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What is the Oldest Car a Bank Will Finance?

Love the charm and character of older cars but unsure about whether they’re eligible for finance? In this hands-on guide we’ll answer “what is the oldest car a bank will finance”. Our goal – to help you get behind the wheel of a car with its own unique story to tell.

The golden numbers

While there’s no hard and fast rule about what the oldest car a bank will finance is, 10 years is generally considered the maximum age for standard agreements. Most high street banks require cars to be no more than 10 years old, with no more than 100,000 miles on the odometer.

Exceptions to the rule

While 10 years and 100,000 miles are considered the maximums for bank-funded auto finance, there are some exceptions to the rule. For example, classic cars are often eligible for finance agreements. What’s the difference between ‘classic’ and ‘older’ cars? There are similarities between the two, however most banks see them as very different candidates for auto finance.

Defining a ‘classic’ car

According to HMRC, classic cars must be at least 15 years old and have a minimum value of £15,000. This is ultimately what sets classics apart from older vehicles. Unless the car meets these prerequisites, banks will generally be reluctant to approve auto finance.

Prefer the gleam of a newly polished hood ornament over the glow of a next-gen touchscreen dashboard? You’re not alone. The UK is a nation of classic car enthusiasts, with the latest stats from the Federation of British Historic Vehicle Clubs (FBHVC) revealing there are more than 1.5 million classics currently registered in the UK.

Dreaming of securing the keys to a pristine pre-war Bentley or a British-built Lotus Elise? Read on to find out more about what the oldest car a bank will finance is and how auto loans work for classic vehicles.

Understanding classic car finance

Unlike traditional auto loans, classic car finance operates within a niche market. Agreements are often tailored to meet the unique needs of vintage automobile enthusiasts, which means financing a classic car can be a little different from the usual process.

Factors influencing classic car finance

Several factors come into play when determining the oldest car a bank will finance. These can include:

Age of the vehicle

One of the first variables banks assess is the age of the classic car. What is the oldest car a bank will finance? While there’s no set rule on the maximum age of a vehicle eligible for financing, most banks tend to favour classics from the post-war era onwards. That said, some specialty lenders may extend financing for exceptionally rare or historically significant vehicles, regardless of age.

Condition

The condition of the classic car plays an important role in securing financing. Banks are more likely to finance well-maintained or meticulously restored classics with documents to back up their past.

Rarity

Rarity, historical significance and desirability among collectors can increase the likelihood of securing finance for older vehicles.

Appraisal and valuation

Before extending financing for a classic car, banks often request a comprehensive appraisal and valuation of the vehicle. This helps determine the market value, authenticity and overall condition of the classic car. Why does this matter? It helps provide banks with confidence in the value of the asset they’re financing and potential resale value.

Types of classic car financing

Classic car financing options vary depending between lenders, so it’s important to do your research and find the right fit. Banks generally take a more conservative approach to finance and stick with popular options like Hire Purchase and Personal Contract Purchase.

Hire Purchase (HP)

This option sees you make a deposit upfront, followed by fixed monthly payments. These payments cover the full purchase price of the classic car, plus interest. Once the final payment is made, legal ownership of the vehicle is transferred to the borrower.

Personal Contract Purchase (PCP)

PCP offers lower monthly payments than HP, as you effectively lease the classic car for a set period of time. At the end of the agreement, you have the option to return the vehicle, trade it in for a different model, or make a balloon payment along with and option to purchase and possible admin fees, to take ownership.

Personal Loans

Personal loans can be a good way to finance a classic car purchase and provide lump-sum financing for the total cost of the vehicle. In exchange, you’ll commit to fixed interest rates and repayment terms.

Navigating your classic car finance journey

From sleek Jaguar E-Types to James Bond-worthy Aston Martins, classic cars are genuine head turners. However, complications can arise when attempting to secure finance. Here are some expert tips on how to improve your chances of success.

Research and due diligence

Before approaching a bank for classic car financing, take the time to thoroughly research the make, model and historical significance of the vehicle. Gather as much documentation as possible, including appraisal reports, maintenance records and ownership history. The more documents you have to support your finance application, the better!

Consider specialty lenders

Feeling disheartened after your application for auto finance has been knocked back? Remember, the buck doesn’t necessarily stop with high street banks. Consider working with a broker like My Car Credit to unlock access to specialty lenders with experience financing classics. Unlike banks which often adopt a conservative and inflexible approach, brokers work with a wide range of lenders, including lenders willing to finance vintage automobiles.

Insurance requirements

Your classic car financing agreement may come with specific insurance requirements to protect the value of the asset and minimise risk for the lender. For this reason, many lenders will insist you have comprehensive classic car insurance in place before finalising the agreement.

The bottom line on financing old cars

Ultimately, there’s no definitive answer to “what is the oldest car a bank will finance?” That said, there are some benchmarks to keep in mind. Banks will generally knock back applications for auto finance if the car is more than 10 years old, with more than 100,000 miles on the odometer. Unless the car qualifies as a ‘classic’, which means it must be at least 15 years old and have a minimum value of £15,000.

Secure the keys to a classic with My Car Credit

Got your heart set on a classic car? Whether you’re dreaming of a mid-century Chevrolet or a Mini in mint condition, My Car Credit is here to help you enjoy the thrill of vintage motoring. We work with a large panel of lenders to maximise your chances of success, with classic car finance options including high street banks as well as non-traditional lenders.

Try our handy online finance calculator to find out more about your options.

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 vs HP – What’s the Difference Between Them?

When it comes to car finance, a standardised approach doesn’t always work. Every motorist is different, which is why lenders offer a variety of models, including personal contract purchase (PCP) and hire purchase (HP). Both are hugely popular in the UK and used to finance everything from budget-friendly hatchbacks to luxury EVs.

Each option offers unique benefits, so how do you decide which is right for you? In this comprehensive guide, we’ll cover everything you need to know about PCP vs HP, including how they work and the key differences between the two financing options.

Understanding the difference between HP and PCP finance

Let’s start with a breakdown of each financing option:

Personal contract purchase (PCP)

In a personal contract purchase agreement, the goal isn’t to own the car outright. Instead, you effectively rent it for a set period, typically two to four years. Your monthly payments cover the car’s depreciation over this period, as well as interest.

At the end of a PCP finance agreement, you have three choices:

Return the car
Trade in the car for a new model, moving into a new car finance agreement
Make a large balloon payment to buy the car outright

Balloon payments are lump sums agreed on at the start of your contract and calculated using the guaranteed minimum future value (GMFV) of the car. The minimum guaranteed future value indicates how much a car will be worth by the end of a PCP finance agreement. Making the final balloon payment means paying off this amount to own the car for good.

Hire purchase (HP)

Hire purchase is a more straightforward type of car finance and puts you on a direct path to owning the car outright. The total cost of the car, minus any deposit paid upfront, is spread over fixed monthly payments for a hire purchase agreement. Once you make the final payment, the car is yours to keep. There’s no need for a balloon payment at the end of the contract and you don’t have the option to return the vehicle. If ownership is your end goal, HP finance is a great option.

PCP vs HP: how the two compare

Now you know more about how each auto finance model works, let’s take a look at how they shape up against each other.

Ownership

PCP finance offers flexibility but stops short of ownership unless you’re willing to make a final balloon payment. As mentioned earlier, you can choose to return the car at the end of the agreement. This makes PCP an attractive option for motorists who love to upgrade to a new model every few years.

The option to own is an important difference between HP and PCP. Once the final payment is made on a HP agreement you become the legal owner of the vehicle. This makes HP finance ideal for motorists with long-term ownership goals.

Monthly payments

Lower monthly payments are one of the top benefits of PCP. They’re generally lower than HP payments as you’re covering the car’s depreciation, not its full value. This is due to the balloon payment, which covers the actual car cost should you want to buy outright.

Monthly payments are higher for HP agreements as you’re paying off the entire cost of the car, plus interest. You may prefer to save money with PCP finance compared to HP repayments and put money aside for the final lump sum.

Balloon payment

The need for a balloon payment at the end of a PCP agreement can catch some motorists off guard. As explained above, it covers the cost of the vehicle which isn’t included in PCP repayments. It is optional though, so you can choose to move to a new PCP finance deal with a car upgrade or just return the vehicle.

