car finance options Archives - Page 2 of 7

Used Car Loan Process Explained

Steering wheel of a car using a used car loan

From sidestepping initial depreciation to avoiding long waitlists, used cars come with myriad benefits.

Like new models, car loans can be a great way to fund the purchase of a second-hand vehicle. Even better, navigating the used car loan process doesn’t have to feel like manoeuvring a busy roundabout during rush hour. With the right information, securing finance for a used car can be straightforward and stress-free. Whether you’re eyeing a sturdy family estate or a compact city runner, read on for an easy, six-step guide to the used car loan process.

Step 1: Assess your financial situation

Before you kickstart your loan application, take a good look at your financial health. Crunch your numbers and decide how much you can afford to pay each month while maintaining a comfortable lifestyle and keeping up with other financial responsibilities. Don’t forget to include other car-related expenses such as insurance, maintenance, and fuel.

It’s worth checking your credit score, which will play a significant role in the terms you might receive and your interest rate. A higher credit score can unlock more favourable loan conditions.

Step 2: Choose the right vehicle

Be mindful that your choice of vehicle can influence your loan terms and overall chance of approval. Older models or cars with high mileage might be harder to finance as they’re considered less reliable. Settling on a few options before approaching lenders can help streamline the used car loan process.

Step 3: Shop around for the best deals

Don’t accept the first loan offer you receive, even if it seems like a great deal. Compare rates from different lenders, including high street banks, credit unions and specialised auto finance companies. Working with a broker can be a great way to expand your horizons and shop around for the best deals when navigating the used car loan process.

Step 4: Understand the terms

It’s important to understand all the terms and conditions of your loan. Look beyond monthly payments and evaluate variables like interest rate, loan duration and any fees associated with early repayment or late payments.

Longer loan terms can make monthly repayments more affordable, but it’s important to remember that you’ll be making more payments and, therefore, paying more interest over time. Assess whether a longer car finance term is truly beneficial for you in the long run. To put things into perspective, the latest data from Experian reveals the average auto loan term for used cars is 67.4 months, while average car leases are just under 36 months.

Step 5: Finalise the loan and purchase your car

After choosing the best loan offer, it’s time to submit your paperwork. This typically involves providing proof of income, identity, and other key documents. Once the loan is approved, the funds are transferred directly to the dealership or your personal bank account, dependent on the type of agreement. You can then purchase your used car and get behind the wheel!

Step 6: Repayment and beyond

With the loan secured and the car keys in hand, focus shifts to repayments. Setting up automatic debits during the used car loan process can help avoid missed payments and potential fees. Consider making extra payments to reduce the interest amount and shorten the loan term.

Check out our fantastic online car finance calculator today to discover the right car finance for you.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

PCP Term: Everything You Need to Know

Woman leaning out of a red car purchased on PCP

Car finance continues to appeal to drivers across the UK because it’s a flexible, affordable way of funding the purchase of a new, nearly-new or used set of wheels.

PCP car finance is one of the most popular types of auto finance agreement. With lower monthly repayments and flexible deposit options compared to other car finance choices, there’s a reason why drivers nationwide continue to choose PCP car finance.

With that said, PCP is a little more complicated than other car finance options because of the end-of-term options. We break down everything you need to know about a PCP term below.

What you need to know about a PCP term

Personal contract purchase (PCP) car finance is a flexible agreement that offers lower monthly repayments compared to other types of car finance.

With PCP, you’ll be splitting the price of your vehicle into three chunks – a deposit, your monthly repayments, and an optional final payment that’s also known as a balloon payment.

A PCP term is typically anywhere from 36 to 60 months, or three to five years. The longer the term of your PCP finance agreement, the lower the monthly repayments will be, as the cost is being spread over a longer term. However, you will generally pay more interest overall because you’re borrowing money for a longer period.

How does the end of a PCP term work?

With PCP, you won’t own the car outright at the end of your agreement, unless you choose to make an optional final payment, also known as a balloon payment, along with a small option to purchase fee,.

In fact, it’s because of this optional final payment that the monthly repayments on PCP are lower compared to other car finance agreements.

However, it does mean that you need to decide whether you want to make this final payment once you reach the end of your PCP term.

Bear in mind that this payment is optional with PCP – you don’t have to make it. You can always choose to hand the car back, and you won’t face any surplus charges, provided you haven’t caused undue damage to the vehicle and the vehicle is within the contracted mileage.

Alternatively, you can make the final balloon payment and you’ll formalise ownership of the vehicle. Balloon payment finance can help to make this final lump sum more affordable by breaking it down into manageable chunks – much like any other car finance agreement.

You can also choose to part exchange the vehicle for a higher spec model if you find yourself in ‘positive equity’. This happens when the car is worth more than the lender anticipated at the end of your PCP term and is a great option for drivers who like to update their car for a newer model.

