Car Finance Options Archives

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 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

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 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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8 Benefits of Getting an Electric Car on Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

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

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

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

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

Require more help?

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

or call 01246 458 810

deposit hp Jan24 no deposit car finance PCP

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 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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HP, Conditional, PCP: The Lowdown on Car Finance Options

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

buying first car car buying credit rating credit score first car Jan24

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 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

credit score guarantor joint application student car finance students

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 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Can I Finance an Automatic Car?

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Am I eligible for car finance?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

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

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

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

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

Require more help?

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

or call 01246 458 810

apr car finance calculator Jan24 low rate car finance

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 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Bank Loan or PCP: Which is Right for You?

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How Much Does Car Finance Cost? Check Now!

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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Advice for Extending Your Car Finance Payment Holiday

man worried about extending his car finance holiday

The COVID-19 pandemic has put financial stress on millions of Brits across the country, with unemployment benefit claims recently jumping to the highest levels in more than 20 years. As a result, the Financial Conduct Authority (FCA) has been rolling out a wave of relief packages, including payment holidays on car finance.

The scheme kicked off in March and was recently extended until October 31, offering Brits the option to defer more than six months’ worth of repayments. Read on for some advice on how the extended payment holiday works and whether you should take one.

Hugely popular scheme

As the name suggests, the car finance payment holiday allows you to take a break on payments for your car finance agreement. “If you’ve a car loan, PCP, leasing or HP deal and are struggling to pay due to coronavirus, you can get a new or extended three month payment holidays on request,” explains Martin Lewis, founder of consumer finance information website MoneySavingExpert. “They can’t repossess cars for non-payment until October 31.”

The latest data from lenders’ trade body UK Finance confirms the scheme has been hugely popular, with more than 1.9 million Brits taking advantage of payment holidays for mortgages alone. While the package is a blessing for Brits struggling to repay loans, experts stress caution should be used when deciding whether to apply for a car finance payment holiday.

A credit file footprint

The COVID-19 pandemic may have reimagined the lending landscape but that doesn’t mean your credit file will remain unaffected. While the Chancellor and FCA have confirmed car finance holidays won’t show up on your credit file, lenders can still find out if you’ve applied for deferrals and use this to negatively assess your application.

This can be done by sourcing information via a third party or looking for inconsistencies in your payment history. The FCA has confirmed this is legal and has even warned consumers about the potentially negative impacts of payment holidays. So, while a little relief in the short term is tempting, a payment holiday could impact your chances of securing loans in the future.

“If you NEED one, take it, but ONLY take it if you need it,” stresses Lewis.

Deferral, not holiday

While the scheme is marketed as a payment holiday this term can be deceiving. Holiday implies a carefree system where borrowers can forget about a payment. In reality, payments are simply deferred and can result in larger debts when the car finance holiday is over.

Factoring in interest

The option to defer payments will be hugely helpful for some. However, for those who can afford to continue paying, the advice is to do so. Excluding payday loan holidays, interest isn’t frozen and will continue to accumulate over the course of the car finance payment holiday.

Usually, repayments lower the total amount owed and gradually bring down the interest. By freezing payments you’re not lowering the total amount and as a result, interest starts to climb, and the loan will cost you more in the long run.

Car finance payment holidays have provided much-needed relief to many Brits during the COVID-19 pandemic but at the same time, they’ve also tempted many borrowers who don’t need assistance. Before applying, the best thing to do is crunch the numbers, talk to your lender and make an educated decision about whether a car finance holiday is the right decision for you. If you’re in trouble, the National Debtline is a fantastic resource.

How we can help

Whether you’re in need of a payment holiday or you’re looking to upgrade your car as things get back up and running, the team at My Car Credit is here to help. Get in touch with our team to discuss your requirements in more depth.

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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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Coronavirus Outbreak: Can I Get a Car Finance Payment Holiday?

Man with sleeves rolled up using his phone to check if he can get a payment holiday

Many households are having to endure significant changes to their personal finances in recent weeks due to the COVID-19 pandemic. Although the introduction of incentives such as mortgage payment holidays have eased the pressure on some families, there are still questions for motorists who are struggling to pay monthly fees for their vehicles.

With around 9 in 10 new cars in Britain bought using some sort of finance, the coronavirus outbreak will certainly be causing concern for many drivers who have a shrinking budget. If you are looking for some relief on your car finance payment due to COVID-19, here is what you should know….

Tell your finance provider straight away

All lenders are required by the Financial Conduct Authority (FCA) to work with their customers to come to an arrangement that is in the interests of fair and appropriate customer outcomes. This includes offering payment holidays of up to three months for customers who’s individual or household income has been affected directly by COVID-19.

