Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 22.09%, the monthly payment would be £152.49, with a total cost of credit of £2,319.37 and a total amount payable of £7319.37. CarLoans UK is a broker not a lender.
Deciding on the perfect car is a big decision to make and is a challenge in itself. Then, you have to choose which finance deal is best suited to your needs, and that can make it even trickier. There are several routes you need to consider and at Car Loans UK, we are here to make it as smooth a ride as possible. With our smart technology, we help you shop around for the best deals, so you can choose the right one for you.
But first, we need to explore what car finance methods exist and learn about the options available to you.
Find out how much you could borrow
Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 22.09%, the monthly payment would be £152.49, with a total cost of credit of £2,319.37 and a total amount payable of £7319.37. CarLoans UK is a broker not a lender.
This step isn’t always required. Although, placing down a deposit when completing a car finance agreement is highly recommended.
Depending on the agreement that has been put in place for example HP, PCP & CS, your repayment plan may vary.
Upon completion of your contract, you will then have a number of different options available to you. Which we will state below.
Car finance is essentially a loan that you can take out to pay for a new or used car. When buying a car, nearly every dealership will offer you a finance arrangement. This is because car finance is a major source of profit for them and, for you, it can be the ideal way to cover the cost of a new car.
However, there are several types of car finance out there. We take a further look.
0% finance deals are offered when a dealer is trying to sell a retiring or gradual selling model. As there isn’t any interest added on monthly repayments, this type of loan can work out quite affordable. However, most 0% finance deals require a larger deposit, 35% or more, meaning it will be doubtful that you could discuss any additional discounts. It’s also worth knowing that if you skip any instalments, the loan could be switched to one with a greater interest rate.
Borrow the amount you need to purchase the car outright and then pay it back to the bank or lender. The APR on the loan might be high, but there isn’t a requirement for a deposit, and you will own the car from the start.
Consider: you’ll need a good credit rating in order to secure good loan terms and there could be penalties for paying the loan back early.
If your credit limit allows, you can buy a car on a credit card.
Consider: the APR could be higher and not all dealerships accept credit cards. Those who do may levy additional fees as the card provider will charge them a percentage of the transaction.
As dealerships and lenders carry out a credit check as part of the car finance application process, it’s always best to check if your credit score is good first and foremost. If it is, it’s likely you will be accepted for car finance.
Yet, there are a few things to consider before you apply that could help your car finance eligibility. For example, you need to ask yourself how much do you need to borrow, how much can you afford to repay each month and whether there will be any additional costs involved when leasing or buying the car? And not forgetting the ongoing costs of fuel, insurance and so forth once you get the keys.
Once you are comfortable with your expenditure and know whether you have a good credit rating or not, you may have a better idea about your car finance eligibility.
For the best deal…
Finding car finance is quick and easy with Car Loans UK. All you need to do is enter your details and our smart technology will get to work instantly. We’ll find you quotes in seconds, so you can see which is right for you and apply, meaning all the paperwork will be down to us.
Our smart technology enables you to make the right financial decisions on all major car finance products. We have access to the best deals, 24/7 and our secure website means your personal and financial data will always be safeguarded.
| Criteria | Personal Contract Purchase (PCP) | Hire Purchase (HP) | Conditional Sale (CS) |
|---|---|---|---|
| The Initial Deposit | The Majority of Lenders Will Require A Deposit | Optional | Optional |
| Repayment Plan | You Pay Less But Have 3 Options At The End of Your Agreement | Payments Are Slightly Higher Than PCP However You Will Own The Car At The End of Your Agreement | Payments Are Slightly Higher Than PCP However You Will Own The Car At The End of Your Agreement |
| Contract Completion | • Optional Final Payment - Pay This And Own The Car • Pay Nothing More And Hand The Car Back • Trade The Car In, Using Positive Equity To Fund The Deposit For Your Next Vehicle. | A Small ‘Option To Purchase’ Fee, Which You Need To Pay To Become The Legal Owner Of The Vehicle (Maximum £50) | No Final Payment, Car Is Yours After The Last Instalment |
| Fixed Monthly Payments | Yes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments. | Yes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments. | Yes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments. |
This type of finance can be used to purchase a new or used car. This is because typically you’ll have to pay a deposit of 10% of the car’s value and then pay off the balance as monthly instalments, as the loan is set against the vehicle. Although both car dealerships and brokers can arrange a hire purchase loan.