Find out more about PCP finance today

If you are looking to start your car-buying journey, check out our online car finance calculator to crunch those numbers and take your first step to owning your next dream car.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

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Paying for a New Car with a Loan – How It Works

Couple stood next to a silver car bought using a car loan

Whether you’re buying your first car or upgrading an existing set of wheels, purchasing a new vehicle is exciting. But for many Brits, the question of how to bankroll it can be daunting.

This is where car loans come in. Suitable for both new and used vehicles, car loans and finance make paying for a new car convenient and accessible.

Want to know more about how an auto loan can help you navigate the road to a new car? Read on as we unpack the ins and outs of paying for a new car with a loan, exploring everything from the application process to repayment options.

Understanding car loans: the basics

Let’s start with the fundamentals. Car loans are a type of financing product specifically designed for auto purchases. They allow you to borrow a certain amount of money from a lender, which you then repay over time, usually with interest.

Choosing the right loan

When it comes to paying for a new car with a loan, one size does not fit all. Before applying, it’s essential to consider your individual circumstances and preferences. Here are some key factors to keep in mind when vetting lenders and loan products:

Loan amount: Determine how much you need to borrow based on your budget and the cost of the car, as well as any additional fees.

Interest rate: Shop around for competitive interest rates to ensure you’re getting the best deal possible. Variables like your credit score can impact the interest rate offered when paying for a new car.

Loan term: Agree on the length of the loan, keeping in mind that longer terms can unlock lower monthly payments but higher overall interest costs.

Additional fees: Ask about any additional charges, such as late payment fees. Some lenders may also charge extra for early repayments. Ask lots of questions to avoid unwelcome surprises down the line.

Types of car loans

When exploring car financing options, you’ll see various types of loans tailored to different needs. There are a few acronyms to decipher, but really, it’s quite straightforward, and there’s no need to be intimidated. Here’s a breakdown of the main ways of paying for a new car in the UK with a loan.

Hire Purchase (HP): With HP loans, you pay a deposit upfront (although there are plenty of zero deposit options too), followed by fixed monthly payments over the lifetime of the agreement. Once you’ve made all the payments, you own the car outright. HP is a clear-cut financing option suitable for those with an end goal of full ownership of the vehicle.

Personal Contract Purchase (PCP): PCP lowers monthly payments by deferring a significant chunk of the loan amount to the end of the agreement. At the end of the term, you can choose to return the car, provided the vehicle is in good condition and within the contracted mileage, trade it in for a new model or make a final ‘balloon payment’ along with a small option to purchase fee to own the vehicle outright.

Personal Contract Hire (PCH): PCH is similar to PCP but involves leasing the car rather than owning it. You pay fixed monthly payments for the duration of the lease and return the car at the end of the agreement. It’s a great option if you love to drive the latest models. However, PCH agreements often include mileage restrictions and wear-and-tear guidelines.

Personal Loans: Personal loans can be used for various purposes, including paying for a new car. You receive a lump sum of money from the lender, which you then repay with interest over time. Personal loans offer flexibility, but the options may be limited for those with a poor credit profile.

The application process: what to expect

Once you’ve done your homework and selected a suitable loan, it’s time to apply. Here’s what you can expect during the application process:

Documentation: Prepare requested documents, including proof of identity, income verification and details about the car you want to purchase.

Credit check: The lender will request a credit report to evaluate your status and set the terms of the loan. A healthy credit score can improve your chances of approval and result in more favourable terms, including lower interest rates.

Approval decision: After reviewing your documents and credit rating, the lender will either approve or decline your application. If approved, you’ll receive details about the loan terms, including the interest rate, amount, and repayment schedule.

Loan pay-out: Once you’ve accepted the loan terms, the finance company will transfer funds to the seller or dealership, allowing you to complete the purchase of your new set of wheels.

Paying for a new car: managing your loan responsibly

With the loan secured and a set of keys in your hands, it’s time to focus on repayments. Here are some tips for managing your loan responsibly:

Budgeting: Incorporate your loan payments into your monthly budget to ensure you can afford them comfortably. Prioritise your payments over other less-important expenses to avoid defaulting on your loan and dragging down your credit score.

Automatic payments: Consider setting up automatic deposits when paying for a new car. This will ensure your loan payments are made on time. This can help you avoid late fees and maintain a stellar payment history.

Extra payments: If possible, consider making extra payments towards your principal loan amount. This will help you pay off the loan faster and reduce the total interest paid.

Communication: If you run into financial difficulties or anticipate missing a payment, communicate with your lender proactively. They will be more understanding than you might think and can usually offer assistance or alternative payment arrangements to help you avoid defaulting.

Drive towards success with My Car Credit

Whether you’re looking to lease a brand-new Nissan Leaf or work towards full ownership of a used Toyota Highlander, paying for a new car with a loan can open new doors when it comes to getting behind the wheel. At My Car Credit, we’re riding shotgun to help you understand the basics of car loans, choose the right product for your needs, navigate the application process, and manage repayments responsibly – so you can get behind the wheel with confidence.

Try out our fantastic online car finance calculator to see an instant breakdown of your expected monthly payments, typical rate and total payable.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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What Does ‘Finance’ Mean When Buying a Car?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

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PCP: Is It Worth It?

