How to Calculate Finance on a Second Hand Car

Row of second hand cars at a dealership

New cars might stand out for their state-of-the-art features and ‘new car smell’, but used cars have plenty of their own benefits too. There are more second-hand motors on the road than ever before, which means you could find yourself in a position where you want to purchase one. However, there are some myths surrounding the industry, the main one being that they’re so much cheaper than brand new, so you can afford to buy a used vehicle outright.

In reality, most people can’t since second-hand cars are still quite expensive. Despite being much more affordable than brand new models, you’re still looking at a total of several thousand pounds, which exceeds most people’s rainy-day fund. Thankfully, second-hand car finance makes it more affordable to buy a used car and make a substantial purchase less substantial.

Still, you need to know how much the deal will cost before you sign on the dotted line. Otherwise, the agreement might not be suitable. With that in mind, here’s how to calculate finance on a used vehicle.

Can you get finance on a second-hand car?

There’s a perception that second-hand car finance isn’t available because of the cost of used cars. According to Money Saving Expert, new motors depreciate at a rate of 27% in the first 12 months, meaning vehicles that are only twelve months old are much cheaper than their counterparts.

Yet, 27% might mean that the value is still above £15,000 or £20,000, which means you’re going to need help from a lender. Turning to car finance is essential as the deals are designed for drivers’ needs. It’s worth remembering that private sellers won’t offer the service as they simply want to offload the vehicle and make a small profit.

Of course, you’re not guaranteed to be accepted just because you applied. There are factors that determine the outcome, so let’s take a look at a few:

Credit rating

Your credit rating, or credit score, is the first thing lenders will look at before signing you off. If it’s not high enough, you might need to take certain measures to boost it, such as paying bills more punctually or avoiding hard checks. Another option is to use your credit card more regularly because you might be rejected if you don’t have any evidence of your spending habits.

The length of the deal

A longer agreement will play into your hands. Typically, car finance deals can range from anywhere between three to seven years, with six being the average. While you will pay extra the longer it lasts, the monthly payments are smaller because they are stretched over 72 months instead of 36 months.

Size of your downpayment

You can lower your finance premiums by putting down a bigger downpayment. The deposit reduces the risk for lenders and therefore can lower the rate you pay. After all, they already have a portion of the loan back, depending on the size of your deposit. However, it’s worth mentioning that you don’t need to pay a deposit to take out car finance.

At My Car Credit, we know how important it is for our customers to be accepted. That’s why we analyse a range of factors before deciding, and why we’re always happy to offer help and advice to any applicants.

How to calculate second-hand car finance

We understand that numbers can confuse people, which is why lots of motorists decide to avoid second-hand car finance in the first place. It can seem too complicated, so they steer clear of what they don’t understand.

That’s a healthy strategy. However, you don’t have to fall into this category because working out the cost of car finance is simple. You only have to do the following:

  • Take the cost of the car
  • Divide it by the number of months in the agreement
  • Add in the rate of interest

Once you have done that, you can clearly see how much you will pay overall and at different periods throughout the deal. For example, you can see the monthly fees, and use them to calculate your overall incomings and outgoings. As a result, you will know whether a second-hand car is affordable in a matter of minutes!

My Car Credit’s car finance calculator

To make matters even easier, at My Car Credit, we have developed a car HP calculator that takes all the stress and confusion out of the process. Whether you want to know how much your monthly payments will be or how much car finance you qualify for, our online tool does the maths on your next car for you in seconds. Just type the relevant details into the easy-to-use interface and let the calculator do the rest.

If you want to learn more about how My Car Credit can help you land the second-hand car finance deal of your dreams, please don’t hesitate to contact us right away.

Rates from 6.9% APR. Representative APR 14.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 14.9%, annual interest rate (fixed) 14.85%, 47 monthly payments of £204.69 followed by 1 payment of £214.69 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,335.12, total amount payable is £9,835.12.

My Car Credit is a credit broker and not a lender.

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!

Can I Take Over Someone Else’s Car Finance?

Car with outstanding finance

Car finance is becoming an increasingly popular method for people looking to buy new or used cars. It’s easy to see why – by paying the car off in a series of affordable monthly payments, the whole process becomes far more manageable and cost-effective.

At My Car Credit, we’re often asked whether customers can take over somebody else’s car finance. Below, we give you the lowdown on that. What’s more, we provide recommendations for finding both a new set of wheels and a car finance deal that suits your budget and needs.

Can I take on a car with outstanding finance?