In comparison, monthly payments made on HP agreements are designed to cover the full cost of the car which means you won’t be hit with a lump sum at the end of your contract.

Mileage limits

PCP agreements often come with mileage restrictions, with additional charges incurred for exceeding your car’s mileage cap. The reasoning behind this is that the finance company wants to protect the value of new cars in case they’re returned at the end of the agreement. It’s well known that higher mileage means lower value, especially for newer cars.

Your mileage limit will typically be from 5,000 to 10,000 miles per year. This can make PCP limiting for high-mileage motorists. However, going over the agreed mileage limit doesn’t mean you can no longer use the car – it simply means you’ll pay extra charges (which will be outlined in your PCP agreement).

With HP, you’re free to drive as much as you like without worrying about mileage restrictions or penalties. That’s because, all being well, you will be the eventual owner of the car at the end of the HP finance term. For many motorists, this freedom makes the HP vs PCP decision easy.

Customisation options

Since you’re essentially leasing the car in a PCP agreement, there may be restrictions on customisations. That’s because the finance company may be getting the car back at the end of your term. It makes it harder for them to lease or sell it if it has custom features.

HP gives you the freedom to modify your vehicle. Whether it’s a custom paint job, tinted windows, tech upgrades or seating configuration, this is a big difference between HP and PCP. If you like to customise cars, hire purchase agreements are probably the car finance option for you.

Similarities between these two car finance options

While these two types of car finance have their differences, it’s worth noting the ways in which they’re similar too. These include:

Manageable monthly payments – Both PCP and HP finance make it more affordable to drive a new car, breaking down the cost into monthly repayments.

Term length – When comparing car finance options, PCP and HP finance both have similar repayment terms. You can typically expect to make monthly payments for 3-5 years, though shorter and longer deals are available.

Initial deposit – PCP and HP finance both require an initial deposit in most cases. This reduces the amount you’re borrowing which results in lower monthly payments. A smaller deposit will result in higher monthly instalments and could even affect the interest rate you’re offered.

New cars – Both of these options make it practical to drive a new car. Rather than facing one big lump sum, you’ll break the cost down into manageable monthly instalments. However, you can use PCP and HP for both new and used cars.

The bottom line on HP vs PCP

Ultimately, there’s no hard and fast answer when it comes to the PCP vs HP debate. What’s best for you depends on your individual preferences, financial situation and driving habits. PCP offers flexibility, affordability and options at the end of your contract, while HP prioritises ownership. Be sure to factor in your long-term plans when deciding and consider how each option aligns with your personal goals.

Need a hand deciding which option is right for you? At My Car Credit, we pride ourselves on offering friendly, personalised support to British motorists. This includes helping you understand the difference between HP and PCP. As well as PCP and HP, our team can get you up to speed on other popular car finance options, including conditional sale and personal contract hire (PCH).

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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Leasing vs Finance: What’s the Difference and Which is Better?

Red sports car bought on finance driving down the road

Despite rising interest rates, borrowing remains the most popular way for Brits to secure the keys to a new car. Of the different borrowing options available, leasing and finance are two of the most utilised. While both avenues offer a route to your dream set of wheels, they come with unique pros and cons.

Wondering which is better for you? In this guide, we’ll break down both and learn more about lease vs finance car options. We’ll spotlight the differences between the two and offer expert tips designed to help you make an informed decision.

Leasing: an alternative to vehicle purchase

Often called Personal Contract Hire (PCH), car leasing is like a long-term rental arrangement. When leasing a car, you don’t own the vehicle outright. Instead you make monthly lease payments that entitle you to drive it. At the end of the lease contract, you hand the car back to the dealer and walk away. This easy and hassle-free approach to driving helps win over many motorists considering leasing vs finance.

The benefits of leasing a car

Low upfront costs: Leasing a car typically requires a lower initial deposit compared to financing a car. This makes a lease agreement an attractive choice if you’re keen to keep your upfront expenses down.

New car feel: With car leasing, you’re consistently driving a brand-new car. It’s like always having the latest smartphone model. If you’re the kind of motorist who values next-gen technology, you’ll love this benefit of lease deals.

Worry-free maintenance: Maintenance can be a big deciding factor in the leasing and financing car debate. A lease car will often be covered by the manufacturer’s warranty for the duration of your agreement. This means you won’t incur any out-of-pocket expenses when it comes to repairs and maintenance.

Embrace change: Leasing offers the flexibility to switch to a new car every few years. If you enjoy variety, this could be your ticket to trying out different vehicles.

The downsides of car leasing

No ownership: What’s the difference between a lease car and finance when it comes to ownership? At the end of a lease deal, you don’t own the car. It’s similar to handing back the keys to a rental apartment – you enjoyed it, but it was never truly yours.

Mileage limits: Mileage is important in the leasing vs finance debate. Leases come with more stringent mileage restrictions to protect the lender from losing money on their investment. Exceeding your agreed annual mileage limit during the lease term can result in additional charges, so it’s important to keep track of your road trips. If you plan to use your car for regular long journeys, leasing may not be right for you.

Wear and tear: As well as mileage limits, you’re also restricted when it comes to wear and tear. While normal use is okay, you must return the lease car in good condition to avoid extra costs for wear and tear at the end of the lease period.

Finance: a ticket to ownership

Car finance, also known as Hire Purchase (HP) or Personal Contract Purchase (PCP), is like a mortgage for your vehicle. You make monthly payments and once the term is over and all payments are complete, you own the car outright. It’s hugely popular in the UK, with the Finance & Leasing Association estimating around 82% of new cars in Britain are funded by PCP agreements.

Here are some of the most popular types of car finance:

Personal contract purchase

A personal contract purchase (PCP) is a car finance agreement that breaks down the cost of a new car into fixed monthly payments. You’ll make a larger initial payment as a deposit, then pay affordable monthly costs including interest payments while you use the car. At the end of the leasing agreement, you’ll have the option to pay a final balloon payment, which is a lump sum to own the car outright.

Alternatively, you can change cars or end the agreement altogether. If you move onto your next car, you’ll start a new finance agreement for an agreed period.

Hire purchase

Hire purchase is the simplest of the car finance agreements as your monthly repayments cover the entire cost of buying a car plus interest payments. With hire purchase, there’s no optional balloon payment, so you will always own the car outright once all monthly repayments have been made.

The benefits of financing

Ultimate ownership: Financing a car means it’s yours at the end of the term when the final payment is made. This is the main difference of leasing and financing. You take legal ownership of the car and have full control over mileage, wear and tear and resale options. When considering lease vs finance car benefits, ownership is a big factor.

No mileage limits: Once your finance agreement is over, you can drive your new car as much as you like, without worrying about an agreed annual mileage limit or excess charges.

The investment angle: While the initial upfront cost for financing a car might be higher than car leasing, you’re building equity with every payment. It’s like gradually acquiring a valuable asset in the most affordable way.

Freedom to customise: The end goal of ownership for your next vehicle gives you the freedom to modify and personalise your car without penalisation.

The downsides of financing

Higher monthly payments: Monthly payment size is a key difference between lease and finance agreements for your next car. Instalments for financing tend to be higher than leasing, as the final goal is ownership.

Depreciation impact: As the eventual owner, you bear the full brunt of the car’s depreciation.

Maintenance costs: Unlike leasing, maintenance and repairs aren’t normally covered. Instead, you’re responsible for keeping your vehicle in tiptop shape alongside your monthly payments.

Lease vs car finance: which is better for you?

Now that we’ve dissected the differences between a lease vs finance car, it’s time to determine which option aligns with your needs and preferences. Here are some factors to consider:

Options to own the car outright

Do you want to eventually own your vehicle, or would you prefer to regularly upgrade to a brand new car? If ownership is a must, financing is your route. If you’d rather upgrade to a showroom-worthy car every few years, leasing a car could be a better option.

Monthly payments

Consider your monthly budget, capital and payment capabilities when weighing up leasing and financing. Leasing often offers lower monthly payments, which can be appealing if you’re aiming to keep costs down.

Mileage habits

How much do you drive? If you’re a frequent road-tripper, finance might be the better choice as you’re less likely to be hit with excess mileage charges at the end of your agreed period which are notoriously stringent with car leasing.

Customisation

Are you someone who enjoys customising their vehicle? Ownership via car financing gives you the freedom to make your car uniquely yours.