Man driving nearly-new car bought using PCP finance

PCP is one of the most popular types of car finance agreement. Flexible and affordable, it’s among the best ways to get behind the wheel of a new, nearly-new or used car.

This article will break down what PCP car finance is, what you can expect of your agreement, and answer the question – is PCP worth it?

What is PCP car finance?

Personal contract purchase (PCP) car finance is one of the most sought-after car finance options.

PCP allows you to split the cost of your car into a series of affordable monthly repayments (plus interest), as well as a deposit and an optional final payment – also called a balloon payment. It offers lower monthly repayments and a lower deposit compared to other kinds of car finance agreements.

These monthly repayments are lower because a higher proportion of the loan is deferred until the optional final payment. This is a lump sum you’ll need to pay the lender to own the car outright.

This lump sum or balloon is calculated based on what’s called your car’s guaranteed future value or GFV. The GFV is calculated according to a forecast of the vehicle’s value at the end of the agreement. This forecast is based on factors like the car’s anticipated mileage – so if you breach this figure or incur excessive vehicular wear and tear, you can face hefty fines.

The length of a PCP agreement is typically anywhere from 24 to 36 months or three to five years. The longer the term of your PCP finance agreement, the lower your optional balloon payment will typically be. This is because newer models of cars will have a higher financial value by comparison.

What are the advantages and disadvantages of PCP?

+ Lower monthly repayments and deposit

Compared to other car finance agreements, PCP has a lower deposit and monthly repayments.

Plus, there’s more flexibility compared to other agreements – you have the option to pay the car off early or negotiate around the end of the repayment term.

+ Possibility of making a profit on your car

Your car’s GFV is a fixed value – it can’t change, even if the car is worth less at the end of your agreement than its GFV.

On the other hand, this can mean that your car is worth more at the end of your PCP agreement than its GFV. This puts you in positive equity, which you can leverage to your advantage. You could part exchange the car for a newer model and put this positive equity towards the deposit of your next car, for example.

Alternatively, you can pay the final balloon including a small option to purchase fee and sell the car on yourself, pocketing the difference.

+ Ideal for regularly upgrading your vehicle

The final balloon payment of a PCP agreement is optional – you don’t have to pay it. Provided that you haven’t exceeded the vehicle’s mileage limit or caused undue wear and tear, you can hand the keys back at the end of the agreement.

This is great for people who like regularly updating their car for newer, higher spec models. Plus, it means that if your vehicle has a lower GFV through no fault of your own, you don’t front the cost.

+ Balloon payment financing

If you want to make the final optional payment to own the car outright but aren’t sure you can afford it, you have options. Balloon payment financing works like any other car finance agreement – you break the cost of the balloon into affordable chunks, plus interest.

– Usage restrictions

With PCP, you defer a significant portion of the car’s value until the final balloon payment. As explained above, this lump sum is calculated based on the car’s anticipated mileage and usage.

If you breach these usage restrictions and cause excessive wear and tear on the vehicle, you’ll impact its overall GFV. The car will then be worth less at the end of your PCP agreement than estimated. You’ll subsequently face penalties for breaching usage restrictions.

PCP: is it worth it?

Whether PCP is worth it depends on what you want from your car finance. One of the main appeals of car finance is the variety of agreements. The right one for you is contingent on your needs and circumstances.

Thinking of starting your car buying journey? Try out our handy online car finance calculator to crunch the numbers on your next car.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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Can I Finance an Automatic Car?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

application ballon payment balloon payment finance car finance car finance options Jan24 lender PCP repayments used car

Car Repayments Explained

Woman calculating her car repayments on a calculator

From daily commutes to weekend adventures, car repayments offer unmatched freedom and convenience. However, for many Brits, understanding the ins and outs of auto finance can feel like navigating a six-lane motorway.

This is where we’re here to help. Read on as we unpack car repayments and explain everything you need to know about loan options, the application process, repayment strategies and more.

Decoding car repayments: key concepts

Understanding auto finance car repayments begins with a few fundamental concepts. Here are some bite-sized definitions of the most important terms you need to know:

Loan principal: This is the base amount you borrow to purchase your vehicle. It doesn’t include the down payment or any value you might get from trading in your old car.

Interest rate: This is what the lender charges for the money-borrowing service they provide. It’s typically expressed as a percentage. Shopping around for the best interest rate is important, as it determines how much extra you’ll pay on top of the loan principal car repayments.

Loan term: This is the duration over which you agree to pay back the loan. While a longer term can reduce your monthly payments, it might increase the total amount of interest you’ll pay over the life of the loan.

Monthly payments: These are what you’ll pay each month, made up of both the principal amount and the interest. The amount is influenced by how much you borrow, the interest rate and the term of your loan. Monthly car repayments may also include other fees applied by the lender.

