What’s the best way to finance a new car? If you don’t quite have the funds to buy a new car outright, you’ll be asking yourself this very question. In truth, there are several options, so it’s important to find the one that’s best for you.

Read on as we look at four of the best ways to fund your big purchase. But first…

Why would you finance a new car?

Whether it’s the fresh smell of the interior or the flawless touch of the steering wheel for the first time – nothing beats that new car feeling. While the most obvious way to pay for a new car is using your savings, not all of us have all of the funds needed up front.

Even for those who do have some savings put aside, it’s not always the best route. You might prefer to keep your savings for a rainy day and pay for the car gradually over time. That’s where car finance comes in. Financing a new car essentially means borrowing money so you’re able to afford a new car, then paying it back once you’ve got your new wheels.

Popular ways to finance a new car

Whether it’s brand new or just new to you, there are actually a number of ways to afford a new car. Here are some of the most popular:

1.    Bank loan

When you need money, it’s only logical that many people’s first stop is the bank. While it works for some people, this option could be a bit too long-winded for some of the more eager drivers out there.

After a face-to-face meeting to discuss your loan, the bank will ask for seemingly endless documents to get your application sorted. They’ll also perform a full credit check, which could damage your credit score.

2.    Car finance through the dealership

Another option is to get car finance directly through a dealership, which has two possibilities:

  • Hire purchase – After paying a deposit of typically around 10%, you’ll make monthly repayments until the car has been fully paid off.
  • Personal contract purchase – Alternatively, you can pay lower monthly instalments, leaving a final (larger) balloon payment at the end of the contract.

On the face of it, this seems very convenient. After all, you’d only have to make one stop when you’re buying your new car. However, like a bank, many of these dealerships will also do a hard credit check, which could put a dent in your credit score.

On top of that, because you’re borrowing directly from the dealership, the car isn’t technically yours until the full loan is repaid. For some, that can put a serious blemish on the ‘new car feeling’. In some cases, dealerships will also enforce an annual mileage limit or stop you making any modifications to your vehicle as you don’t technically own it.

3.    Personal loan

Maybe you know someone who’s got a bit of spare cash, that could help you afford a new car. This option has clear advantages. Borrowing off a friend or family member usually means no interest – and even the most scrupulous relative or friend isn’t likely to perform a hard credit check.

However, ask anyone who’s gone down this route, and they’ll likely warn you off. Aside from feeling like a burden, borrowing off someone you know means you’ll constantly be in their debt. Enjoy giving them lifts everywhere…

If you’re ever late in paying or can’t repay them, you could even see your relationship ruined completely. It’s just not worth it when there are other ways to finance a new car.

4.    Online car finance

One of the best ways to finance a new car is with online car finance. You can arrange your car finance before you’ve even found your car, then simply choose the car you want from any car dealer. Rather than borrowing directly from the dealer and paying them off gradually, the money will be transferred immediately to them so your car is completely yours the day you buy it.

There’s no hard credit check, meaning no impact on your credit score – and there’s much more flexibility for applicants with poor credit scores, who might be rejected by banks or car dealerships.

Car credit made easy

At My Car Credit, we want to make it easy for drivers to be able to afford a new car. Using our online loan calculator, you can get an instant estimation for your car finance based on the price, repayment duration and a rough idea of your credit score.

Based on the result, you can then choose to apply for finance or give it a miss – there’s no obligation either way. Best of all, there’s no impact on your credit score.

If you have a poor credit history, don’t worry – we can help with a bad credit finance too. Give it a try today to take the first steps towards that new car feeling!

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating


  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed


  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs


  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit


  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past


  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan

X monthly repayments of

Typical rate

Loan amount

Total payable




*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!