Car finance

Compare car loan deals & you could save over £930 versus the dealer with our low APRs*

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*Confused.com acts as a credit broker not a lender. Saving of £933.90 based on a comparison of £9,000 hire purchase loan, £1,000 deposit on a £10,000 car and repayments over 48 months. Representative APR 6.5% vs dealers 11.3% median representative APR. Data source AMI100. Correct 15th June 2019. Credit subject to status. See verification here.
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Introduction to car finance

The term car finance covers several types of financial products 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.

If you're unsure whether personal contract purchase, hire purchase or an unsecured loan is the best option for you, take a look at our explanations below.

Not sure what finance is right for you?

We're here to help. This handy table should aid your decision.

Hire purchase
Personal
Contract Purchase
Personal Loan
Requires initial deposit
Usually requires deposit
Usually requires deposit
You own the car outright
Car is yours at the end of the agreement
Fixed monthly payments
Optional balloon (final) payment
Excess mileage charges
Secured against an asset (eg car)
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Compare quotes to see your exact monthly payments without affecting your credit score

Hire purchase explanation

Hire Purchase (HP)

Hire purchase or HP is an arrangement where you hire the car from a finance company until you’ve fully paid for it. The company own the vehicle until the final payment is made, after which time it’s yours to keep. Hire purchase tends to require a deposit usually 10% of the car’s value. The higher the deposit, the lower the monthly payments.

Personal contract purchase explained

Personal Contract Purchase (PCP)

Personal contract purchase or PCP is similar to hire purchase. You’re likely to be asked to pay an initial deposit, and then monthly payments for a set period. The higher your deposit, generally, the lower the monthly payments. Even with the deposit though, monthly payments are typically lower than you’d find with a hire purchase deal or a personal loan. This is because you'll be paying off the value of the depreciation of the car, not the full value of the car.

At the end of the agreement, if you decide you want to keep the car, you’ll need to pay what’s known as a ‘balloon payment’. This covers the cost of the vehicle and transfers ownership from the finance company to you. If you don’t want to keep the vehicle, you can give it back, or start a new PCP deal and get a new car.

Personal loans explained

Personal Loan

A personal loan sometimes called an unsecured loan, allows you to borrow a lump sum over a fixed term. This isn’t secured against anything. That means if you use a personal loan to pay for your car, you’ll own it outright from the day the money is transferred to the dealer. As such, you can sell the vehicle at any time, without needing to settle up with the finance company first. If you think this would be a better option for you then you may want to visit our page for a quote.

Why compare car loans with Confused.com?

Unlike many sites, once you’ve entered your details we’ll be able to show you the exact APR that you’ll be offered for your loan or hire purchase deal - what you see is what you get.

As well as showing you options for exact APR, we’ll show you providers who quote based on representative APR and display the likelihood of acceptance too. Our guide on representative APR vs exact APR explains the difference. 

Knowing the exact APR means it’ll be easier to manage your budget and make sure you get the best deal.

If you'd like to learn more about the options available to you, our articles and guides section might have what you need.

You may also like to use our car finance calculator to help you get an idea of what your monthly repayments are likely to be.

How can I save?

savings blue icon

Before taking out a car loan, you need to take into account how much you're spending, how much you can afford to pay back each month and how good your credit history is. The great way to compare deals is to look at the total cost of credit as this will take into account the monthly payments, and how long you'll end up paying back the loan for. One thing to be careful of when comparing finance deals is that, while extending the period may bring down the cost of monthly payments, it could also mean you'll pay more interest overall.

Can I get car finance if I have bad credit?

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Your credit history is taken into account when you apply through us. But even if you have poor credit, or you are completely new to it, it doesn't mean you'll be rejected, or that your only option is to take out finance through a car dealer. Instead, it will probably mean that your monthly payments and / or the amount you repay overall are higher than some of the rates you've seen advertised. And you may only get quotes from a limited number of “specialist” providers. To find out more, take a look at our guide on how to improve your credit rating.

Understanding your options

Everyone has a different financial situation, so there's no 'one size fits all' with financing your next car.

Before you start looking for a car loan, you'll need to think about a few questions, such as:

Savings icon

Do you have any savings for a deposit?

Monthly spend icon

How much can you afford to pay back each month?

Borrow icon

How much do you want to borrow?

landlord insurance icon

What's your credit history like?

Renew icon

Are you likely to change your car again within the next three years?

Car icon

Have you chosen the car yet?

Savings icon

Is it a private sale, or through a dealer?

Spend icon

How much are you looking to spend?

Once you've answered these questions, you'll be in a much better position to choose the best way to fund your next car.

Need more help? Take a look at our FAQs or our car finance jargon buster.

What you'll need to apply

Home icon

Your current UK address

Phone icon

A contact phone number and email address

Annual income icon

Annual income

General outgoings icon

General outgoings

Confused.com is a credit broker, not a lender. Our website makes it easy for you to compare a wide variety of products, all from a range of trusted providers.

If you decide to buy through us, we get a small fee from one of these providers. Comparing with us costs you nothing!

And please note, the size of the provider’s fee doesn’t affect how we display our products.

Using Confused.com will not affect your credit rating as only soft searches will be carried out.

Will applying for a car loan affect my credit score?

When you get a quote from us, you'll see a number of products offered by our providers/lenders. To get to this stage, we run what's called a soft credit search.

This type of credit search doesn't affect your credit score and is also not shared with potential lenders, just the broker (us).

The only time your credit score and history is shared with a lender will be when you choose to purchase a product and the lender you've chosen to purchase from will then conduct a full/hard credit check.

If you're concerned about your credit rating due to multiple debt payments, you might like to pay our debt consolidation page a visit.

Get a quote
No effect on your credit score

Compare quotes to see your exact monthly payments without affecting your credit score

Need more help? Take a look at our expert guides

Cancelling your car finance early

A look at your rights of voluntary termination.

Can I sell a car with outstanding finance?

What you need to know before you sell your car.

How to get car finance with bad credit

Got credit issues? There may still be hope.

Your options explained

Confused about your options? We're here to help.

Personal contract hire explained

Everything you need to know about PCH.

Car finance traps to avoid

Common problems to watch out for.

Questions and answers

What is APR?

Annual percentage rate (APR) is the total charge for borrowing, including any fees and charges for that lending. We will show you either an exact APR or a representative APR. Exact APR means the rate you see will be the rate you get. Representative APR is an advertised rate that at least 51% of people who are accepted for the product will pay.

Can I get car finance if I have bad credit?

If you have a poor credit history, you can still apply – the company will look at your personal circumstances, such as your employment status, age, income and loan size, alongside your credit history . You’ll then get your exact interest rates and payments.

Can you buy second-hand cars on finance?

Yes. When you search with Confused.com just pop in the registration number of the car you’re looking at, then you can compare quotes from our list of top UK dealers.

What’s the difference between representative and exact APR?

Representative APR is the figure companies use to advertise their rates. Only 51% of people are actually required to receive the advertised rate. Exact APR is the rate you'll be offered by the lender after your information has been checked. If you'd like to find out more, please visit our FAQs page.

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