Understanding different loan options

When it comes to financing your car, there are several routes you can take. Here’s a closer look at some of the most popular car repayments options in the UK:

Hire Purchase (HP)

This straightforward finance plan involves putting down a deposit (although there are plenty of zero deposit options), followed by fixed monthly car repayments. Once you’ve made all the payments, the car is yours to keep. Hire purchase is perfect for those who want to own their car outright at the end of the agreement.

Personal Contract Purchase (PCP)

PCP keeps monthly payments lower by postponing a significant portion of the loan to the end of your agreement. This final chunk is known as a balloon payment, but you’re not necessarily obliged to fork out. When your PCP agreement ends, you can choose to return the car, providing the car is in good working order and within the annual contracted mileage, swap it for a new one or pay the balloon payment along with a small option to buy fee to own the vehicle outright. Flexibility is one of the biggest benefits of PCP car repayments.

Personal Contract Hire (PCH)

Think of PCH as a long-term rental. You pay a fixed monthly fee to use the car but must return it at the end of the term. It’s great for those who like driving newer models and don’t want the hassle of selling the car later.

Personal Loans

These are unsecured loans that give you a lump sum to buy your car. Interest rates might be higher, but they offer more flexibility and aren’t secured against your vehicle.

Navigating the application process

Here’s what to expect when you apply for car finance:

Documents and personal information: You’ll need to gather multiple documents, such as proof of identity, proof of income and details about the vehicle you intend to purchase.

Credit check: Lenders will check your credit score to determine your financial reliability. A healthy credit score usually means more favourable loan terms. Pro tip: when shopping around for car finance some brokers will carry out credit checks to determine your eligibility. Always look for a broker that runs an initial ‘soft’ check that won’t leave a mark on your credit history. Please note however, that should you progress, some lenders may perform a hard search on your credit file.

Approval decision: After reviewing your documents and credit score, the lender will either approve or reject your application. If approved, they’ll clearly outline the loan terms and your car repayment schedule.

Loan pay-out: Once you agree to the terms, the lender will pay out the money to the car seller or dealership.

Savvy car repayment strategies

Car repayments open exciting new doors when it comes to getting behind the wheel. Many Brits are eligible, even with less-than-perfect credit scores. But it’s important to understand your responsibilities as a borrower and keep up with your car repayments. To handle your car loan responsibly, consider the following strategies:

Set a realistic budget

Make sure your monthly car repayments fit comfortably within your budget. It’s better to adjust your budget now than struggle later.

Automate payments

Setting up automatic car repayments can prevent late fees and helps keep your credit score healthy.

Make additional payments

If you can afford it, pay more than the minimum amount each month to reduce interest in the long run and shorten your loan term.

Communicate with your lender

If you hit a financial snag, talk to your lender early to discuss potential adjustments to your payment plan.

A firm grip on the basics of car repayments and a good understanding of different financing options can help you steer clear of common pitfalls and make choices that suit your financial situation, as well as your goals as a motorist.

Simplified auto finance with My Car Credit

Whether you’re eyeing a brand-new Ford Puma equipped with hybrid technology, a versatile Kia Sportage or a zippy Volkswagen Golf, the My Car Credit team is here to help you make smart, informed decisions when it comes to car repayments. This not only puts you in the driver’s seat regarding your financial health but helps ensure a smoother ride in your automotive journey.

So, don’t let finance fears keep you from enjoying the road. Use our handy online car finance repayment calculator to start your journey towards that new car.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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Car Finance: A Complete Guide

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

application car finance car finance options Jan24 lender repayments used car

Bank Loan or PCP: Which is Right for You?

Woman confused over bank loan or PCP to buy a car

Purchasing a car is expensive, and many drivers just don’t have the upfront cash available. That’s when it becomes necessary to find alternative finance options.

With lower monthly repayments, PCP is a popular, flexible, accessible way of financing a car. A bank loan – also called an auto or personal loan – is another favoured finance option. This article will help you decide whether a bank loan or PCP is right for you.

What is PCP car finance?

PCP car finance is one of the most popular types of car finance agreement.

If you choose a PCP car finance agreement, you’ll be splitting the cost of your vehicle into three chunks:

Monthly repayments plus interest
A deposit
An optional final payment, along with a small option to buy fee (also known as a balloon payment)

With PCP, you benefit from lower monthly repayments and flexible deposit options compared to other car finance agreements. You won’t own the car unless you choose to pay the final lump sum, after which the vehicle belongs to you. You’ll also face mileage restrictions and can face penalties if you breach these, or if you cause undue wear and tear to the vehicle.

PCP contracts have a voluntary termination clause, which allows you to exit the agreement early, provided you’ve paid off at least half of the loan. Bank loans must be paid off in full.

A PCP term is typically anywhere from 24 to 36 months. The longer the term of your PCP finance agreement, the lower your optional balloon payment will typically be.

Remember that you will pay interest on the monthly repayments for a PCP agreement.

What is a bank loan?

With a bank loan, you’re borrowing the full value of the vehicle and buying your car outright. You then pay this amount off with a series of monthly instalments, and you don’t have to pay a deposit (but you may be able to, depending on the bank). These monthly instalments are typically higher with a bank loan than they are in a PCP agreement.