Unfortunately, taking on a car with outstanding finance isn’t possible. If a car has remaining fees on it, it technically still belongs to the lender, which means a private seller can’t sell it on. The original seller will have to settle the outstanding balance before selling the vehicle on – if they don’t, they could face severe penalties.

They can do so by contacting their original finance company and asking them for a settlement figure. Once this has been paid, the car is then legally theirs to sell on, which means that you’re free to purchase it. But is it possible to get car finance on private sales?

Car finance for private sales

Many people assume that you can get car finance for private sales much like you would with a dealership. Whilst there are lenders who can help with car finance on private sales, they often require more paperwork and reassurances. Alternatively, you could take out a personal loan to pay for the car upfront. Instead of providing car finance on private sales, we advise searching for your new set of wheels via a reputable UK dealer.

There are so many advantages to going down this path. Finding a vehicle via a dealership doesn’t necessarily mean you’re paying for a brand-new car – you can unearth some excellent nearly new and used cars in our one-stop shop of recommended dealerships. We’ve vetted over 4,500 nationwide car dealers for their service standards and financial stability. Hence, you can rest easy knowing that you’re in good hands.

Choosing a car through one of these motor dealers also helps when it comes to applying for My Car Credit car finance (although you can get a car from any reputable dealer). Our friendly team of car credit specialists will support you throughout your application process. In addition, we’ll offer expert advice and guiding you through every step of the way.

Plus, with our system, the rate you see is the rate you get – there’ll be no hidden fees or costs for you to worry about. Our online application process takes mere minutes to find a rate that suits your individual requirements. This means you can get behind the wheel with peace of mind.

Contact us today

My Car Credit is committed to making the process of finding car finance more affordable, accessible, and quick. You can use our car finance calculator to discover your options, or contact one of our friendly team today on 01246 458 810.

Rates from 6.9% APR. Representative APR 14.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 14.9%, annual interest rate (fixed) 14.85%, 47 monthly payments of £204.69 followed by 1 payment of £214.69 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,335.12, total amount payable is £9,835.12.

My Car Credit is a credit broker and not a lender.

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!

Can I Get Car Finance For A Private Sale?

Car purchased via a private sale being driven at night

Buying a car is likely to be expensive, which is why so many people use car finance as a way of making the whole process more affordable. Private sales are no exception, requiring a decent sum of money that not many buyers have up front.

Understandably, that leaves many buyers wondering whether you can get car finance for private sales. In this post, we’ll explore your options when it comes to private sales and car finance.

Understanding the basics of car finance

Car finance enables you to drive your new vehicle off the showroom floor without having to pay for the car upfront. By making affordable monthly payments directly to the lender, you can have full use of the car. Traditionally, car finance was offered by dealers when you bought the vehicle from them. This can put buyers at a disadvantage if the dealer only uses one or two lenders, rather than searching the whole market for the best deal for your circumstances.

However, the industry has come a long way, with greater choice now available. Nowadays, you can use independent car finance providers or even car finance brokers to get the best deal for your new or used car. Given that dealers are no longer directly involved, many people assume this car finance can be used for private sales too.

Can I get car finance for a private sale?

There are lenders who specialise in car finance for a private sale. However, they may ask for additional information and security. This is because private sales don’t come with the same assurances that dealership sales do. The alternative would be to take out a loan to pay for the car up front. However, it’s worth noting that this doesn’t come with the same flexibility as car finance, such as the option to return the car at the end of your repayment term.

At My Car Credit, we help buyers find a great finance deal for cars which are bought through reputable UK dealers. Remember, buying through a dealership doesn’t mean you have to fork out for a brand-new car. While car finance isn’t available for private sales, there’s no problem when it comes to used cars from a reputable dealership.

Opting for car finance rather than a private sale also means you get expert support throughout the process. Rather than borrowing money and making a purchase on your own, My Car Credit has a team of car credit specialists on hand to guide you through the process. Above all else, that means no hidden costs, no confusion and no need to worry.

Contact us today

At My Car Credit, we’re committed to providing an affordable alternative to private car sales. Using our car finance calculator, you can get a better idea of the interest rate, monthly repayments and overall cost to get the car you need.

With the largest panel of car finance lenders out of any broker, we have great relationships with reputable and professional lenders. This means we’re able to find you the best deal available for your circumstances and requirements.

Want to find out more? Give our friendly team a call on 01246 458 810 today.a

Rates from 6.9% APR. Representative APR 14.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 14.9%, annual interest rate (fixed) 14.85%, 47 monthly payments of £204.69 followed by 1 payment of £214.69 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,335.12, total amount payable is £9,835.12.