Long-term plans

Think about your long-term plans when considering the difference between lease and finance cars. Are you comfortable with committing to a car for several years, or do you prefer the flexibility of upgrading every few years with leasing?

Maintenance responsibilities

Consider your comfort level when it comes to handling maintenance and repairs. Car leasing often includes a warranty that covers maintenance, while financing means you’re responsible for upkeep.

Financial stability

Assess your financial stability before making a commitment to either option. Car leasing usually requires less upfront cash, making it an attractive option if you’re looking to preserve liquid assets.

The final word on leasing vs finance

Ultimately, the choice between a lease vs finance car hinges on your individual circumstances and preferences. This includes variables like budget, lifestyle and future plans. There’s no one-size-fits-all answer, and what’s best for one person might not be the ideal choice for another.

Leasing a car might be the best option if you like a new car every few years, while financing a car allows you to actually buy a car. The best way to decide is to carefully consider both options and ensure you understand the pros and cons of each. Don’t forget to factor in the different methods of financing a car, such as hire purchase or PCP with a balloon payment.

Want to know more about you’re the difference between lease and finance? Call us on 01246 458 810 to chat to an auto finance expert or email us at enquiries@mycarcredit.co.uk.

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

car ownership finance hp Jan24 leasing pch PCP

PCP Finance Explained – Personal Contract Purchase Guide

At My Car Credit, we understand that when it comes to purchasing your dream set of wheels, budget can be a barrier. This is where Personal Contract Purchase (PCP) finance comes in. Flexible and affordable, the auto finance option is one of the most popular ways to purchase a car in the UK.

A new car on the driveway feels great. A huge upfront payment? Not so much. That’s where personal contract purchase (PCP) finance comes in.

PCP offers low monthly payments, lots of flexibility and the chance to drive a newer car more often. At the end of the term, keep it, swap it or hand it back. No pressure, just options. It’s no wonder PCP is one of the most popular auto financing options in the UK.

Looking for a clear guide on PCP finance explained? Continue reading to get a simple, easy-to-understand breakdown of how PCP finance works and what it means for you, from deposits and balloon payments to hidden costs and the best ways to save money.

What is PCP car finance?

Personal contract purchase works differently from other auto finance options like personal contract hire (PCH) and hire purchase (HP). Instead of paying off the full cost of a car, PCP covers only depreciation (this is the difference between the car’s price today and its predicted value at the end of the contract).

Lower monthly payments than options like HP
More choice at the end of the contract. Keep the car, swap it or hand it back
Access to newer, more expensive cars for less

No big upfront payments

Like other finance options, PCP helps spread the upfront cost of getting behind the wheel. Instead of saving for months or dipping into savings, drivers pay an initial deposit and start driving straight away. Some deals even offer zero-deposit PCP, making it easier to upgrade without a large lump sum. Since monthly payments only cover depreciation, rather than the full cost of the car, upfront costs stay low while still providing access to newer models.

PCP works best for those who change cars frequently or want an affordable way to drive something newer. If you want personal contract purchase explained in a way that highlights affordability, this structure makes it clear why PCP is such a popular option.

PCP finance explained: how does finance work on a car?

Instead of paying off the full value of a vehicle, drivers cover depreciation only. This means lower monthly payments compared to options like hire purchase. At the end of the term, instead of owning the car outright, there’s a decision to make:

Keep it
Trade it in for something new
Hand it back and walk away

The process starts with an initial deposit, followed by fixed monthly payments over an agreed period, usually between two and four years. When the contract ends, a balloon payment (also called the Guaranteed Future Value) determines whether the car stays or goes.

For those who like swapping into something fresh every few years, personal contract purchase keeps things simple – providing lots of options without long-term commitment.

A PCP deal breaks down into three key parts:

Deposit – the upfront payment

Unlike a traditional down payment that reduces the total loan amount, a PCP deposit helps cover the car’s depreciation.

A higher deposit lowers the monthly payments and makes finance more affordable over time. Some dealers offer zero-deposit PCP deals, but these usually mean higher monthly costs. The deposit also reassures lenders, showing commitment to the agreement and improving approval chances.

How much is a PCP deposit?

Usually 10% of the total value of the car. So, if you’re buying a new Ford Fiesta worth £20,000 you’ll pay a deposit of £2,000 upfront. If you’re looking at a BMW X5 worth £70,000 your deposit will be £7,000.

Can you get a PCP deal with no deposit?

Yes, some lenders offer zero-deposit PCP deals. But they’re usually reserved for applicants with excellent credit scores. Keep in mind that monthly payments increase without a deposit, because the entire finance amount is spread across the contract term. Skipping the deposit keeps upfront costs low but it also means higher long-term payments and potentially more interest paid overall.

Just want PCP car finance explained simply? A deposit reduces the amount borrowed, which lowers monthly costs and the total interest paid.

What happens to the deposit?

The deposit isn’t refunded at the end of the agreement. That said, if the car is worth more than the Guaranteed Minimum Future Value (GMFV) at the end of the contract, this difference can go towards the deposit on a new PCP deal.

Is it worth paying a bigger deposit?

While a larger deposit lowers monthly payments, it doesn’t always make financial sense. Paying too much upfront ties up cash that could be used elsewhere, and since PCP isn’t structured for outright ownership, a big deposit won’t necessarily bring major benefits. If keeping the car at the end is a priority, some drivers prefer to spread costs evenly and put money aside for the final balloon payment instead.

Can a part-exchange be used as a PCP deposit?

Yes, a trade-in vehicle can be used towards the deposit on a new PCP deal. If the car being traded in is worth more than the settlement figure, the difference can go towards the next agreement, lowering the amount borrowed. This can be a great way to upgrade without needing a lump sum upfront.

The amount you borrow

Unlike HP, where the loan covers the full cost of the car, Personal Contract Purchase only finances a portion of the vehicle’s value. The amount borrowed is based on how much the car is expected to depreciate over the course of the agreement, not the car’s total price.

How is the PCP loan amount calculated?

PCP finance is structured around three key figures:

The car’s price today
The Guaranteed Minimum Future Value (GMFV)
The deposit paid upfront

The difference between the purchase price and the GMFV (minus any deposit) is what gets financed.

For example, a £30,000 car with a GMFV of £15,000 after three years means the car is expected to lose £15,000 in value over the contract term. If a £3,000 deposit is paid upfront, the amount borrowed would be:

£30,000 – £15,000 – £3,000 = £12,000 financed

This £12,000 loan is then spread across monthly payments. Explaining PCP finance simply – borrowers only pay for the car’s depreciation, rather than its full value.

How depreciation affects monthly payments

Depreciation plays a major role in PCP affordability. Cars that hold their value well (think premium brands like BMW, Audi or Lexus) often have lower monthly payments because the gap between the initial price and the GMFV is smaller. On the flip side, payments can be higher for vehicles that lose value quickly, as the finance company takes on greater risk.

This means two cars priced at £30,000 but with different depreciation rates could result in very different PCP payments:

Car A (low depreciation)

GMFV of £18,000 after three years.

Borrowed amount: £30,000 – £18,000 = £12,000

Car B (high depreciation)

GMFV of £12,000 after three years.

Borrowed amount: £30,000 – £12,000 = £18,000

Despite the same purchase price, Car B costs £6,000 more to finance, meaning higher monthly payments.

How to reduce the amount borrowed

Drivers looking to cut monthly costs have a few options:

Choose a car with strong resale value – A higher GMFV means borrowing less.
Increase the deposit – A larger upfront payment reduces the amount financed.
Opt for a shorter term – Lowering the contract length can improve the GMFV.
Negotiate a lower interest rate – A lower APR means smaller finance charges.

The balloon payment

A balloon payment is the final lump sum due at the end of a PCP agreement. Unlike HP, where monthly payments gradually cover the full cost of the car, PCP leaves a significant balance unpaid until the final stage of the contract. This unpaid balance is called the Guaranteed Minimum Future Value (GMFV) and is an estimate of the car’s worth at the end of the agreement.

This model keeps monthly payments low but leaves drivers with a decision at the end of the term. Three options are available:

Return the car – Walk away with no further costs
Buy the car – Make the balloon payment
Part-exchange – Trade it in for a new deal

What if the car is worth more than the balloon payment? Good news. If the car holds more value than expected, the extra amount can go towards a new finance deal.