With a bank loan, you can choose to only borrow part of the car’s overall value – you can use your savings to make up the outstanding amount.

Unlike with PCP, you’ll own the car outright from the get-go, so you can sell or change it whenever suits you. You also won’t face restrictions around mileage or other usage and can modify the car during the deal if necessary.

Bank loans typically aren’t secured against the car, so if you fall behind on repayments, it can’t be taken away. That said, bank loan amounts may be limited in size to minimise risk to the lender, depending on their policy.

Individuals with poor credit ratings are unlikely to secure a bank loan. Equally, you’ll have to apply individually to different banks for a bank loan. Each application will require a credit check, and these are often hard credit checks in the first instance, meaning they’ll leave a mark on your overall score. With car finance, the initial credit check is soft. Please note that should you progress, some lenders may perform a hard search on your credit file.

A typical bank loan length is anywhere from 12 to 60 months.

Bank loan or PCP: pros and cons

Bank loan pros

Can be the simplest way of financing a car, as you can use the loan to buy from any private seller or business.
The car belongs to you immediately, so you can sell it on or modify the vehicle if desired.
No usage restrictions.

Bank loan cons

Higher monthly repayments compared to PCP.
Because you own the vehicle, you’ll bear the financial front if it experiences significant depreciation.
Bank loans are often limited in size, and individuals may not get the advertised rates.

PCP pros

Lower monthly repayments compared to a bank loan.
You don’t have to keep the car once the agreement ends.
Great for people who like to regularly switch up their vehicle for a newer, higher-spec model.
Guaranteed future value (GFV) of car, so you could benefit from positive equity at the end of the agreement.

PCP cons

You are not the car’s owner unless you make the final optional balloon payment.
Usage and modification restrictions.
The car can be repossessed if you fail to keep up with monthly repayments.

PCP vs bank loan – which is right for you?

PCP car finance is ideal for those looking for lower monthly repayments and who like to change their car often. With PCP, you also benefit from flexible options once the agreement ends and can choose to hand the vehicle back if it no longer serves you. This is providing the vehicle is in good working condition and within the annual contracted mileage.

Bank loans are great for individuals who want to own the car outright from the get-go, and don’t want to face any usage restrictions.

Discover your car finance needs today

If you’ve still got questions about PCP vs a bank loan, check out our other blogs on available finance options or try out our online car finance calculator to begin your car buying journey today.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What’s the Cheapest Way to Finance a Car?

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

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Help! Car Finance is Taking Too Long

Car finance can be a fantastic way to purchase a new vehicle. But what happens when the process seems to drag on? Don’t stress just yet. If you’re worried about car finance taking too long, this article is for you. Read on as we explore common reasons why car finance may be taking too long and share expert tips on how to speed up the process.

The waiting game: common reasons for delays

Car finance taking too long? Before we explore solutions, let’s identify some common culprits that can prolong the process:

Incomplete documentation

One of the most common reasons for delays is documentation. Whether you’re missing proof of income, failed to verify your identity or submitted a blurry photo of your driver’s licence, incomplete paperwork can grind the car finance process to a halt.

Lender processing times

While some lenders pride themselves on swift approvals, others may take longer to process applications. If speed is a priority, it’s worth working with lenders with an excellent track record when it comes to fast approvals.

Credit issues

Credit checks are a standard part of the car finance process. No surprises here – issues or discrepancies with your credit history can slow down the application process.

Communication breakdown

Car finance taking too long? Miscommunication between parties involved in the process can lead to delays. This includes including borrowers, brokers, lenders and dealers.

Tips for speeding up the process

Now that we’ve identified potential roadblocks, let’s spotlight steps to get your car finance application back in the fast lane.

Be proactive with documentation

Give yourself the best shot of success and ensure all documents are complete, accurate and up to date before submitting your application. This includes proof of identity, income verification and any other documents requested by the lender.

Work with a broker

Teaming up with a car finance broker can drastically speed up the car finance process. As well as traditional lenders like high street banks, brokers work with alternative creditors known for their quick turnaround times. Working with a broker is one of the best moves you can make if you’re concerned about car finance taking too long.

Stay on top of communication

Maintain open lines of communication with your broker, lender and dealer throughout the process. Quickly respond to requests for additional information to prevent unnecessary delays.

How My Car Credit can help

At My Car Credit, we understand the frustration of car finance taking too long. That’s why we’ve created a streamlined process designed to get you behind the wheel in no time. With our extensive network of lenders and expert guidance, we have what it takes to turbocharge the process for quick car finance. Help is always available, so don’t hesitate to reach out to My Car Credit for personalised support on your car finance journey. We’re with you every step of the way, from initial application to keys in hand.

To check eligibility for car finance, My Car Credit has developed a car finance calculator to allow you to crunch those numbers around your next car. Give it a try and start your car buying journey today.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How to Finance a Car in 4 Easy Steps

Can You Pay Monthly for a Used Car?