My Car Credit is a credit broker and not a lender.

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!

What Types of Finance Are Available for Used Cars?

Used car bough using car finance

Buying a car is likely to be one of the most significant purchases you make. Even for a second-hand model, a car represents a sizeable outlay. For this reason, many people choose to seek help in the shape of car financing. This can not only allow you to afford a better vehicle, but give you greater control of your finances, as well.

To meet this growing demand, there are now a number of different used car finance deals available. These include hire purchase, conditional sale, personal contract purchase, personal contract hire, personal loan and guarantor loan. The best way to finance a used car will vary from person to person, depending on their unique circumstances.

Used car finance deals

Our quick guide should give you a better idea of the options available and allow you to make an informed decision about whether to buy or finance your next vehicle purchase. Read on for a quick rundown of the types of used car finance on the market today.

Hire purchase (HP)

As one of the simplest types of car finance available, HP is also one of the most popular. Under this arrangement, you’ll pay an initial deposit, then hire the vehicle until you have paid for it in full. In addition, you’ll spread the remaining cost over a pre-agreed number of monthly instalments. There is no large payment at the end (as there is with PCP) but you may have some admin and transfer of rights fees to cover. Once you’ve paid the agreement off in full, the vehicle then becomes yours.

Conditional sale

A conditional sale arrangement is similar to HP. However, the monthly payments are usually higher but there are no fees to pay at the end. The ownership of the car will automatically transfer to you once the final loan amount has been paid.

Personal contract purchase (PCP)

PCP finance for used cars works on the same principles as HP. However, the difference is that a significant chunk of the total price of the car is held back for an optional final payment. That means that the monthly repayments can be a lot lower, making it easier to afford a newer or higher value vehicle.

At the end of a PCP finance for used cars deal, you will have a choice of three options. You can pay the final sum and own the car outright. Alternative, you can use any equity in the contract as a deposit for your next vehicle. Of course, you can simply walk away from the deal altogether. This can be a helpful option for those who aren’t sure if they would like to keep the car after the contract has run its course.

Personal contract hire (PCH)

PCH is essential a long-term leasing arrangement, whereby you pay an initial deposit and a series of monthly instalments thereafter. You must also adhere to a maximum annual mileage allowance. Bear in mind, you may face a hefty fee if you leave the contract before it has reached the pre-agreed expiry date. 

Personal loan

A personal loan is similar to one you might obtain from a bank and will depend largely upon your credit score. The loan is not secured against the car itself. This means you can sell the car at any time as long as you continue to keep up with the repayments. You’ll also own the car outright from the get-go.

Guarantor loan

Aimed at those with a poor credit score, guarantor loans involve a third party who is liable for covering repayments that you yourself may not be able to. This is ideal for those who struggle to be approved for finance in general. What’s more, when adhered to responsibly, a guarantor loan can help to improve your credit rating. However, it is a big responsibility for both parties as both become liable should you not keep up with repayments.

Take stock of your options

The best way to finance a used car for you will depend greatly on your own personal situation. You’ll need to consider the type of car you wish to buy, whether you want to own it outright after the deal is concluded and what your credit history looks like. With that in mind, it’s a good idea to sit down and assess the options available to you. You’ll discover a vast resource on the internet to understand which type of finance is best for you.

In this respect, a car finance calculator can be a very helpful tool too. This will help you to understand how much you’ll be liable to pay throughout the course of a car financing contract. On the other hand, if you’d prefer to speak to a qualified professional and obtain advice about the best course of action for your situation, our team are always here to help.

Simply give us a call on 01246 458 810 or drop us an email at enquiries@mycarcredit.co.uk and we’ll get back to you at our earliest convenience. Your next dream car could be just a phone call away!

Rates from 6.9% APR. Representative APR 14.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 14.9%, annual interest rate (fixed) 14.85%, 47 monthly payments of £204.69 followed by 1 payment of £214.69 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,335.12, total amount payable is £9,835.12.

My Car Credit is a credit broker and not a lender.

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!

Can I Get a Car Loan with a Poor Credit Score?

Car driving bought with a low credit score loan

It’s common for lenders to carry out a credit check on anyone who applies for a car loan. This is usually a ‘soft search’ initially. Credit checks can lead to those with poor credit scores shying away from applying due to the fear of rejection. However, you’ll be surprised how easy it is to successfully obtain a loan by making a few minimal changes.