We’ll cover all three in more detail below!

How does PCP work at the end of the term?

PCP finance explained – it keeps things flexible right up to the final stretch. When the contract ends, there’s no pressure to stick with one path. Drivers choose what works best for them. Whether it’s handing the car back, keeping it or using it to fund a newer model, the options stay open.

Here’s how it plays out:

Return the car

Nothing more to pay with this option. Just hand the car back to the lender and walk away.

Best for: Drivers who like to upgrade their car regularly or want flexibility at the end of the contract.

No extra cost if: The car stays within mileage limits and remains in good condition.

Possible charges: Exceeding mileage limits or returning the car with excessive wear and tear could result in fees.

Buy the car

Want to keep the car? You’ll need to cover the balloon payment in full. This figure is set at the start of the agreement and reflects what the car should be worth at the end of the term. No surprises. Just a final bill standing between you and outright ownership.

Best for: Drivers who want long-term ownership or find the car’s value higher than the agreed GMFV.

No more finance payments: Once the balloon payment is settled, full ownership transfers to the driver.

Consider the cost: The final payment can be hefty. Some drivers choose to refinance the balloon payment with another finance deal to spread the cost.

Part-exchange

If the car ends up worth more than the GMFV, the difference can go towards the deposit for a new PCP deal. A handy way to roll into a newer model without a big upfront cost.

Best for: Drivers who like upgrading without saving for a large deposit.

Equity boost: If the car’s market value exceeds the GMFV, the extra amount reduces the deposit on a new PCP deal.

No guaranteed profit: If the car holds less value than the GMFV, no equity remains for a new deal.

Choosing the right PCP exit strategy

Flexibility sits at the heart of PCP. No long-term commitment, no pressure to stick with the same car. Just options that fit different needs. Whether it’s upgrading, keeping or trading in, drivers stay in control.

Best choice for frequent upgraders? Hand the car back and start a new PCP deal.
Best choice for keeping the car? Cover the balloon payment or refinance.
Best choice for rolling into a new deal? Trade the car in and apply the equity towards a fresh PCP agreement.

Benefits of PCP

There’s lots to love about PCP finance. Here’s a closer look at the benefits:

Lower monthly payments

PCP agreements focus on the car’s depreciation rather than its full cost. Instead of covering the entire value, payments go towards the difference between its original price and its expected worth at the end of the contract. With smaller monthly costs than options like hire purchase (HP), this keeps budgets in check while keeping options open.

More car for your budget

PCP stretches budgets further. A standard finance deal might cover a reliable runaround, but PCP offers access to something newer, sleeker or better equipped. A mid-range trim instead of the base model, a hybrid instead of petrol, leather seats instead of cloth. For drivers after the latest comfort or tech without breaking the bank, PCP makes it possible.

Flexible at the end

PCP offers more than one way out. Pay the balloon payment and keep the car. Trade it in and roll any equity into a fresh deal. Or hand it back and walk away. No pressure to commit upfront. No long-term ties. Just options that suit different circumstances.

Smaller upfront costs

PCP explained – it makes car finance more accessible, with lower deposits, or sometimes none at all. No need to drain savings or hold off for months to build a deposit. Just a manageable way to get behind the wheel.

Equity potential

If the car’s value sits higher than the GMFV, the difference rolls into the next deal as a deposit. A model with strong resale value means a better starting point for the next agreement. While never guaranteed, this can work in favour of drivers looking to upgrade without saving separately for a deposit.

Drawbacks of PCP

PCP has some great benefits but it’s important to understand the full picture before committing. Here’s a look at some of the potential drawbacks:

Mileage restrictions

Every PCP agreement includes a mileage limit. Drive beyond it, and fees apply per extra mile. The cost might seem small per mile, but over the years, it adds up. Best to estimate mileage honestly at the start rather than face a surprise bill later.

Condition requirements

Normal wear and tear are expected, but anything beyond that might mean extra charges. Scratches, dents, scuffed alloys or a coffee-stained interior could lead to fees. Keeping the car in good nick avoids unexpected costs at the end of the contract.

Final payment required to own the car

PCP doesn’t include ownership at the end unless the balloon payment is settled. Drivers wanting to keep the car need to cover this amount, often requiring extra savings or a refinancing deal.

Total cost may be higher

Interest applies not just to the borrowed amount but also to the balloon payment. This means, over time, the total amount paid could exceed what a similar car would have cost with an outright purchase or HP. Weighing up affordability against flexibility is key.

How to cut your monthly PCP car finance payments

PCP already stands out for its lower monthly payments. But with a bit of strategy, those payments can shrink even further. Here’s how to make PCP even more affordable.

Increase the deposit

A bigger deposit means borrowing less from the lender. Less borrowing leads to smaller monthly payments, keeping costs manageable over time. Most PCP agreements require at least 10% upfront, but putting down more trims down repayments even further. Worth considering if savings allow, but balancing affordability is key. No point in sinking all available funds into a deposit if it leaves nothing for running costs.

Choose a car with slow depreciation

Cars lose value over time, but some hold onto their worth better than others. Luxury brands, electric vehicles with strong demand and popular models tend to retain value, making them better suited to PCP deals. A higher resale value means a lower balloon payment at the end, keeping costs lower throughout the contract. Checking resale trends before picking a car can save a fair bit over the term of the deal.

Extend the contract length

PCP agreements usually run for two to four years, but stretching to five years spreads the cost further. Monthly payments drop, making it easier to budget. A longer contract does mean paying more interest overall, but for those prioritising lower monthly outgoings, it’s a sensible trade-off. Don’t forget, keeping within the expected mileage limit is important! Going over could mean extra charges, even with a longer term.

Look for low APR deals

Interest rates play a big role in the overall cost of PCP finance. A lower APR reduces the total amount paid over time, so it’s worth shopping around to find the best deals. Some dealerships and manufacturers offer promotional APR rates at certain times of the year, so timing a deal well can also mean decent savings.

What you need for PCP finance

Before getting started with a PCP deal, lenders check a few key details to make sure applicants meet the requirements. Nothing too complicated but having everything in order speeds up the process. Here’s what’s needed:

Personal details – Full name, date of birth and residential address history (usually covering at least three years). Lenders like stability, so a consistent address history helps.

Employment details and income – Current employer, job role and income details. Self-employed? Some lenders ask for tax returns or bank statements as proof of earnings.

Bank details – Account number and sort code for setting up the monthly payments. Some lenders also check banking history to assess financial stability.

Identification documents – A valid UK driving licence or passport confirms identity. You might also be asked for proof of address, like a recent utility bill or council tax statement.

Credit history check – Lenders run a credit check to see past borrowing behaviour. A strong credit score helps unlock better rates, but options exist for those with less-than-perfect records.

With these details ready, the PCP process moves along smoothly. A bit of prep upfront makes all the difference.

PCP vs. other auto finance options

Still not sure if PCP is your ideal route? Now we’ve got PCP finance explained, let’s compare it to other options to get a better understanding of the pros and cons:

Hire purchase (HP)

HP agreements let you spread the cost of the car over a set term, but instead of options at the end of the agreement you own the car outright. It’s like paying off a mortgage and owning your home when the final instalment is made.

Personal contract hire (PCH)

PCH agreements involve leasing a vehicle throughout the duration of a contract. Unlike PCP and HP loans, PCH doesn’t involve borrowing money for car ownership. Instead, you initiate the leasing agreement with a non-refundable deposit and then make monthly ‘hire’ payments that give you use of the car. At the end of the contract, you’ll return the vehicle without the option to purchase it and become the outright owner. It’s important to note that PCH agreements often come with restrictions, including mileage limits and caps on acceptable wear and tear.

Personal loan

With a personal loan, you borrow a lump sum to purchase the car and own it from day one. Interest rates are usually significantly higher for personal loans.

Why choose My Car Credit for PCP finance?

At My Car Credit, we’re your trusted co-pilot when it comes to securing the best PCP finance deals. Why choose us for PCP finance?

Expertise: Our team has the knowledge and experience to guide you through the entire PCP process, from start to finish. If you need PCP finance explained, we have your back.

Variety: We work with a wide range of lenders to offer you the best PCP deals. Worried about having car finance declined? As well as high street banks, we partner with smaller lenders who can help you get finance, even if your credit score is less-than-perfect.