Some Positives Include:
• Firstly, you will have a flexible payment period, ranging from one to five years to suit your financial circumstances. But it is important to remember that the longer the period, the more interest you will have to pay.
• Secondly, no deposit is required.
• Thirdly, You often have the option to return the car, once you have paid off 50% of it and thus, you won’t have to commit to further payments.
• Finally, It normally comes without mileage limits.
Things To Think About:
• Until you’ve made the final payment, you won’t own the car.
• Also you are not allowed to sell or change the car in any way without seeking permission beforehand.
• Thirdly, Monthly repayments tend to be more compared to PCP and other leasing schemes.
• Lastly, It can prove costly if you only need a short-term arrangement.
This is similar to a hire purchase contract, but with PCP, you tend to have lower monthly repayments. However, it’s best to remember that the full amount payable is usually higher.
PCP works by having a loan for the difference of the car’s price at new and the anticipated value once the agreement is completed. Moreover, a forecasted annual mileage is used over the contract period.
Then once you have reached the end of the agreement there are three options to choose from:
• First of all you can trade in the car and begin the process again with another vehicle.
• Or you can simply return the car to the dealership and pay nothing.
• Finally you have the option to pay the option to purchase fee at the end of the term, which is usually the resale price and keep it.
Some Positives Include:
• Low 10% deposit
• Also you will have lower monthly payments
• As well as options to decide what to do with the car at the end of the agreement.
Things To Think About:
• Exceeding mileage limits resulting in additional charges.
• Paying extra fees for excessive wear and tear, as well as any damage.
• The total amount could be higher compared to hire purchase.
• You will also need to pay the outstanding amount if you wish to keep the car.
This type of car financing is very similar to a Hire Purchase contract, but at the end of your finance agreement, you automatically own the car. You own the car once you have completely repaid the loan, so you don’t have to give it back to the dealer, unlike HP and PCP agreements, which allow you to do so at the end.
Some Positives Include:
Things To Think About:
At CarLoansUK, we provide numerous amounts of different finance options across our car finance brokerage site. Which then allows you to find the best way to pay with ease. Including but not limited to PCP Car Finance, HP Car Finance or No Deposit Car Finance just to name a few. Because CarLoansUK has got you covered, don’t believe us? Then take a look at our excellent trust pilot reviews and see for yourself.
Using our quick and easy form you get an instant decision in a matter of minutes. Apply for a car finance 24/7 days a week through our short form.
Choose from any reputable car dealer nationwide and find a car that suits you, your budget and is local to you.
Once we have dotted the I's and crossed the T's, we will do the rest of the paperwork for you so it's nice and easy!
A car finance broker is essentially a middle man between the customer and the lender. A car loan finance broker will take care of all of the complicated paperwork as well as the negotiations with lenders. Which essentially means you can sit back and relax knowing that the broker is fighting your corner to get you the best deal possible. All whilst making your car finance journey as stress free as possible. Not only this but car finance brokers such as ourselves, also have deals that aren’t usually available to the general public, and to top it all off. Car finance brokers will actually charge the dealerships instead of the customer.
If you have been refused by other brokers in the past, all is not lost. At CarLoans UK we have a number of finance options for those with bad credit scores. However, you should be aware that when you apply for car finance through us, a hard credit check will be conducted, which may in turn have a negative impact on your credit score. Especially if these credit checks have been done in quick succession. So therefore it is recommended that after being declined for car finance, you should wait between 3-6 months before applying again.
If you are struggling to keep up with your car finance repayment plan. There are a number of options available to you. It is of great importance that you obtain free independent advice from one of the following charities/organisations.
Initially, applying for a car loan usually will have a negative impact on your credit score. Although, you should be aware that if you make your car loan repayments on time. This will most likely have a positive impact on your credit score.