Communication is key. If you are a customer suffering financial difficulty or are anticipating payment problems due to the coronavirus, get in touch with your lender as soon as possible. Be aware that call volumes will be very high at the moment, and most lenders will be working with an unprecedented number of concerns. Use online forms and emails where possible. Some lenders may have moved employees from sales and new business acquisition to client support. They may also pause new lending to support their existing client base. Be patient when contacting your lender.

Work with your lender

The solutions will vary from lender to lender and customer to customer. Keep in mind that lenders will be underwriting whilst giving consideration to customers in different circumstances, so two people may not get the same outcome. Discuss your concerns with your lender and work together to find an answer that best suits your circumstances. Not all lenders will be able to offer you a car finance payment holiday, but they will be sympathetic to your situation and can advise on further action to take.

Understand the consequences

If your lender is able to offer you a car finance payment holiday, be sure that you understand its impact. In most cases, if you take a payment holiday for two months, your loan will be extended for two months to cover the missed payments. Also, there should be no impact to your credit score. However, it will be visible on your credit file.

During the pandemic, you will have the option to stop your monthly car finance payments temporarily for a period of up to three months, which in some cases may mean you will accrue additional interest charges. At the end of the car finance payment holiday, the finance company will recalculate the remaining monthly payments and may increase them slightly to cover the cost of unpaid fees.

Contacting your lender

Are you struggling to pay your car finance payment? You can easily access lender contact details for many of My Car Credit’s finance panel. Get in touch with them today to discuss your circumstances.

If you are concerned about the financial impacts of COVID-19 or are experiencing financial difficulties, the following not-for-profit organisations also provide free, confidential and impartial debt advice and support:

Citizens Advice – www.adviceguide.org.uk

National Debtline – www.nationaldebtline.co.uk

Money Advice Service – www.moneyadviceservice.org.uk

If you need any further advice, the team at My Car Credit is here to help. We have years of experience in handling unique client cases. We are following Government guidelines and industry updates on dealing with the coronavirus and its consequences. Get in touch on 01246 458 810 or email us at enquiries@mycarcredit.co.uk

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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 to Do If You Can’t Pay Car Finance Because of COVID-19

calculator being used to work out how to pay car finance

The coronavirus pandemic has caused disruption in everyone’s lives across the UK. From the way we work to weekly supermarket shopping, COVID-19 has impacted all of us. While it continues to cause all sorts of stress around health, financial wellbeing is an escalating issue for many. If you’re worried that you can’t pay car finance or make your monthly repayments because of COVID-19, read on to find out what your options are.

Over two million car finance agreement were transacted in 2019 alone, meaning a lot of people will be worried about how they will make their payments in the months to come.

If you’ve bought a car on finance and can no longer afford it because you’ve been laid off, furloughed, or have seen a significant drop in your income, here is what you should know about your options to secure more affordable car payments.

Review your paperwork

Look over the paperwork that you signed when taking out your car finance plan. Read through the wording and check if there are any notes about relief and special circumstances. Understanding your contract will help when you contact the lender. Double-check the documentation on consumer rights. For more information about your contract, take a look at our Adequate Explanation videos.

Contact your lender

Once you have reviewed your paperwork, the next step is to contact your financial provider directly. We can also provide you with the contact details for most of My Car Credit’s panel of lenders.

The Financial Conduct Authority (FCA) requires all lenders to work with their customers to come to a fair and appropriate financial arrangement. If an individual or household income has been affected directly by COVID-19, lenders are offering payment holidays of up to three months which should allow you to keep the car moving forward.

Handing your car back

During the COVID-19 pandemic, lenders should, wherever possible, consider offering a solution that will enable you to keep your vehicle (if that is your wish), ensuring you can afford any monthly payments and allowing you to retain contractual rights such as voluntary termination.

If your car is financed by a Personal Contract Purchase (PCP) or Hire Purchase, you are allowed to hand it back to the finance company if you have already paid off 50% or more of the total amount payable, including any interest and fees. Note that if you cancel the contract, you will not get any extra money back. If you have yet to pay off 50% of the total amount payable, you will have to make up the difference.

As per your agreement with the lender, charges may apply for damage to the car over and above reasonable wear and tear. You may also incur a fee for ending the agreement early.

In many cases, you will be able to keep your vehicle. Even if you’re coming to the end of your PCP agreement, you can refinance the balloon payment instead of paying a large lump sum of cash to keep the vehicle. This is something that My Car Credit can help you with so get in touch if you think balloon refinancing is the right option for you.

Expert financial advice and support

My Car Credit can help you throughout this troubling time. We make the car finance process simple and hassle-free. Our agents are experts in the industry and stay updated on the latest offerings and relief available throughout the pandemic. For more information, call us on 01246 458 810 or email us at enquiries@mycarcredit.co.uk. We look forward to hearing from you.