Choice: As well as partnering with a wide range of lenders, we offer a huge amount of choice when it comes to cars. No need to limit yourself to particular makes and models. We pride ourselves on helping every client secure the keys to their dream car, whatever that might be. It’s like having access to a huge showroom of cars, all in one place.

Flexibility: We tailor our PCP agreements to suit your specific needs, offering you a good amount of flexibility when it comes to things like deposit size, contract length and vehicle options.

Support: Need your Personal Contract Purchase explained? We’re here to answer your questions, provide guidance and make your PCP journey as smooth as possible.

Ready to get behind the wheel? Give us a call on 01246 458 810 to find out more about PCP finance options or email us at enquiries@mycarcredit.co.uk for a speedy response.

Frequently asked questions about PCP

What does PCP stand for?

Personal Contract Purchase.

Is PCP car finance a good idea?

PCP works well for low monthly payments and flexible choices at the end.

What if I want to end my PCP car finance contract early?

Early termination is possible but may include settlement fees.

How does PCP work at the end of the term?

The car can be returned, traded in or bought outright.

What are the risks of PCP car finance?

PCP keeps things flexible, but it’s not without its pitfalls. Go over the mileage or hand the car back with a few too many scuffs, and expect extra charges. That balloon payment at the end? Not exactly pocket change. And if the car’s value takes a nosedive, there’s no leftover equity to put towards your next set of wheels.

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

Am I eligible for car finance?

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

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

Buying your first car is an exciting milestone. You probably can’t wait to get on the road, whether it’s road trips with your mates or just a much easier commute to college or work. But even the bank of Mum and Dad can’t stretch to the cost of buying a car outright, which is where finance comes in.

Car finance for first-time drivers makes it realistic to get a good set of wheels without the massive upfront costs. It means you can swerve the dodgy second-hand car dealerships, breakdowns at the side of the road and ongoing costs for repairing an old banger.

It’s more common than you might think too. From May 2023-2024, more than two million cars were bought on finance in the UK. New drivers are no exception, whether you’re a teenager passing for the first time or an adult getting your licence later in life. Below, we’ll look at how you can get a new or used car on finance – including the challenges, different options and tips to improve your chances.

How do first-time drivers get car finance?

While drivers can pass their test at any stage in life, lots of people get straight into it from the youngest possible age – 17. Unfortunately, the most eager teenagers who learn to drive quickly and pass for the first time won’t be able to apply for finance just yet, as the minimum age is 18.

You might think you can get a parent to apply for finance on your behalf. However, this can be classed as fraud, as discussed in our article on finance for children.

From 18, all drivers can apply for car finance. You’ll need:

Your licence
Proof of income
Proof of address
And typically a selfie with your licence to prove your identity

Admittedly, young first-time drivers might struggle to get car finance from mainstream lenders because of limited or no credit history (more on this below). Fortunately, some financial institutions see past this – offering car finance specifically for younger drivers. As well as a more lenient approach to credit history, you can expect lower deposits and more flexible terms.

Why is car finance difficult to get for young first-time drivers?

So, you’re over 18 and ready to finance a car. There’s just one small problem – credit history. Even though you’re legally classed as an adult, you won’t have a credit profile that puts you on a par with your elders just yet. That’s simply because you’ve not been working, paying bills and making other repayments for several years – you’ve not had the time just yet!

Credit files are one of the main ways lenders check your eligibility and trustworthiness, so having limited or no credit history is obviously a stumbling block. It makes lenders cautious, because they can’t see evidence of you borrowing and paying back money to other companies.

That’s not the only risk factor either. Young drivers are seen as higher-risk borrowers due to their lack of driving experience. Drivers between the ages of 17 and 24 are over-represented in reported road accidents, compared to those aged 25 and above. This can put off lenders when the car you’re driving is the only asset securing your loan.

On top of that, there’s the income issue. When you’re on the bottom rung of the career ladder, your wage is likely to be lower – not to mention your job being less stable. Young people have the shortest tenures at jobs with 37.7% of 18-19-year-olds spending less than 6 months with an employer on average.

Types of car finance for first-time drivers

When shopping for car finance, you’ll see a variety of different options. They can be a little hard to decipher at first, which is why we’ve put together a quick and easy guide covering your options.

Personal contract purchase (PCP)

PCP contracts are one of the most widely used car finance options in the UK. Benefits include low monthly repayments and lots of flexibility. You start with a cash deposit, then repay the rest of the loan in fixed monthly payments, plus interest. Instead of purchasing the car, your repayments cover the cost of depreciation.

Because of this, most PCP loans have mileage caps to limit depreciation and minimise wear and tear. When your contract ends, you can choose to return the car and start a new contract on a brand-new vehicle, or you can make a final ‘balloon payment’ and own the car outright.

Hire purchase (HP)

HP loans generally start with a 10% deposit, followed by monthly instalments, plus interest. Unlike PCP contracts, your fixed monthly payments are put towards the total value of the car, not depreciation. This means you don’t have mileage caps and you’re the legal owner of the car at the end of the contract. No balloon payment necessary. You can either sell the car and start a new HP loan or keep it with no ongoing payments.

Personal contract hire (PCH)

Unlike PCP and HP loans that give you the option to own the car at the end of your contract, PCH agreements adopt a lease model. Your repayments aren’t put towards depreciation or the total cost of the car. Instead, you’re simply renting a vehicle for the duration of your contract.

This gives you more flexibility as you can switch cars every few years. It will also cost a bit less given that you’re not paying off the cost of the vehicle itself. However, it does mean that you’ll have mileage limits like a PCP deal.

Traditional personal loans

Another option is to get a personal loan from a bank or credit union. In this case, your loan isn’t tied to the car, so there won’t be any mileage limits or other restrictions. You’ll purchase the vehicle outright then pay off your loan separately.

However, because there’s no asset (the vehicle) to secure the loan, it can be harder to get approved. You’ll still have the challenges with your credit history, income and collision risk, without the collateral to reduce risk for the lender.

Steps to apply for car finance as a first-time driver

If you’re applying for car finance as a first-time driver, there are some steps you should take to make the process easier and avoid any hiccups.

Shopping around

You’ve probably heard it a thousand times before, but it always pays to shop around for the best deals and terms. Because of the risk factors we’ve mentioned above, car finance for first-time drivers might come with a higher interest rate. You can minimise the impact of this by comparing different lenders or using a broker to find the best deal for you.

Checking eligibility

You should always check your eligibility before applying with different lenders. This includes their own criteria as well as your credit score. Applying when you’re not eligible can have an impact on your credit score, as lenders might perform a hard credit search before rejecting your application. These searches leave a mark on your credit file, so having lots of them isn’t a good look.

Choosing the right car

Make sure you pick a car that fits within your budget too. If you’re applying for finance before searching for a car, lenders will give you a maximum loan as part of your terms. If you choose a car that doesn’t fit, you’ll need to pay a larger deposit to make up the difference.

Check terms and conditions

Finally, always check the terms and conditions before entering any finance deal. This will ensure you avoid any unexpected fees for things like wear and tear, excess mileage or late payments.

How to improve your chances of getting approved for car finance

There are a few ways to improve your chances of success when applying for first-time car finance.

Build your credit score

While you won’t have a long track record of credit for lenders to look at, you can still improve your score by being responsible with money. Pay bills on time, avoid accumulating too much debt and don’t make applications on a whim. For more tips, check out our article on improving your credit score.

Make a larger deposit

We mentioned the bank of Mum and Dad earlier. While it might not cover the cost of a car in full, they might be able to help with a larger deposit. Or perhaps you’ve got a bit of money saved up yourself.

The more money you put down up front, the less risk there is for lenders. It reduces the amount you need to borrow, which also reduces your monthly payments to improve affordability.

Use a guarantor

A guarantor is someone who agrees to make repayments to your lender if you fail to make them. It’s another layer of security for lenders which makes your application more appealing. Guarantor loans are a popular option for first-time drivers, if you have a parent, sibling or friend who’s willing to back you up.

Pros and cons of financing your first car

Below, we’ll look at the pros and cons of car financing for first-time buyers.

Pros:

Affordable monthly payments

Car finance for first-time buyers is simply a clever way to stretch out your payments over a pre-set timeframe. There’s no need to fork out thousands of pounds up front – which most first-time drivers don’t have. Instead, you can break the cost of your car down into manageable monthly payments.