Can You Modify a Car on HP Finance?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car finance car finance options Jan24 lenders time used car

Instant Car Loan: Does It Exist?

Person using phone to get an instant car loan

Are you dreaming of a new set of wheels but dreading the process of securing car finance? Fear not. Instant car loans take the stress out of auto finance and make it easy to lock in a lender. Of course, you are entering an official financial agreement which means there is some red tape to navigate. Read on to find out more about the process and decide if an instant car loan is right for you.

Instant car loan – myth or reality?

Picture this – you’ve found the car of your dreams and can practically feel the keys in your pocket. But before you can turn the ignition and put your foot down on the accelerator, there’s financing to consider. Enter the instant car loan – a fast and easy way to secure auto finance.

So, what exactly is an instant car loan? Put simply, it’s a finance option designed to give you quick access to funds. This means you can drive away in your chosen vehicle without delay. Loans are extended for all types of makes and models, from SUVs and estates to saloons and sports cars.

How does it work? Let’s pop the bonnet and take a closer look:

How instant car finance works

The appeal of an instant car loan lies in the streamlined process. Here’s a step-by-step breakdown of how it all works:

Easy online application

Forget queuing at the bank or filling out mountains of paperwork. With instant car finance, the journey begins with a simple online application. With just a few clicks you can be on your way to securing the funds you need.

Instant decision

Using advanced algorithms and instant search technology, lenders assess your application in record time. This allows them to make a preliminary decision in minutes, rather than days or weeks.

Digital documents

While the instant decision may leave you daydreaming of the open road, there are still a few hoops to jump through before funds hit your account. You’ll need to provide supporting documentation, such as proof of identity, income and credit history, to verify the information provided in your application. Think of it as dotting the i’s and crossing the t’s to ensure everything is in order.

Final approval and funding

After documents have been received by the lender the final approval process swings into action. The lender conducts a thorough review to ensure everything checks out. Once the final stamp of approval is given, funds are transferred to your account. In some cases, the lender may purchase the car outright on your behalf. In both scenarios, you’ll repay the loan in monthly instalments, along with interest and any additional fees.

Reality check: understanding the fine print

Before you hit the motorway, let’s address the elephant in the room – the reality check. While the appeal of instant car finance is undeniable, it’s important to recognise that approval is preliminary. The “instant” decision you receive is a promising sign that you meet the initial criteria set by the lender. However, to seal the deal and secure funds, additional steps are required, including that should you progress, some lenders may perform a hard search on your credit file.

Your instant car loan: the final steps

So, how do you get the green light for your instant car loan? Once you’ve received your instant decision, the next steps involve submitting supporting documentation and passing a final review process. This can include a hard credit check which sees the lender take a deep dive into your financial history using credit reference agencies (CRAs) like Equifax, Experian and TransUnion. All three CRAs have access to information about British adults and their credit histories. This information is used to generate a credit score which is used to assess your risk as a potential borrower.

In the final stage you’ll also lock in the terms and conditions of your loan. This includes the total amount you’ll borrow, length of your agreement, monthly repayments and APR.

The role of brokers

Most banks and high street lenders are too cautious to issue instant auto finance approval. This is where a broker can really boost your chances of success. Instead of partnering exclusively with a single lender, brokers work with multiple lenders. This exposes your application to far more potential creditors, including those specialising in auto finance for borrowers with less-than-perfect credit scores.

Instant car finance – a road worth exploring

While the concept of an instant car loan isn’t necessarily as simple as it sounds, it’s a road worth exploring if you’re seeking swift approval and streamlined financing solutions. It’s a fast way to get the ball rolling and get an idea of your different options, including what type of terms, monthly repayments and APR rates to expect.

Of course, it’s important to approach instant car loans with a pinch of salt and recognise that approval is preliminary. By understanding the process and being prepared to navigate the additional steps required, you can enjoy the benefits of instant car finance and hit the road without delay.

Hit the road with My Car Credit

Ready to get behind the wheel? Whether you’re in the market for a PHEV Kia Sportage to slash your tailpipe emissions or an athletic Audi A3 with a luxe trim level, apply for your instant car loan today and take the first step towards automotive ownership.

As part of Evolution Funding, the UK’s largest motor finance and technology provider, My Car Credit leverages award-winning technology to improve your chances of acceptance. Our unique matching algorithm ensures you find the best product and lender for your circumstances, at a competitive rate. We’re passionate about seeing every quick car finance application right through to the end, right through to the final cash deposit in your bank account.

A great place to start is by using our online car finance calculator. Here you can get an idea of acceptance probability and cost, all without affecting your credit score. Please note that should you progress, some lenders may perform a hard search on your credit file.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What Does ‘Finance’ Mean When Buying a Car?

Car Finance: A Complete Guide

Check for car finance without affecting your credit score

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car finance car finance options car loan instant Jan24 used car

7 Advantages of Used Car Hire Purchase

Car in sunset with people camping all bought on Hire Purchase

Used car finance has become an increasingly popular way of drivers getting behind the wheel of a nearly-new vehicle. Used car hire purchase is just one type of used car finance – and one of the most popular.

This article will break down what used car hire purchase is, and outline the advantages of this kind of car finance agreement. Finance your next ‘new to you’ used car by reading on.

What is used car hire purchase?

Used car hire purchase is just one type of car finance available to you.

With used car hire purchase, you’ll split the cost of your nearly-new vehicle over a set period of time. You’ll pay back what you borrow against this car over this designated time period via a series of affordable monthly instalments, plus interest.

You don’t own the car until you’ve paid in full, but it’s yours at the agreement’s end.

What are the advantages of used car hire purchase?

1. Flexibility

Used car hire purchase is one of the most flexible forms of car finance.

With this type of agreement, repayment terms are typically between one to five years, depending on how much you (the borrower) can afford to pay back each month. Choose to pay higher monthly repayments for a shorter borrowing period, or reduce these instalments with a longer repayment term. Remember that you’ll pay more interest the longer the agreement.

Used car hire purchase therefore has flexibility with how much you pay for your monthly instalments. You can always pay a larger upfront deposit for lower monthly repayments.

Some used car hire purchase agreements also allow you to pay off the agreement early, reducing the overall long-term cost. You’ll need to check with your lender whether you’re eligible for this kind of early termination.

2. Low initial deposit

Typically, you don’t have to front a big deposit with used car hire purchase. In fact, you should only expect to pay around 10% of your used car’s price on the deposit.

That said, you can also choose to pay more if preferred, which will then lower your monthly repayments.

3. Cost effective

A new car may have that ‘never been driven’ appeal, but you’re likely facing a hefty price tag for that privilege – and not all drivers can front that cost. What’s more, as soon as you drive off the dealer’s forecourt, its value significantly depreciates.

By choosing used car finance like a hire purchase agreement, you’re able to fund an affordable, reliable vehicle that won’t experience this extreme depreciation in value. Plus, your vehicle is less likely to drop in value during your ownership, too, meaning it’s a more stable and cost-effective investment overall.

4. Accessibility

Some types of car finance can be inaccessible for those with poor credit ratings.

Used car hire purchase is one of the easiest types of car finance to get approval for, making it a more accessible option for individuals with bad credit profiles.

In fact, at My Car Credit, we pride ourselves on providing car finance for drivers with poor credit scores.

5. No balloon payment

Used car hire purchase is just one kind of used car finance agreement. Another popular type is used car personal contract purchase (PCP).

With a used car PCP agreement, you’ll be expected to make a final balloon payment at the agreement’s end (plus an option to purchase fee and possible admin fees) in order to own the car. This can be expensive, and not all drivers have the cash to pay it.

With used car hire purchase, you won’t face this final lump sum – the car is yours at the end of the agreement.

6. Better control of finances

Saving up for a big deposit or balloon payment can take its toll on your financial situation. With used car hire purchase, there’s a fixed payment schedule where you pay the same every month for the entirety of the term.

You’ll benefit from fixed interest rates and monthly repayments – and know exactly what you owe each month and when you owe it. This puts you in better control of your finances, enabling you to budget accordingly.

7. No usage restrictions

A used car PCP agreement involves usage restrictions. If you cause unusual amounts of wear and tear to the vehicle, or if you exceed its annual mileage limit, you can be penalised.

With used car hire purchase, you don’t face any usage restrictions. Plus, you’ll also own the vehicle at the end of the agreement.

Does used car hire purchase have disadvantages?

As with any loan, it’s sensible to consider whether used car hire purchase is the best option for you.

Although this type of used car finance agreement is more flexible than PCP or a leasing deal, the monthly payments are usually higher. Plus, your deposit and term length will impact these repayments – higher deposits and shorter loan terms make for lower monthly instalments.

Used car hire purchase can therefore be a more expensive option for short term agreements (for example, those under a year).

Remember that if you miss out or default on any of your payments, this will negatively impact your overall credit score. Missed payments typically remain on your credit profile for six years. This can in turn impact future loan eligibility. What’s more, the car may also be taken away from you if you continue to miss your repayments.

Additionally, you won’t own the car until you’ve fully paid it off. So, you won’t be able to sell it or modify it until the agreement is complete.

Find the right used car hire purchase for you

My Car Credit offers a range of different used car finance agreements.

Use our online calculator to get a no-obligation quote for used car hire purchase in mere minutes. Simply input the amount you want to borrow and your ideal repayment term, and we’ll give you an instant, online decision.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

5 Different Ways to Pay for a Car

PCP Term: Everything You Need to Know

How Many Years in a Car Loan Term?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

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Financing a Second-Hand Car: 4 Options

Friends going on a trip in a red car bought using car finance

It’s never been easier to find car finance for nearly new or used cars. Choosing to purchase a ‘new to you’ vehicle has many advantages. You’ll be able to split the cost of your vehicle into a series of affordable monthly instalments, potentially affording a better set of wheels than you would otherwise be able to. Plus, you’ll be improving your overall credit score.

