What is Car Finance?

Car finance lets you break down the cost of a car into smaller, more manageable monthly payments instead of paying the full price at once. It offers a practical way for you to get on the road and stay in control of your budget. With many types of car finance available, you can explore the different benefits and decide what matters most to you. Whether that’s eventual ownership, lower monthly payments, or flexibility, there’s an option for you.
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How Do I Choose the Right Type of Car Finance?

Finding the right type of car finance really comes down to what works best for your budget, lifestyle, and plans. Before choosing, it’s worth asking yourself a few questions:
  • How much can I comfortably afford to pay every month?
  • Do I have a deposit, or would I prefer a no-deposit option?
  • Do I want to own the car outright at the end, or would I like to change cars?
  • Is my credit score in shape to get a good car finance deal?
Hire Purchase (HP) Personal Contract Purchase (PCP) Leasing Personal Loan
Requires deposit Usually Usually Usually No
Fixed monthly payments Yes Yes Yes Yes
Own the car immediately No No No Yes
Own the car at the end Yes Optional (with final balloon payment) No Yes
Excess mileage charges No Yes Yes No
Secured (against the car) Yes Yes Yes No
Options for bad credit Possibly (higher rates) Possibly (higher rates) Possibly (higher rates) Possibly (higher rates)

Car Finance Calculator

The CK car finance calculator provides an estimate for illustrative purposes only, and it is based on the information you have entered. It does not guarantee you will be approved for a loan, and actual rates and repayments may differ.

Rates start from 9.9% APR.
Representative example: borrowing £7,500 over 48 months with a REPRESENTATIVE APR of 23.9%, an annual interest rate of 23.9% (Fixed) and a deposit of £0.00, the amount payable would be £234.76 per calendar month, with a total cost of credit of £3,768.48 and a total amount payable of £11,268.48.
Rates may differ as they are dependent on individual circumstances. Rates from 9.9% APR: the exact rate you will be offered will be based on your circumstances, subject to status. No initial impact to your credit score but a hard search will be added to your credit profile if you decide to proceed with finance.

Getting Car Finance with Bad Credit

Having a low credit score can make it difficult to get approved for car finance, but it’s still possible. At CreditKnowledge, we work with a range partners with a panel of trusted lenders specialising in bad credit car finance. Together, we can help you find affordable options tailored to your personal circumstances.

Here’s what to keep in mind:
  • You may face higher rates due to your current credit history.
  • Missing payments could damage your credit rating further.
  • HP and PCP use the car as security, so approval could be more likely.
  • Consistently making payments could gradually improve your score.
Improving your credit score can potentially give you access to better rates. Learn what’s lowering your score with your free credit report.
Get My Free Credit Report

Please note that not all applicants will qualify for a loan, and not all lenders offer the full range of loan amounts or terms shown. We provide a free loan comparison service and act as a credit broker, not a lender. We may receive commission or other fees from providers if you take out a product through our service.

We search a panel of lenders and specialist motor finance providers. Depending on your circumstances and eligibility, you may be offered HP, PCP or a personal loan that could be used towards the purchase of a vehicle. Not all finance options are available to everyone, and some may only be available to homeowners.

You can check your eligibility with no impact to your score. Only once you decide to proceed with a specific finance option will a hard credit check be conducted, which may affect your credit score.

Please ensure that you can afford the repayments before taking out any form of credit. 

Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk