Opting for monthly payments is one of the smartest decisions you can make when purchasing a used car. Many Brits think payment plans are just for new vehicles and as a result, don’t ask “can you pay monthly for a used car?” when shopping for a second-hand ride. This is a big faux pas as car finance offers some fantastic benefits; when done right.

Want to know more? Read on as we answer all your questions about can you pay monthly for a used car.

Scenarios where used car finance steps up

Below, we explore some scenarios where used car finance can step up as a great purchasing option:

You want to stretch your budget

With the latest research from Auto Trader revealing the average cost of purchasing a used car in the UK is whopping £18,000, even second-hand vehicles are out of reach for many Brits. If you think this sounds high, you’re probably not alone. Over the past year, the typical cost of a pre-owned vehicle has increased by around £4,000. Large, family-friendly models are the most coveted, though the drastic price increase of almost 32% has hit all vehicle types.

If you’ve got a healthy deposit but can’t afford to pay the full amount in cash, car finance can help stretch your budget. It’s not about biting off more than you can chew and splurging on a vehicle you can’t afford. Instead, car finance can be a clever alternative to get behind the wheel of a used car within your budget, only faster.

Crunching the numbers is important, so take the time to factor in variables such as your budget, cash deposit, preferred loan term and your credit score, which can affect the interest rates you’re eligible for. Our cost of car finance calculator is a great place to start. 

You want to boost your credit score

Committing to monthly payment plans, such as a car finance loan, can be a great way to boost your credit score. If a big financial move like applying for a mortgage or increasing your credit card limit is on the horizon, car finance can be a great way to improve your reputation as a borrower and prove to lenders that you’re a responsible applicant.

You want to be a competitive buyer

Factors like the global semiconductor chip storage, supply chain issues caused by the pandemic and conflict between Russia and Ukraine have hit the used car market hard. According to Richard Walker from Auto Trader, “the speed in which used cars are selling has also accelerated significantly, with the average car taking 11 days fewer to leave forecourts in February 2022 when compared to the same period last year.”

Demand for used cars is high which means you’ll likely face competition from other buyers. Car finance can help you make a realistic offer on a used car and give dealers the peace of mind that payment is guaranteed.

Understanding loan types for used cars

As a used car buyer, you enjoy the same auto loan options available with new models. These include:

Personal contract purchase (PCP)

PCP loans are one of the most popular ways to pay for used cars. Offered by car dealerships and independent lenders, they allow you to spread out payments for your vehicle over three to five years. You may need to make a cash deposit but options are available without.

Payments are calculated using the price of the car, the interest rate (APR) of your loan and most importantly, the expected depreciation rate of the vehicle. Your lender will calculate a guaranteed minimum future value (GMFV) and at the end of the loan, you’ll have the option to make a ‘balloon payment’ equal to the GMFV to keep the car. Alternatively, you can use the GMFV to fund a new PCP agreement.

Personal contract hire (PCH)

PCH loans are another great way to get into the driver’s seat of a used car faster. Also known as car leasing, you pay a cash deposit, then continue to make monthly payments for the duration of the lease term. Most agreements span for between two and five years, with longer terms translating to lower monthly instalments. At the end of the contract, you’ll give the car back to the dealer.

Hire purchase (HP)

As the name suggests, HP loans see you ‘hire’ a vehicle for a fixed period, usually between one to five years. You may need to make a cash deposit, but no-deposit options are available, then continue to make monthly instalments over the course of the loan. At the end of a HP plan you’ll have the option to take ownership of the car by paying a transfer fee.

Personal loan

If you want to own your car outright, a personal loan can be a good way to boost your budget. A lender will agree to a fixed sum, which you’ll use to purchase a used car. You’ll then repay the loan in monthly instalments, usually spread out over a year or more. Generally, the higher your personal loan, the lower your APR will be.

Can you pay monthly for a used car?

The final verdict on whether you can pay monthly for a used car? Absolutely. Auto finance can be a terrific way to pay for a used car, with different benefits appealing to different buyers.  

Ready to get behind the wheel of your dream used car? Whatever your budget or credit rating, we’re here to help. With access to one of the biggest panels of lenders in the UK, we have the connections to secure you the best possible deals on finance for used vehicles.

You can calculate car finance and apply without impacting your credit score. Alternatively, get in touch by email or give us a call on 01246 458 810 to find out more about how can you pay monthly for a used car.

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!