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What Are Your Options For Financing A Car?

Are you in the market for a new car? Whether it’s your first vehicle or you’re in need of an upgrade, comparing models and taking them for test drives is an exciting process. One big barrier for most car shoppers is the cost. The cost is a major deterrent for most car buyers.

However, you’ll need to consider carefully how you’ll pay for your new vehicle. is the best spot for you this time. Here you’ll find the most affordable automobiles that best fit your budget, and the dealers will show you the best car for your budget, as well as other cars with similar qualities.

Options For Financing A Car

You’ll save a lot from the outset if you buy second hand, of course. While used car prices have soared in recent times due to production shortages for new models, you’re still likely to save a significant percentage and avoid the worst depreciation.

Buying outright still might not be a feasible route for you though. So what are your other options? We’ve rounded up some of the key points worth knowing about car finance – which has regrown in popularity recently, according to the Finance and Leasing Association.

Key types of car finance

The key types of car finance are:

  • Personal loans, which involve borrowing money from a bank, building society or alternative lender
  • Personal contract purchase (PCP), where you pay a deposit and fixed instalments for a set period, then have the option to return the car, keep it or trade it
  • Hire purchase, where you pay a deposit and monthly payments until you eventually own the car
  • Personal contract hire (PCH), which involves effectively renting a car for a set period of usually two to three years

Can you sell your car on finance?

You’ll need to settle the outstanding finance with your lender first. Your settlement figure will include the total finance amount minus your deposit and any repayments you’ve made since.

Some car dealers will agree to pay this settlement figure as part of the sale. If the figure is lower than the sale price, the dealer will give you the difference – but you’ll have to pay them if it’s the other way around.

Beyond this basic concept, selling your financed car works slightly depending on your chosen finance type – so it’s important to check the finer details.

Can you swap finance from one car to another?

In short, no, as car finance deals are specific to your financial situation at the time and the car itself. But there are other options if you want to change your car in the future.

You could pay off your balance as we described above, then sell your car and buy a new one. Or you could ask to part-exchange by using the value of your current car as part of the payment for a new one.

Do you need a good credit score for car finance?

Your credit score isn’t the be-all and end-all and a poor score won’t necessarily rule you out. There are other key factors involved including your income and outgoings, and your chosen car. But having a good credit score shows lenders that you’re reliable, so you could access better deals from more providers as a result.

Could car finance help you get behind the wheel of your ideal car?

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