Access to better cars

Many first-time buyers think they’re limited by a cash budget when shopping for a car. The truth is most new private cars in the UK are purchased using car finance. It’s a great way to boost your budget and unlock access to more desirable models. With car finance, you can afford a higher-end vehicle or a new model without the need for a huge deposit.

Building your credit history

Credit scores have to be earned, which can make things difficult for Brits without a solid borrowing history. If you have a limited financial paper trail, car finance for first-time buyers can be a great way to improve your credit score and prove to lenders that you’re a responsible borrower. Moving forward, this will help you secure other loans like a house mortgage.

Cons:

Interest and fees

It’s worth noting that car finance agreements include interest and additional fees, making the overall cost higher than the original vehicle price.

Long-term commitment

Car finance is a long-term financial commitment, which can be restrictive, especially if your financial situation changes. You should consider whether you’ll be changing jobs, moving house or making any other big purchases over the length of your repayment term.

Risk of repossession

If you fail to meet your monthly payments, the lender may repossess your car, leaving you without a vehicle. Make sure you factor in other running costs like insurance and fuel as well as general living costs to avoid overspending.

What are the best cars for first-time drivers?

There are four main factors to consider when selecting a car to finance as a first-time driver…

Insurance

The average young person pays double for their car insurance, compared to people over 35. So, you’ll want a car with low insurance premiums to keep costs to a minimum.

Fuel economy

The cost of petrol and diesel can soon stack up, so it’s best to choose an economical car to save money on running costs.

Reliability

Having a reliable car will reduce maintenance and repair costs. According to the What Car? Reliability Survey, the top contenders are Lexus, Toyota, Mini, Suzuki, Mitsubishi, Honda, Hyundai and Kia.

Affordability

Finally, you’ll want to balance all of this with your budget. Here are some of the most affordable cars for first-time drivers based on all of the above:

Volkswagen Polo
Hyundai i10
SEAT Ibiza
Skoda Fabia
Fiat Panda

Is car finance right for you as a first-time driver?

Car finance for first-time drivers has its challenges – whether it’s limited credit history, low or unstable income, or just lender caution in general. With specialist lenders, it’s possible for most first-time drivers to find a deal that suits their needs. In doing so, you can spread the cost of your next car and maximise your budget to buy something that’s more reliable.

An important part of the process is choosing between the different car finance options such as PCP, HP, leasing and personal loans. You should also think carefully about your budget, affordability and long-term financial health before making a decision.

Are You a First-Time Driver Looking for Car Finance?

If you want to get a better idea of how much car finance will cost, try our car finance calculator. Simply enter the amount you need to borrow along with your preferred repayment term and a rough idea of your credit rating, then get a handy estimate of the monthly repayments.

Need more personalised support? You can also contact our Car Credit Specialists on 01246 458 810 or by emailing enquiries@mycarcredit.co.uk.

Frequently asked questions

Can I get car finance as a first-time driver?

As long as you’re over 18, it’s entirely possible to get finance for first-time car buyers. You may need to compare deals from specialist lenders because of your limited credit history or consider a guarantor loan to strengthen your application.

What is the minimum age to get car finance?

The minimum age for car finance is 18 in the UK.

What types of car finance are available to first-time drivers?

Once you’re 18, you can choose between several types of car finance for first-time drivers, including personal contract purchase (PCP), hire purchase (HP), personal contract hire (PCH) and personal loans from a bank or credit union.

Will car finance be more expensive for first-time drivers?

Car financing for first-time buyers can be more expensive because of the increased risk for lenders – due to limited credit history, less stable income and a higher risk of road traffic incidents. As a result, lenders will often charge higher interest rates for first-time drivers to make the reward worth the risk.

Can a first-time driver get car finance with a guarantor?

Using a guarantor can increase the chance of approval for first-time drivers, but you still need to be 18+ to apply. If you make all your payments on time, your guarantor will simply be a name on your application. However, they will have to make payments on your behalf if anything is missed.

Is it better to buy a car outright or use finance as a first-time driver?

This depends on your personal preferences and financial circumstances. Buying a car outright means you’ll pay less overall, without any interest or other fees. However, it requires a large up-front payment that most first-time drivers can’t afford. Finance provides more flexibility by spreading the cost, though you do have to pay interest and there may be mileage limits and other terms depending on your agreement.

What should I consider before applying for car finance as a first-time driver?

You should consider the different car finance options – PCP, HP, leasing and traditional loans – as well as the option to buy outright. Take into account your up-front budget, monthly affordability and long-term financial health.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Can You Get Cars on HP with No Deposit?

What is Hire Purchase? – Simple HP Explanation

PCP Term: Everything You Need to Know

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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How Does Auto Finance Work?

Lady applying for auto finance in a cafe

With average car prices sitting at around £38,000 for family-friendly SUVs and almost £22,000 for compact hatchbacks, paying cash simply isn’t an option for many Brits. This is where auto finance steps up. Designed to get you behind the wheel of your dream car faster, auto finance is a great way to boost your spending power.

So, how does auto finance work? Read on for a complete guide that covers everything you need to know about auto finance. We cut through jargon, unpack the acronyms and break down exactly how auto finance works.

What does ‘auto finance’ mean?

The term ‘auto finance’ is relatively self-explanatory. Like other financial contracts, such as credit cards and house mortgages, auto finance makes big purchases more affordable for everyday Brits.

How does auto finance work? The umbrella term describes a series of credit agreements between the buyer and lender. We take a closer look at the different types of auto finance later on in the article.

Instalments are generally made monthly, though this can vary depending on the type of auto finance contract. Many auto finance contracts are also restricted by caps on mileage and wear and tear. This can work in your favour if your priority is to drive the latest models packed with next-gen technology and driver-assist features.

Does auto finance include interest?

How does auto finance work in terms of interest? Most auto finance contracts incur interest. However, rates are generally far more affordable than taking out a personal loan with a bank or private lender. Interest rates vary depending on the type of auto finance loan you take out.

Auto finance eligibility

Eligibility for car finance depends on a variety of factors. Most importantly, you’ll need to be at least 18-years old and a legal resident of the UK. Tick both these boxes and your chances for auto finance approval drastically increase. Lenders will then start looking at things like your credit score.

What are the different kinds of auto finance?

There are several different types of auto finance to choose from. Finding the right fit depends on your personal preferences and financial situation. We take a closer look at the different options below…

Car loans

Car loans are essentially personal loans designed to purchase vehicles. Cash is borrowed directly from banks or private lenders and used to fund the purchase of a vehicle. You become the outright owner of the car and pay back your loan in instalments, plus interest.

Personal Contract Purchase (PCP)

Low monthly repayments and plenty of flexibility make PCP contracts one of the most popular car finance options. How does auto finance work for PCP contracts? You kickstart your PCP loan with a cash deposit. The larger your initial deposit, the lower your monthly repayments. PCP repayments are low as you don’t pay for the car itself, rather you cover the vehicle’s depreciation in value. Most PCP loans include mileage caps designed to limit wear and tear.

At the end of the contract, you can choose to make a final ‘balloon payment’ to become the owner of the car. This covers the remaining value of the vehicle. Alternatively, you can return the car and start a new contract. This makes Personal Contract Purchase loans a great option for motorists who love to drive the latest models.

Hire Purchase (HP)

HP loans are similar to PCP contracts, with a few small adjustments. How does auto finance work for HP loans? Deposits are usually around 10%, followed by fixed monthly payments for the duration of the contract. Interest rates are competitive and repayment terms are generally flexible. Unlike PCP loans, HP contracts don’t usually restrict you with mileage caps. This makes them a great option for motorists who plan to use their car for business and leisure.

Like PCP loans, you don’t legally own the vehicle unless you make a final balloon payment at the end of the contract. Otherwise, you’re free to return the car at the end of the contract, without any further payments.

Personal Contract Hire (PCH)

PCH leasing agreements see you lease a vehicle for the duration of your contract. There’s no option to purchase the car and become the outright owner at the end of the contract. Unlike PCP and HP loans, you’re not technically borrowing cash to fund the purchase of a car.

