Buying a Car on 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.

Buying a car on finance also offers 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. Car 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.

Interest rates rose substantially in 2023, so you can expect to pay more for finance than in 2024 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.

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 car finance quotes with the same type of finance, contract length, deposit amount and mileage allowance. Keep reading to work out the best car finance options for you.

Cheap cars on finance
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 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 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 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

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

Halal car finance: interest-free 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.

Can you get car finance with bad credit?

Looking for low monthly payments despite a poor credit score? PCP finance can provide an alternative to car leasing.

What is a car balloon payment?

A large PCP balloon payment means low monthly payments, but also a big bill if you want to buy the car when the contract ends

What is a mileage allowance?

Financing a car and perplexed by mileage allowances? Higher limits mean higher monthly payments but less chance of end-of-contract charges

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

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

Can I get car finance if I'm a student?

At university 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

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

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.

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.

Guarantor car finance: affordable payments for young drivers

Struggling to get finance but have someone with a good credit score who's happy to help with a joint application? Try guarantor finance

Leasing vs buying a car: which should you chose?

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

Selling a car on finance

Want to end your finance deal early to get to a new car or because your circumstances have changed? Find out more about selling a car on finance.

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.

Buying a car on finance: 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. 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.

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.