Your vehicle may be repossessed if you do not keep up repayments and you could be responsible for covering any shortfall in value. Failure to pay may also affect your credit score and you could be liable for extra fees, interest and charges. It is a way of borrowing money to buy a vehicle. The finance agreement is normally secured against the vehicle you buy, and you do not own the vehicle until the agreement ends. When you apply the lender decides if you can afford the finance and runs a credit check.
Car finance explained
We explain the different types of finance plan, how to understand your payment options and the advantages of each, as well as the things to be aware of before you sign on the dotted line. But there are also other ways to pay for your car that could be cheaper than dealer finance and suit you better, such as a credit card, personal loan or other form of independent borrowing. We look at all the options available to help you make the best decision for your needs and financial circumstances.
Discover the cars we recommend by viewing our Best Buys. These can work out affordable, with no interest charged on your monthly repayments. Dealers also make commission from additional insurance and other products that they may offer as a package with the finance plan. These typically include:. Invariably, these products are more cheaply bought independently, should you wish to buy them, from a third-party provider.
If you find it simpler to buy them as part of your purchase, then at least ask for a discount. Many Which? To find the best loans currently available visit our guide to the cheapest personal loans. PPI was sold on the basis that it would cover your finance payments if you were unable to work due to accident, sickness or unemployment, but proved expensive and gave limited cover.
Should lenders still try to sell you this, we strongly advise against it. Follow our tips below to get the best deal possible. Car finance explained By Adrian Porter. Put us to the test Our Test Labs compare features and prices on a range of products. Sign up now or login. Dealer finance There are three main types of finance a dealer is likely to offer: At the end of the loan period, you own the car outright. Be aware that: It can prove more expensive than an independent bank loan.
Servicing may be included, but check all terms and conditions. Personal contract purchase PCP This typically involves paying a deposit then low monthly instalments over a fixed period. You are hiring the car and will not own it until the balloon payment is made. It may be less cost-effective than HP if you plan to keep the car, however. Personal leasing contract hire This is like a PCP, again with low monthly payments, but you have no option to buy the car.
The type of car, length of contract and agreed mileage limits determine the overall leasing cost. Again, mileage limits may apply. Additional extras Dealers also make commission from additional insurance and other products that they may offer as a package with the finance plan. These typically include: Minor damage insurance - Additional insurance covering scrapes and cosmetic damage, which could affect the guaranteed value of your car when you come to return it at the end of a lease plan.
Independent finance Many Which? Personal loan You could borrow the amount you need to pay for the car outright, then pay it back to your bank or other lender. The APR may be high, but you will not have to pay a deposit, you could spread the loan over a time period of your choice, and you will own the car from the outset. It may work out cheaper in the long term than a dealer finance scheme. There may be penalties for settling the loan early. Credit card You could buy a car on a credit card just like any other large purchase, as long as your credit limit is sufficient.
The APR may be high. Not all dealers will accept credit cards, and may impose extra fees if they do. Mortgage Some buyers prefer to borrow more on their existing mortgage to pay for a car, which can make sense as interest rates on mortgages are currently very low. This can also be easier to manage than separate borrowing. Borrowing this way could cost you more than other options because you will be paying interest on the loan for the life of the mortgage.
Make sure you take into account different timeframes and any fees or other payments you will need to make. Think long term - Low monthly payments may be enticing, but consider the cost throughout the whole period of the finance scheme using the APR and the total amount repayable. A longer repayment term means you will be paying interest for longer and the car could cost you more in the end.
Shop around Different dealers, even for the same brand, may be able to offer you different finance plans, perhaps in conjunction with a discount on the vehicle itself. Look in terms of the whole deal on the table. Lexus LS Jan Reviewed: Jan Lexus RX Hybrid Sep Reviewed: Apr Audi SQ7 Jun Reviewed:
A big part of our site is helping you find the best deals available in your area. To help with this we ve taken a guess at your location:. The leasing pages of our website contain some of the best car and van leasing offers available, direct from reputable franchised dealerships all around the UK. Personal contract hire is a type of lease for personal customers.
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Cars under £ per month for sale
If you are considering car finance take a look at our video guides explaining how PCP works, what PCH personal leasing is, and the ins and outs of Hire Purchase. With car finance splitting the cost of a new car into affordable chunks, the best deals mean that you can get a more upmarket or higher-spec car than you might expect, all without breaking the bank. And you ll want to check our top tips for getting the best car finance deal to ensure you get the best bang for your buck. Looking to run a brand-new car for the lowest possible monthly payment? If you re not concerned about the option to own the car at the end of the contract, PCH personal leasing could be perfect.