In this short guide, we’ll explain everything you need to know when applying for a car loan with poor credit. In addition, we’ll cover how to get the best deal by ensuring your credit score is up to scratch.

What is a car loan?

Finding the right car within your price range can be a challenge. But, with a car loan, you can spread the payments out over a course of several months or years. This is a great way of significantly increasing the options available to you.

Two popular forms of car loan are a personal loan and Hire Purchase (HP). A personal loan will see someone borrow money from a lender, bank or building society. This allows them to have instant ownership of a car. In contrast, HP will have the individual pay an initial deposit (not always required) with fixed monthly payments for the next three to five years. They effectively hire the vehicle over the period, with the option to purchase at the end.

At the end of the term, they will be offered three choices; to either return the car to the supplier, keep it, or trade it in for a replacement. However, you must be careful not to miss the repayments before the end of the term. In these cases, the finance company may decide to repossess the vehicle to settle the debt.

How can you improve your credit score?

A lender will perform a credit check to ensure that the person applying can afford the monthly payments. People who obtain an excellent credit score will have demonstrated a firm grasp of their finances. In theory, this makes for a reliable choice for lenders.

Those described as having a ‘thin’ credit history will have a history of missing payments. Alternatively, there may be little concrete evidence of financial security, such as never owning a credit card or bank account. A higher credit score will open more doors. This could include a much more comprehensive range of car loan options. These are often accompanied by much more favourable interest rates.

Here are some simple but effective ways of raising your credit score.

1. Identify the problems in your credit report

Before you apply for a car loan, it will be wise to get a free copy of your credit report. This will give you an idea of any pitfalls that may scupper your loan request. There may be some glaring mistakes you are making in the way you handle your money, damaging the profile. It is also worth ensuring it is up to date and doesn’t contain any errors or inaccuracies which could unfairly affect your score.

2. Apply for a credit card and use it sensibly

Credit cards have a strange reputation of being a poor way to save money. But the truth is that as long as you’re making repayments on time, they will put you in good stead to improve your credit score. Proof that you can budget and regularly meet repayment deadlines will help you secure a more competitive car loan deal.

3. Stay away from bad credit

If you’ve ever been financially linked with someone you know has bad credit, such as a joint account or shared mortgage, it may lower your credit score. If this is the case, it will be a good idea to issue a notice of disassociation. This informs lenders that you are no longer financially linked and should be judged on your own merit.

4. Settle any loans

Now is the time to settle those loans and reduce your debt as much as possible. This is easier said than done, but to get behind the wheel of the car you desire you may need to work at it.

What are my other options for obtaining a loan?

Start by crunching the numbers on a car loan calculator. You may consider making slight changes to the car loan variables to see how it can help. No matter how low your credit score, some changes can ultimately work in your favour to help you get a car with poor credit history.

1. Pay a larger deposit

Simply put, a larger up-front deposit will mean your monthly payments will be reduced. This in turn minimises the risk for the lender in ensuring they are met. It can be frustrating as you’ll be forking out a potentially huge chunk of money. That said, it is often a sure-fire way to improve your chance of getting the deal.

2. Pay a higher interest rate

Someone with a low credit score will often need to accept a higher interest rate than the advertised representative rate. Again, it may seem frustrating on the face of it. However, don’t despair as it tends to mean only a slightly higher monthly payment.

3. Choose a lower annual mileage limit

Opting for a lower annual mileage limit can result in much lower costs month to month. This is because the car will be worth much more to the dealer at the end of the loan. This is usually related to fewer miles on the clock and less wear and tear.

However, you will want to keep the figure realistic. Going over your allowance will end up costing you dearly. You will find that there are harsh penalties that charge you for every extra mile taken.

4. Choose a used car

Opting for a loan on a used car will ultimately see you borrowing less money from a provider. This improves the possibility of obtaining a loan, even with a poor credit score. There is much less risk for the dealer as the car will already have depreciated in value. However, this doesn’t deflect from the fact that used cars are mostly reliable and of good quality.

If you worry about being able to afford to buy a car, this may be the best and most sensible option.

Need help getting a car loan with a poor credit score?

Take the headache out of getting a car loan with a straightforward and simple chat with our friendly specialists. Find out more about how we can find the right deal for you no matter how your credit score may look.

You’re not in this on your own, and we’ll support you every step on the way to get you on the road with the car of your dreams. Give us a call on 01246 458 810 or email enquiries@mycarcredit.co.uk to find out more

Rates from 6.9% APR. Representative APR 14.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 14.9%, annual interest rate (fixed) 14.85%, 47 monthly payments of £204.69 followed by 1 payment of £214.69 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,335.12, total amount payable is £9,835.12.

My Car Credit is a credit broker and not a lender.

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!

No Deposit Car Finance – How Does it Work?

New car bought with no deposit car finance

You’ve fallen in love with the perfect dream car, it’s ready to go and you’re raring to drive it straight off the forecourt. Only one problem remains – paying for your new wheels.

Car finance offers the perfect solution for buying the car of your dreams without needing to use your savings and pay in one go. You get the option to pay your car off in manageable monthly payments, over a period of your choice.

However, some people do worry about needing to find a deposit. This is typically a large chunk of the overall payment and if you do not have a car to trade in, it can be unaffordable for some.

Luckily, you can now get car finance without having to pay an initial deposit. Read on to discover how this works and whether you could get no deposit car finance.

The types of car financing

Car financing is a very common method used when buying a car. For the majority of us out there, paying for a car outright is unrealistic, especially if you’re looking to get a new vehicle. Car financing gives you the option to pay off the cost of your car monthly, rather than paying the cost in one go. There are a few different types of car financing available that you can choose from, with the main two being hire purchase and personal contract purchase:

Hire purchase (HP)

Hire purchase is one of the most popular car financing methods. You can either set up an HP deal with your car dealer directly or with a third party broker or lender. Generally, you may get a better deal with an external company than the car dealership so it’s good practice to shop around.

With many car finance options, a deposit of around 10% of the purchase price is required to secure the financing – we’ll get to the zero deposit options later in the article.

HP contracts can last anywhere between two and five years, with monthly payments, plus interest, paying off the value of the car. Once your contract is up and you have completed all your payments, the car is yours. You may have to pay a final payment that is higher than your monthly cost to secure the vehicle, but this will be agreed when buying the car so there will be no hidden surprises.

So, once your contract has come to an end and all payments have been made, you are then the owner of the car and can do with it whatever you please.

Personal contract purchase (PCP)

A personal contract purchase (PCP) is similar to a hire purchase in many ways. The car is paid off in monthly installments rather than one lump sum. You have the option of paying a deposit, which does reduce your monthly payments and overall interest. Despite their similarities, there is one clear difference between HP and PCP car financing deals.

With a HP agreement, you are paying off the full value of the car each month and so at the end of the agreement, you own the vehicle. However, with a PCP agreement, you are only paying off the depreciation of the car each month, rather than the full value.

So, you are essentially paying the difference between the car’s value when you purchase it and the estimated value of the car at the end of the agreement. In essence, you are renting the car from the dealership for a set number of years. At the end of the contract, you can make a choice between paying a lump sum to keep the car, trading in the vehicle for a newer model or returning the car entirely to the dealer.

No deposit car finance

So, now we’ve covered the two most popular forms of car financing, it’s time to take a closer look at how you can secure a car finance deal without having to fork out the initial deposit. It sounds too good to be true, right? Driving away in your dream car without having to pay a penny upfront. But it is in fact a reality.

Due to the huge competition out there when it comes to car financing options, from car dealerships to independent companies, there are a number of deals now available to allow companies to stand out from the crowd.

Typically, the best no deposit car finance deals are found from third party companies. This includes car finance price comparison websites such as Confused.com, which compare the best deals from across the market.

Alternatively, car finance brokers such as My Car Credit will offer you a broader panel of lenders who cover all credit profiles, from excellent through to bad.

No deposit car finance is available from most of My Car Credit’s lender panel. This means if you find a car worth £7500, a lender from My Car Credit would pay for the vehicle from the dealership and offer you a repayment plan over your chosen term, leaving you with nothing to pay upfront.

Secure the best deal

If you’re looking for a new car and want to know your budget or perhaps you’ve found your dream vehicle and are wanting to get driving as soon as possible, the no deposit car financing deals from My Car Credit can get you on the road in no time. We have a number of options available to suit you, no matter your circumstances.

Get a car finance quote today using our quick and easy calculator. You can then apply online and get an instant, online decision on car finance. If you need any help, feel free to get in touch with our friendly team to see how we can help you drive away in your new car.

Rates from 6.9% APR. Representative APR 14.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 14.9%, annual interest rate (fixed) 14.85%, 47 monthly payments of £204.69 followed by 1 payment of £214.69 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,335.12, total amount payable is £9,835.12.

My Car Credit is a credit broker and not a lender.

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!

A Guide to Buying Your First Car on Finance

Man holding keys after buying first car on finance

Alongside graduating from school, college or university, starting work and moving out (bye-bye parents, hello freedom), buying a car is a pivotal moment for any young person. However, without the bank of mum and dad, many struggle to afford the lump sum payment, which is why car finance is an attractive and realistic option.

In this short guide, we’ll explain everything you need to know about buying your first car on finance, from improving your credit score and setting budgets to securing the best possible deals. While we’ve tailored this guide mostly to young first-time buyers, the advice given applies to anyone searching for a more affordable way to get on the road. 

What is car finance? 

Car finance is an accessible means of owning the car of your dreams. Instead of covering the full cost upfront, you can spread payments over several months or years in reasonable, bite-sized chunks. 

A personal contract purchase (PCP) is a popular way of financing a car. Agreements often last between three to five years, and at the end you can either make a final payment to keep the vehicle, return it or use the resale value towards buying something brand-new. 

You can also opt for Hire Purchase (HP) if you prefer the idea of owning the car at the end of the agreement without needing to pay a final lump sum payment.  

To secure a finance agreement, you’ll have to pass a credit check and lender criteria and it helps to make a small deposit upfront (usually 10% of the car’s total cost). 

How to improve your credit score 

Before lenders consider your application, they’ll undertake a thorough credit check to assess your potential risk. The overall score determines who qualifies for a loan, the amount you can borrow, interest rates and credit limits.  

To ensure you’re in the best position possible, you’ll need some active credit history to show you can manage money responsibly (this is especially important for students without full-time employment). Below are three simple ways you can improve your score and bolster your chances of securing finance. 

Check you’re on the electoral roll 

Lenders check whether you’re on the electoral roll to protect themselves against fraud. If you’re a student, you can register at your home address or student address. 

Apply for a credit card and use it sensibly 

Using a credit card is the easiest way to show lenders you can keep track of your outgoings. However, if you’re worried about debt or have a low credit rating, a prepaid card is an alternative option, working similarly to a pay-as-you-go mobile capping your spending. Students may also be eligible for a student credit card with a low credit limit.  

Mobile phone contract  

If you’ve never had credit, a mobile phone contract is a simple way of improving your score. They work much the same as repaying car finance, albeit on a much smaller scale, demonstrating your ability to meet monthly repayments. 

Four things to do before buying your first car on finance 

Set your budget and plan for additional costs 

The most crucial part of buying any car is setting a budget and sticking to it, no matter how tempting a set of shiny new wheels might be. So, before entering a finance agreement, prepare to meet monthly repayments by choosing a realistic model. If possible, negotiate an arrangement that suits your income stream. 

However, it’s not just the initial value of the car you must consider  plan for running and maintenance costs too. These include: 

  • Car insurance (often more expensive for new and young drivers) 
  • Fuel costs, especially if you plan to travel frequently 
  • MOT tests, scheduled maintenance and repair costs 
  • Road tax (there are a few exemptions) 

If you’re not sure how much you can borrow, read this handy guide. 

Decide whether you want a used or new car 

When it comes to buying your first car, a key consideration is whether you should buy new or used. While the decision is ultimately personal, depending on your budget and immediate needs, consider the benefits of both routes before making a final decision. 

The advantages of a used car include affordability (the initial price is often between 30-50% less, meaning lower monthly repayments), cheaper insurance (a massive incentive for new drivers who are already facing premiums) and discounted tax. 

However, there’s more choice when buying a new car and improved safety features, such as automatic emergency brakes, adaptive cruise control and intelligent sensor systems that reduce collisions. Surprisingly, new models are also quite affordable thanks to the range of generous finance deals on offer. 

Find a guarantor 

If you’re a student, you’re still eligible to buy a new car on finance. Although, without a full-time income, lenders may need additional reassurance that you can meet monthly repayments. In these cases, a guarantor will help bolster your application. 

A guarantor is usually a close friend or relative, with a good credit history, who agrees to continue repayments if you’re unable to make them. While they can’t take on the loan (it will always be in your name), they act as a safety net to mitigate risk. 

Entering into a Guarantor Loan is a big responsibility for both parties. It is therefore important that you both understand your obligations, as well as the potential risks. 

Double check the agreement before signing 

You know how the saying goes  it’s better to be safe than sorry. With that in mind, double-check the terms and conditions of your finance agreement to avoid hidden charges and dubious stipulations. 

Things to watch out for include: 

  • Mileage caps which restrict the amount you can travel each year (exceeding the limit incurs charges anywhere between 3p to 70p per mile) 
  • Late payment policies which penalise you for missing repayments 
  • Damage charges and service requirements
  • “Free” insurance policies that sound too good to be true 

Do you need help finding a finance agreement? 

Buying your first car is nerve-wracking at the best of times without worrying about hefty upfront costs, which is why we aim to make the process as straightforward and affordable as possible with the best finance deals anywhere in the UK. 

To learn more, call us on 01246 458 810 or drop us an email at enquiries@mycarcredit.co.uk  one of our friendly specialists will be in touch shortly. For additional information, you can also visit our website where we have hundreds of helpful blogs and articles to browse through. 

 

Rates from 6.9% APR. Representative APR 14.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 14.9%, annual interest rate (fixed) 14.85%, 47 monthly payments of £204.69 followed by 1 payment of £214.69 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,335.12, total amount payable is £9,835.12.

My Car Credit is a credit broker and not a lender.

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!

How to Get Car Finance for Students

young man and lady laughing while trying to find car finance for students

If you pass your driving test before or during university, you’ll be in the advantageous position of driving as a student. That means no more buses and trains to and from campus, home or your part-time job.

Whatever the case, having a trustworthy car is a huge benefit for students, but there's just one small hurdle to address – how do you pay for it? My Car Credit explores the ins and outs of securing car finance for students.

In reality, it’s difficult for most people to cover the costs of buying a car upfront, let alone for someone prioritising their studies. However, there’s no need to fret because your student status doesn’t exclude you from purchasing a car on finance. To qualify, you’re assessed the same way as everyone else – on credit history, income and risk.

1. Credit score

A credit score is a rating based on your financial history that helps lenders to determine who qualifies for a loan, the potential risk, interest rates and credit limits.

To ensure you’re in the best possible position to qualify for finance, you’ll need some active credit history to reassure companies you can manage your money responsibly. Below, we’ve listed three simple ways you can improve your standing with lenders.

Mobile phone contract 

Most students already have mobile phones on contract but if you don’t, consider entering an agreement. They work much the same as repaying car finance, albeit on a much smaller level. Paying your monthly bills proves you’re able to budget your finances accordingly.

Student credit card

If you have a student bank account, you may be eligible for a student credit card with a low credit limit. If so, use this card to make small purchases, then settle the outstanding balance at the end of each month.

Electoral roll 

Lenders check whether you’re on the electoral roll to protect themselves against fraud. If you’re a young student, your parents will probably have registered you at your home address. However, you can also re-register at your student address.

2. Income

To qualify for finance, you’ll have to prove you have some reliable means of income. To be clear, you cannot make repayments using your student loan. If you don’t have any income, you have to honestly assess if you can afford to buy a car in the first place.

It doesn’t matter whether you have a full-time or part-time job – what’s important is how much you earn. At My Car Credit, we consider applications from students who make around £1000 per month.

3. Guarantor or Joint Applicant

If you’re a parent, you might wonder if you can finance a car for your child. In a sense, you can – while your child will be responsible for making the agreed repayments, you can bolster their application by agreeing to be either a guarantor or by making a joint application. 

A guarantor is usually a close relative, with a good credit history, who is prepared to back a loan by agreeing to continue payments if the recipient is unable to make them. They are not responsible for repaying the loan but act as a safety net to mitigate risk for lenders. However, the responsibility of being a guarantor should not be underestimated. Failure to make the monthly payments will mean that ultimately, both parties may find their credit profile affected.

A stronger option is via a joint application by both the student and a parent. This is a good solution where the student is on a good income but maybe has a weaker credit score. Again, there is a big responsibility that comes with this approach. It is therefore important to consider all options before entering into a car finance agreement.

How we can help

If you’re a student, you’re still eligible for car finance provided you have a credit history, some reliable income and, where necessary, a guarantor or joint applicant. 

Our online application form doesn’t allow for adding in an additional person. Instead, to start your journey, speak to one of our team members by calling 01246 458 810 or emailing enquiries@mycarcredit.co.uk.

Rates from 6.9% APR. Representative APR 14.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 14.9%, annual interest rate (fixed) 14.85%, 47 monthly payments of £204.69 followed by 1 payment of £214.69 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,335.12, total amount payable is £9,835.12.

My Car Credit is a credit broker and not a lender.

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!