But what options are there for financing a second-hand car? We break down how My Car Credit can help you to get behind the steering wheel of a nearly new or used vehicle below.

How to finance a used car

Used car finance is a catch-all term for car finance agreements that allow you to borrow money against a used or nearly new vehicle.

Remember to always do your research before purchasing a new or nearly new vehicle. You want to make sure that you’re in the know about everything from the vehicle’s condition through to its remaining warranty (if relevant), and its service history.

There are different kinds of car finance agreements that you can choose for your used car. The right deal for you will depend on your unique needs and circumstances.

It’s worth comparing the different kinds of used car finance available, so that you can make an informed decision and choose the right agreement for you. That way, you’re not forking out for anything you don’t need.

Financing a second-hand car – 4 options

Hire Purchase (HP)

HP used car finance is our most popular agreement. With HP, you can pay an initial deposit, followed by a series of monthly instalments. This initial deposit isn’t always necessary, but paying it means you’ll have lower monthly payments.

Your monthly outgoings are fixed, giving you greater budgetary control. You won’t face a final balloon payment, and will own the vehicle at the agreement’s end. Plus, you also won’t face mileage limits, or fines for excessive wear and tear.

HP used car finance is best for those looking to own their vehicle at the end of the agreement, and who’d benefit from no usage limitations. You will be expected to make higher monthly payments compared to other finance agreements.

Personal Contract Purchase (PCP)

With PCP, you’ll pay a deposit and regular monthly payments against your used or nearly new vehicle. These monthly payments are lower compared to other agreements (like HP) because you’ll pay a final lump sum (balloon payment) at the end of the agreement. This allows you to completely own the car. Alternatively, you don’t have to make the balloon payment and can hand the car back providing the car is in good condition and within the contracted annual mileage.

Personal Contract Hire (PCH)

PCH car finance can also be referred to as a lease agreement. Essentially, you’re renting the vehicle for a long-term period of time, before handing it back to the dealership. You’ll pay an initial deposit and can also benefit from features like breakdown and road tax coverage.

PCH used car finance is only suitable for those with good or excellent credit scores, who aren’t looking to own the car at the end of the agreement. You’ll also face charges if you exceed mileage limits or cause excessive damage.

Personal Loan

With a personal loan, you’ll borrow the full amount of the used or nearly new vehicle, paying this off via monthly repayments. Essentially, you’re buying the car outright, and you own it from the beginning of the agreement. This means that you can always choose to sell it any time after purchasing it.

A personal loan is the simplest financing option for a second-hand car, but is only suitable for those with a good credit score.

Is financing a second-hand car right for me?

There are many benefits to financing a second-hand car. You’re spreading the cost of what can be a very expensive purchase, potentially affording a nearly new vehicle that would be beyond your budget if you were buying outright. Plus, by making your monthly repayments according to schedule, you’ll improve your overall credit rating.

As with any finance agreement, if you fail to make your repayments, you’re at risk of losing the vehicle and negatively impacting your credit score.

Find out more about financing a second-hand car

Check out our post to find out more about your used car finance options. We also have a car finance calculator to help you do the maths on your next vehicle purchase.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Car Finance for First Time Drivers: A Beginner’s Guide

Balloon Payments Explained: What, Why & How

I want to buy a car on finance, how much can I borrow?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car finance car finance options hire purchase hp Jan24 lenders options PCP second hand used car

From sidestepping initial depreciation to avoiding long waitlists, used cars come with myriad benefits.

Step 1: Assess your financial situation

Step 2: Choose the right vehicle

Step 3: Shop around for the best deals

Step 4: Understand the terms

Step 5: Finalise the loan and purchase your car

Step 6: Repayment and beyond

Rates from 9.9% APR. Representative APR 10.9%

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Require more help?

Car finance continues to appeal to drivers across the UK because it’s a flexible, affordable way of funding the purchase of a new, nearly-new or used set of wheels.

What you need to know about a PCP term

How does the end of a PCP term work?

Find out more about PCP finance today

Rates from 9.9% APR. Representative APR 10.9%

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Whether you’re buying your first car or upgrading an existing set of wheels, purchasing a new vehicle is exciting. But for many Brits, the question of how to bankroll it can be daunting.

Understanding car loans: the basics

Choosing the right loan

Types of car loans

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Drive towards success with My Car Credit

Rates from 9.9% APR. Representative APR 10.9%

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PCP is one of the most popular types of car finance agreement. Flexible and affordable, it’s among the best ways to get behind the wheel of a new, nearly-new or used car.

What is PCP car finance?

What are the advantages and disadvantages of PCP?

+ Lower monthly repayments and deposit

+ Possibility of making a profit on your car

+ Ideal for regularly upgrading your vehicle

+ Balloon payment financing

– Usage restrictions

PCP: is it worth it?

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From daily commutes to weekend adventures, car repayments offer unmatched freedom and convenience. However, for many Brits, understanding the ins and outs of auto finance can feel like navigating a six-lane motorway.

Decoding car repayments: key concepts

Understanding different loan options

Hire Purchase (HP)

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