount payable would be £163 a month, with a total cost of credit of £2,283 and a total amount payable of £7,783.

Is car finance worth it?

While many people try to avoid taking out finance to keep their monthly outgoings to a minimum, when it comes to high-ticket items like cars, not everyone has the funds at their disposal to pay for a product outright. In these cases, finance can be an invaluable option. 

Whether you take out a personal loan, a personal contract plan or opt for a hire purchase agreement, you will make repayments in installments to a lender. In some cases, such as a fixed loan, the car will be yours right away, while in others, such as hire purchase, the vehicle remains the property of your lender until all your payments are complete.

The value of car finance may depend greatly on your individual circumstances and needs, and can vary depending on the deal you are able to secure.

So, all this considered, is car finance worth it? Read on to get the lowdown on car finance pros and cons.

The pros of car finance

Unlike saving up for a vehicle, with car finance there’s no waiting. As soon as you’ve signed your agreement, you have immediate use of the car, although actual ownership will depend on the nature and details of your arrangement.

One of the most popular reasons for opting for car finance is that it allows you to spread out the total cost of purchasing a vehicle. This means that you’re more likely to be able to afford a higher spec or newer model of car than you would if you were to pay in one single upfront payment. 

Car finance is a flexible and affordable way to have the use of a car. Terms are available from one to five years, and if you are fortunate enough to be able to put down a large deposit, you may be able to secure an interest rate as low as 0%.

Car finance such as hire purchase can be a good option if your credit history is poor and it’s essential you have the use of a vehicle, for example to work. Individuals with negative credit ratings can receive finance agreements on the basis that the car itself is held as collateral.

Certain car finance agreements such as personal contract plans (PCPs) are worth considering if you like to change your vehicle regularly and upgrade to the latest model.

The cons of car finance

Car finance ties you into an agreement of regular monthly installments. If your circumstances were to change and you were no longer in a position to make repayments, your car could be reclaimed to cover your debt.

With many forms of car finance, such as hire purchase and PCPs, you don’t actually own the vehicle outright until all your payments plus fees have been made. This lack of ownership means that you are unable to modify the vehicle or sell it on without express permission from your lender.

If you have a poor credit history, the rate of interest you pay per month will be inflated. Always look at the Annual Percentage Rate (APR) figure before taking out any form of car finance as this will tell you the total amount you will actually be repaying during the term of your agreement. This figure will be instrumental in deciding whether your agreement is financially viable.

As experts in the automotive industry here at Car.co.uk, our goal is to continue to assist car owners throughout the country with all their queries on the subject of car finance.

Other related FAQs

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

Car loans can be secured or unsecured, depending on the type of agreement you get.

Car finance is a loan – but it’s one that’s often secured against the vehicle you’ve decided you want. As such, it’s often viewed a little differently to a personal loan – which is not secured against anything.

Lying on a car loan application is a form of fraud and is illegal. If you’re found to have done this, you could face prosecution and you may find it harder to get credit in the future.

Car finance agreements don’t tend to include insurance as standard, but there are packages available that do.

The maximum age of used cars eligible for finance agreements tends to be 10 years, although there are exceptions to this.

Yes, you can refinance your car loan. However, you should carefully assess the pros and cons of doing so before you make a decision.

The simplest way to find out how much is left on your car finance agreement is to contact your lender. Alternatively, you can calculate this figure yourself.

Your ‘settlement figure’ is the amount that the car finance company require to pay off your finance in full. Since this changes as interest is added and as payments are made, requested settlement figures are usually only valid for a short time.

When you’re applying for finance for a used car, it’s useful to have the relevant supporting documents such as information on your vehicle of choice, your financial details and proof of address and income. You may also need a deposit.

Car loans for used cars vary in length. Terms are typically between 12 and 60 months.