Why You Should Steer Clear of Low Rate Car Finance Promises

Frustrated lady on laptop trying to find low rate car finance

Buying a brand-new or used car is often a serious investment. It can be tempting to offset costs by opting for a car finance agreement that guarantees astonishingly low interest rates.

However, when something sounds too good to be true, it usually is! In reality, finance companies can't promise low rate car finance for all applicants. This is because they’re calculated based on individual credit scores and circumstances.

How are interest rates calculated?

So, shiny promises aside, how is car finance interest calculated? The outcome depends on many variables, including a person’s credit history, income, desired vehicle model and deposit. 

Without a doubt, a person’s credit score is the most significant factor. This is a rating everyone has based on their financial history. This rating helps lenders to determine potential risk, interest rates and credit limits. It’s used to gauge someone’s trustworthiness and likelihood to pay back instalments. A good credit score increases your chances of securing a lower interest rate and overall monthly repayments. 

However, at My Car Credit, we understand that unforeseen circumstances can impact a person’s credit rating through no fault of their own. This is why we’re open to accepting applications from people with less than perfect financial backgrounds.

If you’d like to improve your chances of securing finance, there are plenty of simple ways to bolster your rating and generate more favourable interest rates before applying.

We can help you find the best possible interest rates

Whilst we would never promise you a low interest rate, we are in a great position to find you the best deal on car finance for your circumstances. We have the largest panel of lenders out of any UK car finance broker. This gives us the best chance of matching you to a lender with the most desirable interest rates. 

To start your journey, speak to one of our knowledgeable team members by calling 01246 458 810 or emailing enquiries@mycarcredit.co.uk

Rates from 6.9% APR. Representative APR 14.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 14.9%, annual interest rate (fixed) 14.85%, 47 monthly payments of £204.69 followed by 1 payment of £214.69 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,335.12, total amount payable is £9,835.12.

My Car Credit is a credit broker and not a lender.

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!

Can I Sell My Car with Outstanding Finance?

Man handing over car keys after clearing outstanding finance on his car

More people than ever are using finance schemes to buy new and used cars. But what happens when a person wants to sell up or trade-in before they've finished paying the outstanding amount on their contract?

It’s a question we receive time and time again at My Car Credit, so here’s everything you need to know before listing the car for sale.

Can I sell a car with outstanding hire purchase finance?

The short answer is unfortunately not. Until you settle the outstanding fees, the car belongs to the lender and isn’t yours to sell. What’s more, if you tried to make a sale without telling the buyer about the existing finance agreement, you could face severe penalties including car repossession, court proceedings and fraud charges.

However, you can work around these stipulations by contacting your finance company and asking them for a settlement figure. Once you’ve paid this, which amounts to the full sum left on your contract, the car will legally be yours to sell.

A word of warning

If you take the settlement route, it could end up costing you more money than expected thanks to early repayment and administration fees. Check with your lender beforehand to factor in these additional costs before making a final decision.

Another viable option is to visit a car dealership. Provided the settlement amount is less than the car’s total worth, you can put the difference towards a deposit for a new set of wheels. Once you’ve checked the figures, you can get a quote for a new finance deal and arrange monthly repayments with your lender.

Can I sell a car with an outstanding personal contract purchase?

Just like hire purchase agreements, the finance company legally owns the car when you take out a personal contract purchase agreement. 

If you wanted to sell, you must follow the same route of acquiring ownership through settlement beforehand.

What about a personal loan?

Personal loans work differently to car finance agreements. Assuming you paid for the car in full, you’re the legal owner of the car, and there are no restrictions when it comes to selling. 

Just remember, you’re still liable for the monthly repayments on your personal loan once you’ve handed over possession.

Voluntary termination

Some people look to sell their car because of difficulties keeping up with monthly repayments. However, in this case, an easier option could be voluntary termination.

Provided you have covered at least 50% of the total cost, and your contract includes a voluntary termination clause, you should be able to return the vehicle stress-free without making any further payments.

Are you looking for a car finance deal?

At My Car Credit, our goal is to make securing car finance as simple and accessible as possible, whatever your credit score or budget.

To find out how we can help you, give us a call on 01246 458 810 or drop us an email at enquiries@mycarcredit.co.uk. One of our knowledgeable team members will get back to you as soon as possible.

Rates from 6.9% APR. Representative APR 14.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 14.9%, annual interest rate (fixed) 14.85%, 47 monthly payments of £204.69 followed by 1 payment of £214.69 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,335.12, total amount payable is £9,835.12.

My Car Credit is a credit broker and not a lender.

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!