Instead, you pay a non-returnable deposit to initiate the leasing agreement and continue to make monthly ‘hire’ repayments. You’ll need to return the car at the end of the contract. Most PCH agreements are restricted by mileage and wear and tear caps.

Do I need a good credit score for auto finance?

Most lenders will run a credit score check before approving car finance applications. This helps establish your borrowing history and determine the level of risk involved. At My Car Credit, we always start with a soft search. Unlike hard searches, this entry-level financial history check doesn’t leave a mark on your credit score. If you want to know more about your credit score to finance a car, a soft search is the best place to start.

A good credit score will always help you unlock the best car finance deals. So, how does auto finance work without a good credit score? With the right help and guidance, many applicants with poor credit are eligible for car finance. The key is to find a car finance broker with a large panel of lenders. This allows brokers to look beyond traditional lenders and match your application with other options.

Find the best auto finance deals with My Car Credit

Tracking down the best auto finance deals doesn’t have to be stressful. At My Car Credit, our goal is to connect you with the top lenders in the UK, so you can enjoy stress-free auto finance and the best possible interest rates.

Want to know more about auto finance? Get in touch with our expert team today to learn more about how auto finance works – and your different options.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How Does PCP Work at the End of the Term?

Can You Modify a Car on HP Finance?

Balloon Payments Explained: What, Why & How

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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How Many Years in a Car Loan Term?

Woman working out length of car loan on a calendar

If you’re looking to get a car finance quote, there are a number of factors to consider. Firstly, you’ll want to consider what kind of car finance deal you want, as there are a number of different types.

The most popular options tend to be hire purchase (HP), personal contract plans (PCP) and personal contract hire (PCH). The right kind of car finance for you will depend on variables such as whether or not you want to own the car at the close of the term, as well as the kind of repayment terms that you need. Another major factor to consider is how many years a car loan term lasts.

How many years in a car loan term?

Car finance is becoming an increasingly popular way to purchase a vehicle. As an accessible, affordable way of paying off a car, car finance allows you to remain in control of your budget and know what you owe when. So, exactly how many years are in a car loan term?

According to Experian, the average length of a car loan for new vehicles has increased to 72 months, with the average length of a car loan for used vehicles growing similarly to 65 months. This marks a significant increase from the standard car loan periods, which usually consist of agreements of 24, 48 or 60 months.

The appeal of longer car loan terms tends to be the fact that monthly repayments will be lower. However, you’ll be making more of them, and you’ll therefore be paying more in interest, so it’s worth considering if a longer car finance term really is beneficial for you in the long run.

Secure your ideal car finance today

If you’re looking for car finance, contact My Car Credit on enquiries@mycarcredit.co.uk, We’ll assist you in establishing your car finance needs, including the length of the loan agreement, and help you to find a deal that matches your unique circumstances, even with a poor credit score.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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How Do Car Finance Calculators Work?

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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What Does ‘Finance’ Mean When Buying a Car?

When it comes to car finance, there’s a lot of jargon and acronyms, and it’s easy to find yourself questioning what each finance agreement really means.

This post aims to help you get to grips with what different types of finance actually mean when buying a car, and how they work. Once you’ve understood the different kinds of agreements available, you’ll be on your way to securing a car loan quote that will work for your circumstances.

So, what does ‘finance’ mean when buying a car? Read on to learn more…

What does ‘finance’ mean when buying a car?

In essence, car finance makes the purchase of a car more affordable. It’s a credit agreement between you and the lender, allowing you to make full use of the vehicle whilst paying it off in cost-effective monthly instalments according to a pre-agreed schedule. The amount you pay off will also include additional interest on top.

What are the different kinds of car finance?

The right car finance for you will depend on the kind of agreement and terms that you’re looking for, as well as your own driving preferences and needs.

Car loan

A car loan is a type of personal loan but is specifically designed for use on vehicles.

With a car loan, you borrow the money from either a bank or building society. Once you’ve bought the car, you are its outright owner. You’ll repay the car loan over time via instalments, with added interest. Typically, a car loan is more likely to be granted to those with a good credit score – there are other kinds of car finance available for those with poor credit ratings.

Personal Contract Purchase (PCP)

Do you like mixing up the vehicles you drive? Are you happy sticking to mileage caps or paying excess fees for any vehicular wear and tear? Would you like flexibility in choosing whether or not to own the vehicle at the termination of the agreement? Then PCP is potentially the car finance for you. In fact, PCP is the most popular kind of car finance because of its low monthly repayments and flexibility.

With PCP car finance agreements, you’ll pay a deposit and monthly instalments (plus interest). The larger your deposit is, the lower these payments will be. These payments are typically lower than other kinds of car finance as you’re only paying for the car’s depreciation in value during the time that you’re using it.

You can also choose whether or not you want to own the car once you’ve fully paid off the finance. If you do, you’ll pay a final balloon payment to make up the remaining value of the car. If not, you can hand the car back to the dealer with nothing more to pay. Be aware that you won’t own the car unless you opt to do so at the agreement’s termination.

Hire Purchase (HP)

Hire purchase car finance is similar to PCP, but a little more straightforward. You’ll typically make a deposit of around 10% with HP finance, then make fixed monthly payments according to a pre-determined schedule. Repayment terms can be relatively flexible, and there are often competitive interest rates with HP finance.

Like with PCP, you won’t own the vehicle until you’ve made the final repayment of your agreement, but you can opt to do so with a final balloon payment. After this, you can choose to part exchange, sell or keep the car. However, unlike PCP, you won’t usually face mileage caps, so HP finance may be preferable for you if you’re regularly making long journeys.

Personal Contract Hire (PCH)

PCH car finance is when you lease the car, which is why it’s also known as a car leasing agreement. You will never be its outright owner – you’re essentially hiring it until the end of your finance agreement. In this way, PCH differs from either HP or PCP. Though it’s technically not car finance, as you’re not borrowing money, you’ll still see this term frequently used when discussing car financing options.

With PCH, you’ll typically pay a non-returnable deposit as well as your monthly repayments. At the agreement’s end, you’ll hand the car back. If you’ve gone over the mileage cap or have made unreasonable vehicular wear and tear, you’ll pay a penalty fee.

Find the right car finance for you with My Car Credit

Shopping around for car finance can seem stressful, but it needn’t be. My Car Credit aims to make the process of securing your dream deal stress-free and streamlined. Contact our expert team today on enquiries@mycarcredit.co.uk to start your car finance journey.

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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Can I Finance an Automatic Car?

There are a number of benefits to automatic cars. From fuel efficiency and ease of use through to being more comfortable to drive during stop-start journeys in urban centres, there’s a reason why people opt for automatic vehicles. But can you secure car finance on an automatic car?

Can you finance an automatic car?

Yes, you absolutely can finance automatic cars. Your finance broker will be able to work with you to find a car finance deal that suits your circumstances, as well as covering the kind of car that you’re looking for, whether that’s a manual or automatic model. In fact, My Car Credit can even help you find car finance with poor credit, working with all kinds of drivers from a range of different backgrounds and with differing requirements.

This is obviously great news if you passed your test in a car with an automatic gearbox, as you’ll only be licensed to drive vehicles with automatic transmissions. However, many drivers simply prefer automatic cars even if they can drive manually.

Automatics can be more fuel efficient depending on your driving style. As well as better fuel economy, they eliminate the need to change gear, providing a smooth driving experience even in high traffic with no need to keep your foot over the clutch pedal. Not to mention making hill starts a breeze.

However, it’s worth noting that automatic cars may be more expensive to finance than manual options.

Why can automatic cars be more expensive to finance?

You’ll likely find that purchasing a manual, as well as insuring it, will tend to be cheaper than purchasing or insuring an automatic.

This is because automatic gearboxes such as continuously variable transmission (CVT) are more complex than manual ones. It requires more sophisticated technology, as the gearbox essentially chooses what gear you’re driving in. You’re just choosing between drive, park and reverse.

As such, automatic gearboxes tend to require more kit – meaning that they’re more expensive to produce, and more expensive to fix too. It also means that automatic vehicles have higher insurance premiums and are more expensive to buy in the first instance.

You’ll likely find that your finance agreement is therefore more expensive too, in order to reflect these costs. This may change over time as automatics become the norm. That’s because electric vehicles don’t need to change gear at all, so there’s no need for a gearbox.