If you are concerned about the financial impacts of COVID-19 or are experiencing financial difficulties, the following not-for-profit organisations also provide free, confidential and impartial debt advice and support:

Citizens Advice – www.adviceguide.org.uk

National Debtline – www.nationaldebtline.co.uk

Money Advice Service – www.moneyadviceservice.org.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

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5 Different Ways to Pay for a Car

white car in dealership being bought using a car loan

Once you have taken a test drive in your shiny new motor, it can be tempting to throw caution to wind and not worry too much about how you’re going to pay for it. Unfortunately, this is all too common for car owners across the UK. Before you sign on any dotted line, you should know how you aim to pay for the vehicle, whether you decide to hand over cash or take out car finance.

If you’re in the market for your next ‘new-to-you’ vehicle, take a look at the different ways to pay for a car.

How to pay for a car

Cash
As long as you’d have enough savings left over to cover other major purchases or unexpected costs in the future, paying cash is a great way to buy a car. Paying cash means that you own the vehicle straight away. If you get into financial difficulties, you have the option to sell the vehicle and keep the cash from the sale. If you have a car finance agreement such as a leasing or hire purchase, this isn’t possible.
If you don’t have quite enough savings to buy the car outright, you could use them to give you the biggest deposit possible, so you end up spending less on loan interest.
Before you pay cash, think about your future finances. Are you planning any other large purchases over the next few years, such as buying a house? If so, you may want to save some cash and consider financing the vehicle.
Hire Purchase
This option is increasingly popular for the purchase of new cars. Typically, you will put down a deposit of 10%, and then make fixed monthly payments over an agreed time period. This means that you won’t own the vehicle until the last payment has been made. However, this route does make purchasing a vehicle more manageable. Even those motorists with poor credit can get accepted for car financing.
Hire purchase agreements are convenient to arrange and can be competitive for newer vehicles. There is also a fixed interest rate and monthly payments with no annual mileage conditions or fines for wear and tear.
Personal Contract Purchase (PCP)
This type of car finance deal is similar to a hire purchase agreement, but you usually make lower monthly payments. With a personal contract purchase, you have an ‘optional final payment’ at the end of the car finance plan, often referred to as the ‘balloon payment.’ You are able to defer some of the cost of the car to be paid at the end of the plan, making the monthly payments cheaper.
Instead of getting a loan for the total cost of the car, you get a loan for the difference between its sale price and its predicted value at the end of the hire agreement.
In a PCP, you decide how much of a deposit you want to make and estimate your annual mileage and the length of the contract. Typically, this type of car finance plan is between 3 and 5 years.
At the end of the term, you can:
• Trade the car in and start over again;
• Hand the car back to the dealer and pay nothing; or
• Pay a final payment (balloon payment) and keep the vehicle.
Conditional Sale
A conditional sale is similar to a hire purchase agreement, but you pay higher monthly payments and don’t have a fee to pay at the end of the term. Like a hire purchase, you do not own the car until the car finance plan has been paid in full. Typically, you put down 10% of the car’s value as a deposit, and repayment terms last between 2 and 6 years, making this option ideal for those who want to keep the car at the end of the plan without paying a final fee.
Credit Cards
Using a credit card to buy your new car can be a cost-effective way of getting a new set of wheels that allows you to buy the car outright on the day. To buy all or a portion of a car with a credit card, you must first ask the dealer if they accept credit card payments as many do not. If they do, they could charge a hefty processing fee that you need to consider.
It is best to use a credit card that has a 0% interest offer to buy the car outright and then split the repayments over the interest-free period so that the balance is cleared by the time you’re due to be charged interest.
Putting your new car on a credit card gives you repayment flexibility as long as you meet the minimum payment every month. However, if you only repay the minimum repayment every month, it may take much longer to repay your borrowing amount.

Getting a car on finance? Here’s what to look out for

Before you take out a car on finance, here are a few things to look out for:

• Make sure you can afford the monthly payment – not just now, but for the whole term of the loan.
• Ask the lender what will happen if you struggle to pay one month, and what options you have if you couldn’t afford to pay.
• Compare the total cost of borrowing, including all charges over the full term of the loan.
• Compare interest rates from different lenders. Remember that a larger deposit usually means you have a lower interest rate.
• Consider working with car credit specialists to land the right finance plan.

Find out if you can get car finance

At My Car Credit, we aim to help you through every step of the car finance process to make the process as hassle-free as possible.
For an instant quote, and to see what car finance plan you can be eligible for, please use our simple car finance calculator.

We are open 7 days a week, and our website is full of helpful tips, guidelines and answers to any questions you have.
For more information, call us on 01246 458 810 or email us at enquiries@mycarcredit.co.uk.

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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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