APR stands for annual percentage rate and is the total amount charged for the lend. There are, however, two different types of APR.Exact APR in short means that the rate that is shown to you, is the rate that you will get. Whereas, representative APR however, means that 51% or more of the people who apply for the finance will receive that rate. What this means is that customers with poor credit scores could see a higher APR.
Representative APR is, for the most part, used to advertise the companies rates. After you have provided all of the necessary information to the lender, they can then offer you your exact APR rate.
What is it?
Gap insurance stands for Guaranteed Asset Protection.
Essentially gap insurance is, is a form of insurance that is designed to cover the difference between the amount your insurance provider pays out in the event of your vehicle either being written off or stolen and the price that you paid for the vehicle. You should however be aware that gap insurance works alongside your standard car insurance and is in no way a substitute.
So when is gap insurance needed?
Gap insurance can be worthwhile in several ways. Firstly, if you have taken out a big loan to buy your car. Gap insurance would be beneficial as mentioned previously if your car is stolen or written off. This is because the gap will pay off the outstanding finance.
As well as this, gap insurance could also be beneficial if you are worried about your car depreciating. A brand new car will lose between 15-35% of its value in the first year. Therefore gap insurance can help you get a bigger payout if your car is written off after it has already depreciated.
Where can I get gap insurance?
Comparing gap insurance quotes has never been easier thanks to Bright Compare!
If the vehicle is faulty on delivery, you can simply refuse the car and send it back to the dealership.
You can, however, you will have to ask the finance company for permission prior to making any sort of modifications.
When you select HP finance, you agree to pay the total value of the vehicle, calculated as monthly instalments for the duration of your contract. Because interest and the final fee are added to your payment commitments. Therefore when you have made all agreed payments, you own the car.
Furthermore leasing a car involves monthly payments too, but these are rental payments only. Because the monthly figure you pay when you lease a car is calculated using different criteria such as a set mileage. Then at the end of your lease, the vehicle is returned to the dealership
The Finance and Leasing Association (FLA) offers handy information to help you navigate closed showrooms during lockdown, and beyond. Furthermore their website is well worth a look to help with any lingering lockdown car purchase confusion.
A quick look at their latest statistics reveal the FLA are forecasting a challenging outlook to 2021’s first quarter (1 January to 31 March). Due to ongoing pandemic restrictions and lockdown measures, closing car showrooms nationwide, new car finance declined by 24% last year. Not to mention the latest figures also show FLA members provided £30billion in new finance, and £62billion in new credit since the start of the pandemic in 2020. Therefore car dealerships have adapted in all sorts of ingenious ways to help you continue to access vehicles as normally as possible.
Due to the financial uncertainty surrounding the pandemic, applications for car payment holidays have been extended until 31 March 2021. Car payment holidays are arranged for up to six months, and are a formal arrangement with your HP finance provider.
Defaulting on your car payments is a serious issue, especially if you are committed to a HP finance contract. Because as we mentioned earlier, your car is used to secure the finance deal and if you default or cannot meet your payments, the car may be repossessed. Not to Mention, experts emphasise the importance of contacting your HP finance provider as soon as you are aware that you may experience difficulty in meeting your agreed monthly instalments.
Applying with us only takes a couple of minutes and doesn’t effect your credit score!
Rates from 7.9% APR. Representative APR 22.09%
CarLoansUK
Kingsgate House,
Wellington Road North,
Stockport,
Cheshire,
SK4 1LW
Hello@carloansuk.co.uk
0330 202 1201
Car Loans UK is a trading style of Wallace Bohen Ltd, a company registered in England and Wales. (Company number: 12382512, Registered Address: 4th Floor, Kingsgate, Wellington Road North, Stockport, Cheshire, SK4 1LW. We act as a credit broker and not a lender and are authorised and regulated by the Financial Conduct Authority for consumer credit FCA no.928674. CarLoansUK can introduce customers to a limited number of finance providers based on overall credit profile and may receive a commission for such introductions, this will not impact the rate you are provided. We do not charge a fee to the customer for arranging the finance. Written quotations on request. All finance subject to terms and status Data Protection Registration No.ZA766848.
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