As petrol, diesel and full hybrid cars are phased out, new and used automatic cars will become the norm, which could increase supply in line with demand to reduce costs.

Finance – automatic car options

Despite the higher cost, it’s well worth investigating your finance options if you’re set on cars with automatic gearboxes.

There are three main vehicle finance options, other than paying upfront with cash or via a personal loan. These are personal contract purchase (PCP), hire purchase (HP), and personal contract hire (PCH). All of these different kinds of car financing have advantages, depending on your needs as a driver.

Hire purchase

Hire purchase (HP) is arguably the simplest type of car finance for new and used automatic cars – as well as manual vehicles. The cost of your next car is broken down into monthly payments, plus interest. You then make these payments over the course of the repayment term, which can typically range from 3 to 5 years, until the cost has been paid for in full.

It’s very similar to a conditional sale, except that hire purchase has a small fee when you finish your agreement and purchase the car (rather than upgrading to a different vehicle, for example).

Personal contract purchase

Personal contract purchase (PCP) is another popular option for automatic cars. It’s similar to HP, but with a larger final payment. This is known as a balloon payment, which can be made if you want to buy the car outright.

Alternatively, you can opt out of the final payment and give the car back. In many cases, the money you pay will cover the car’s depreciation over the repayment term, with the balloon payment covering all of the interest (depending on representative APR) or a large portion of it.

Personal contract hire

Also known as leasing, PCH means you pay to use a vehicle for the length of your term. It takes the commitment out of your car search, as you know you’ll be able to switch to a new ride at the end of your deal – whether that’s automatic or manual.

Which is best for you?

Owning outright

One of the main factors when financing your next set of wheels is whether you want to own outright. If you definitely don’t, PCH is the best option, allowing you to continuously switch to your next car and drive newer models. If you definitely do, HP is for you. Alternatively, PCP offers more flexibility with the decision made at the end of your term.

Mileage

Mileage limits are another consideration. These are most common for PCP and PCH agreements to avoid excessive depreciation of the car’s value if you’re handing it back. You’ll need to pay if you exceed mileage limits, with charges per mile agreed as part of your deal.

If you don’t want to worry about mileage, HP may be the most suitable option. However, you’ll still need to check your agreement to make sure you don’t need to pay anything extra.

Availability

However, you may find that your finance provider will only finance an automatic car via one kind of finance deal. Whether or not that deal works for you will depend on your unique circumstances. That’s why it’s worth using a finance broker like My Car Credit, as you’ll be able to get the most competitive deal from our panel of lenders, rather than being restricted to just one.

Secure automatic car finance with My Car Credit

Compared to a manual car, one with an automatic gearbox can provide better fuel economy and an easier drive. With many new cars being automatic, there’s a better range than ever to choose from.

If you’re looking for finance on an automatic vehicle, find out how My Car Credit can help. Whether you want to discuss your finance options or your eligibility for finance, we’re on hand to support you through every step.

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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What is a Balloon Payment on a Car Loan?

The car loan industry has its fair share of jargon, and as a prospective buyer, it’s important to understand the lingo. “Balloon payment” is one of the most common terms you’ll encounter when shopping for loans, which is why we’ve dedicated an entire article to it.

Read on to find out more about the definition of a balloon payment on a car loan, what to expect and how to get the best deals on vehicle finance.

What is a balloon payment on a car loan?

The concept of a balloon payment on a car is relatively simple. It’s a final instalment, paid to the lender in a lump sum at the end of your loan. The balloon payment is usually larger than other previous payments and is designed to ensure the lender isn’t out of pocket.

Balloon payment car loans are offered on two types of finance agreements – Personal Contract Purchase (PCP) and Lease Purchase. We take a closer look at each below:

PCP balloon payment

PCP loans are one of the most popular ways for Brits to get behind the wheel of a new car. Most contracts span for three to five years and require monthly payments. At the end of the contract, you’re offered the option of making a final balloon payment to purchase the car outright. Also called an Optional Final Payment, this final instalment gives you full ownership of the car.

How a PCP balloon payment works

At the beginning of your loan, the lender calculates the balloon payment based on the Guaranteed Future Value (GFV). This is the predicted resale value of the car at the end of the agreement. The balloon payment is designed to cover the remaining value of the GFV.
The GFV doesn’t change over the life of your contract, regardless of whether the value of the car fluctuates.
After making your final balloon payment, you take legal ownership of the car.

Think a PCP loan could be the right solution for you? Fast and easy to use, our car loan approval calculator is a great way to get the ball rolling and find out how far your budget can take you.

Lease Purchase (LP) balloon payment

LP agreements give you the option to pay a percentage of your loan at the end of the contract. This figure is called the balloon payment and unlike PCP loans, it’s not optional. Over the lifetime of the agreement, you’ll need to set aside cash to pay off the balloon payment. Once the balloon payment has been made, you take on full ownership of the vehicle.

How an LP balloon payment works

At the start of the contract, you and the lender agree on a set amount to defer. For example, a car may cost £16,000 and you choose to defer £4000.
The remaining £12,000 is paid over the next four years, in monthly payments.
After making your final monthly instalment, you top up your balance with the balloon payment of £4000. This gives you legal ownership of the vehicle.

The benefits of a balloon payment on a car

Lower monthly repayments

Opting to make a balloon payment at the end of your contract is a great way to unlock lower monthly repayments. You’re essentially deferring a percentage of the total cost until the end of your finance agreement. This brings down your monthly repayments and can make it easier to incorporate a car loan into your budget.

Stretch your budget further

For many motorists, balloon payments are a great way to stretch the budget further. Instead of settling for a less-than-ideal vehicle, a balloon payment allows you to defer part of the cost and secure the keys to your dream car. With a responsible attitude towards finance, there’s plenty of time to save for your balloon payment.

Do all car loan contracts include a balloon payment?

No, not all contracts include a balloon payment. Options like Hire Purchase (HP) agreements incorporate the total cost into your monthly repayments. This means there’s no need to make a balloon payment at the end of your contract.

Can I refinance a balloon payment car?

We get it. Things come up and despite the best intentions, it’s not always possible to cover your balloon payment at the end of your contract. If you find yourself in this situation, it is possible to refinance a balloon payment car. Agreements usually take on a Hire Purchase model and spread the cost of your balloon payment across several months or years. At the end of the contract, you become the legal owner of the vehicle.

It’s worth noting that before opting to refinance a balloon payment, you should consider the current value of the vehicle compared to the cost you’ll have to absorb to keep it. If the vehicle is worth less than the balloon payment, it’s generally best to return it and purchase a similar second-hand car for less. Similarly, if the car is worth more than the balloon payment, it’s worth refinancing and committing to full ownership.

If you think refinancing your balloon payment could be a good option, the first step is to reach out to your lender. It’s also worth getting in touch with our team to discuss refinance options. Our panel includes plenty of lenders willing to offer balloon payment finance plans designed to help you stay behind the wheel.

Find out more about balloon payments

Want to know more about balloon payment car instalments and the different types of loans available to you? Send us an email or give us a call on 01246 458 810 to chat to an experienced team member. We’re here to help, so don’t hold back when it comes to questions and queries.

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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Love the charm and character of older cars but unsure about whether they’re eligible for finance? In this hands-on guide we’ll answer “what is the oldest car a bank will finance”. Our goal – to help you get behind the wheel of a car with its own unique story to tell.

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Condition

Rarity

Appraisal and valuation

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Personal Loans

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Consider specialty lenders

Insurance requirements

The bottom line on financing old cars

Secure the keys to a classic with My Car Credit

Rates from 9.9% APR. Representative APR 10.9%

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At My Car Credit, we understand that when it comes to purchasing your dream set of wheels, budget can be a barrier. This is where Personal Contract Purchase (PCP) finance comes in. Flexible and affordable, the auto finance option is one of the most popular ways to purchase a car in the UK.

What is PCP car finance?

No big upfront payments

PCP finance explained: how does finance work on a car?

Deposit – the upfront payment

How much is a PCP deposit?

Can you get a PCP deal with no deposit?

What happens to the deposit?

Is it worth paying a bigger deposit?

Can a part-exchange be used as a PCP deposit?

The amount you borrow

How is the PCP loan amount calculated?

How depreciation affects monthly payments

How to reduce the amount borrowed

The balloon payment

How does PCP work at the end of the term?

Return the car