Car Finance – what are your options?

  • Find out the different types of car finance
  • Which makes the most sense for you?
  • Visit the Parkers car finance section today to get a quote

Buying a new car is likely to be the second biggest purchase you’ll ever make.

Although most of us would like to save and pay for a new car in cash, everyday life throws up all sorts of challenges and unexpected bills which prevent us from doing so.

That’s why many of us look to finance as a way of affording our next car.

We’re all familiar with the two most traditional methods – personal loan or dealership finance packages – but thanks to consumer demand and changes in the finance industry these aren’t your only options any more. You’ve actually got a lot more power and choice and there is no single best option; the right one for you will depend on your situation.

Once you've decided on the right type of finance for you, make sure you visit our finance section for a quote - we work with over 21 lenders to give our customers access to over 100 different lending options.

Car finance options

HP (Hire Purchase)

This is the most common form of finance and is typically available on any car up to 10 years old. You make monthly payments and when you finish paying off the loan, the car’s legally yours. If you want to sell beforehand or make any modifications you will probably need to ask permission from the lender first. HP traditionally comes with higher interest rates than personal loans because people with fair or bad credit can also be accepted dependant on circumstances, but there are some deals to be had so it’s worth shopping around.

PCP (Personal Contract Purchase)

PCP is very similar to HP in that you also make monthly payments, however they’re almost always lower because at the end of the term you can either pay a balloon repayment to buy the car or hand the car back. You can lower the price of the car by laying down a deposit, although some finance packages offer you the car without paying anything initially.

At the start of the loan the lender will give you a guaranteed price for what the car will be worth at the end of the term. There will be mileage stipulations and the condition of the car when it is returned needs to meet certain criteria otherwise you could end up incurring charges.

Specialist car finance

Long gone are the days when you would have to walk into a dealership to get a finance deal. There are plenty of online companies that offer car finance, some without needing a mortgage or a good credit rating.

Parkers works in partnership with carloans4u. To find out more about getting a loan and an idea of what your monthly repayments could be, click here to head to our dedicated section.

0 percent finance deals

If you have a large deposit to put down on your new car then there is the possibility of getting a 0 percent finance offer. You need to be prepared to pay a big proportion of the total cost as the deposit (usually around 40 percent) while the rest will be in interest-free monthly installments. At the end of the term you will own the car.

Not all manufacturers, dealers or specialist finance companies offer this type of finance so it is worth shopping around.

Have you considered leasing?

Ok so leasing isn’t exactly a finance option but it is similar in that you’ll be making monthly payments in return for getting a car.

Traditionally more popular with businesses, private leasing has its perks, especially if you like to change cars often. You can also have maintenance and servicing built into your monthly cost so you don’t need to worry about forking out for it later.

You do need to specify the mileage though, like PCP, and if you hand the car back and it has gone over the original mileage you stated you will incur charges.

Click here to visit our car finance section for a simple, affordable and trusted service allowing you to finance the car you want at the best possible price.