New car deals with 0% APR finance
Taking control of debt, free debt advice, improving your credit score and low-cost borrowing. Renting, buying a home and choosing the right mortgage. Running a bank account, planning your finances, cutting costs, saving money and getting started with investing. Understanding your employment rights, dealing with redundancy, benefit entitlements and Universal Credit. Planning your retirement, automatic enrolment, types of pension and retirement income. Buying, running and selling a car, buying holiday money and sending money abroad. Protecting your home and family with the right insurance policies. Buying a car is no simple decision. From buying outright to buying a car on finance, there are many options.
Find your next Car or Van Lease
A chief concern among those considering buying a car on finance is how much you will have to pay back overall via the interest rate. That is why at Accept Car Finance, our specialised lenders provide affordable low rate car finance that works for everyone. The main reason so many people are turning to car finance is because it offers a more cost-effective solution compared to making one lump sum payment. Having to then pay back exorbitant interest rates defeats the purpose of using car finance. High interest rates will, for instance, cause you to lose a lot of money in the long term. With low rate finance, however, you do not have to dread how much those monthly payments are adding up to.
Low Rate Finance
Here are some of the best cars you can buy on a PCP deal. View gallery. Car finance is getting ever more popular these days, because it can make buying a new car more affordable. There are some great deals to be had on some really great cars, but knowing where to look can be tricky. Happy hunting… See all city car deals. Families come in all shapes and sizes, and so do family cars. A great option for buyers on a budget. PCP Representative Example:
Simply input your information on our system, sit back, relax, and we ll do all the hard work and search the market for the best finance package to suit your circumstances. We ll come back to you with a decision in minutes, and one of our friendly staff members will call you back. Now for the exciting part. There are lots of dealers out there offering a wide variety of solutions, so finding the right car will be easy. We have trained specialists to help you along the way with advice and tips on your purchase. Time to pick up the keys to your new car. Enjoy, have fun and drive safe. Car finance might seem daunting at first, but in reality, it s just a simple two-stage process.
Hire Purchase is Arnold Clark s best nearly-new and used car finance deal, created to give you low monthly car payments and a low fixed interest rate on your new car, making financing your car easy to understand. Hire purchase allows you to finance your car over a 12—60 month period and gives you the security that you own the car at the end of term while still getting the benefits of competitive car finance rates and low monthly payments.
View gallery. That means finding them in among all the other hundreds of finance deals can be quite tricky. The small one — Ford Fiesta. The Fiesta has always been the stand out small car in the driving stakes, thanks to its mixture of sharp handling, comfy ride and punchy performance. That latest version, however, also brings more sophistication to the party, with a bigger, comfier, quieter cabin, posher materials and more tech. Find the latest deals here…. The small family car one — Seat Leon. Whichever Leon you go for, you get a cracking car, with neat styling, a practical cabin, lots of luxury toys and a very well-rounded driving experience. The large family car one — Ford Mondeo. However, a recent facelift has freshened things up a bit, and despite its age, there are still very few competitors that can match the Mondeo s combination of smoothness and agility on the road. It also happens to be absolutely enormous, meaning that families — along with all the clutter that accompanies a family — will fit comfortably. Small SUVs are all the rage at the moment. The Captur happens to be our favourite of the current crop. And as an all-rounder, the X-Trail is very hard to fault.
Looking for car finance? Looking to sell your car? Home insurance. The term car finance covers several types of loan you can take out when purchasing a car. Most deals require an initial deposit followed by set monthly payments. By spreading the cost over time, it s a great way to avoid paying for a car all in one go. Much like other types of loan, interest rates tend to apply, as well as extra fees. This makes shopping around for the right deal vitally important. Compare car loan quotes to see your exact monthly payments without affecting your credit score. Personal contract purchase or PCP is similar to a hire purchase.
Instead, the cost of the car is spread over a defined time period, often three years, and monthly payments make a new car more attainable for many drivers. The charge means that you pay back more than you borrowed over the period, and the APR can vary greatly. In order to lure buyers there are some loans that charge nothing, though, saving consumers thousands of pounds. With all the cars listed, terms and conditions will apply, and the size of the necessary deposit contributions, monthly payments and agreement periods also vary. The Volkswagen Up! There are lots of great family hatchbacks to choose from, but the Seat Leon is one we reckon should be on your radar. Executive brands may be snapping up most of the large family car sales, but cars from less upmarket makers are still shortlist worthy. Case in point: There are loads of customisation options, too, if you want to add a personal touch. The all-wheel drive versions are pretty handy off-road, too. In true Audi fashion, the interior is impeccable, and the A8 is crammed with advanced tech such as air suspension, a slick digital dashboard display and a suite of safety assists.VIDEO ON THEME: Best UK Car Leasing Deals (*FINDING LOW/NO DEPOSIT HOT HATCHES*)