Car Finance Options Archives

Car Finance or Personal Loan – Which is Best for You?

Couple comparing Personal Loan and Car Finance

Millions of new and used vehicles are purchased using finance every year in the UK. When securing funds, most motorists choose between two popular options – car finance or personal loan. Both are designed to get you behind the wheel of your dream car, though each option has its own pros and cons.

Car finance: options and ownership

Car finance is an umbrella term used to describe several types of auto loans, including options like Hire Purchase (HP), Personal Contract Purchase (PCP), Personal Contract Hire (PCH) and Conditional Sale. Each option is slightly different in terms of deposits, monthly payments, legal ownership and end-of-term options.

Pros of car finance:

Lower initial costs: Initial deposits are generally lower for car finance, compared to purchasing a vehicle outright. This can be an advantage if you want to retain capital and keep your upfront expenses as low as possible.

Flexibility in ownership:

What’s more flexible, car finance or loan? Depending on the type of agreement, car finance generally offers options at the end of the term, including owning the car outright or upgrading to a new model.

Access to new models: Car finance options like Personal Contract Hire are designed to get you into the driver’s seats of the latest models. The chance to drive newer or more expensive models that may otherwise be outside your budget is a major benefit for some motorists.

Maintenance included: Some car finance options include maintenance packages which takes the stress out of ownership.

Cons of car finance:

Monthly payments: While monthly payments may be lower, they accumulate interest over time which can increase the total cost of your loan.

Ownership delays: With some car finance options, you don’t own the car outright until the final payment is made. This can be an important factor when deciding between car finance or personal loan.

Personal loan: simple and straightforward

A personal loan sees you borrow the full amount needed to purchase a car outright. You drive away as the legal owner of the vehicle and make monthly repayments to your lender to cover the cost of the loan, plus interest.

Pros of personal loans:

Instant ownership: With a personal loan, you own the car from day one. For many motorists, this makes the car finance or loan decision easy.

No mileage restrictions: Unlike some car finance agreements which come with mileage restrictions, personal loans give you the freedom to drive as much as you like without worrying about penalties.

Cons of personal loans:

Higher interest rates: Unless you have a stellar credit score, personal loans can come with higher interest rates compared to some car finance options.

Strict eligibility criteria: Securing a personal loan generally requires a good credit score, and eligibility criteria can be more stringent.

Higher initial costs: Personal loans often call for larger upfront payments.

Enjoy tailored auto finance with My Car Credit

Need help deciding between car finance or loan? Want to find out if car finance is easier to get than a loan?

At My Car Credit, we appreciate that every motorist is unique. That’s why we work with every client to build tailored financing solutions to match your budget, personal preferences and ownership goals.

Give us a call on 01246 458 810 to find out more about car finance options or email us at enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 12.4%

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

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

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

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

Require more help?

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

or call 01246 458 810

PCP vs HP – What’s the Difference Between Them?

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

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

Understanding the difference between HP and PCP

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

Personal contract purchase (PCP)

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

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

Return the car
Trade in the car for a new model
Make a balloon payment to buy the car outright. Balloon payments are lump sums agreed on at the start of your contract and calculated using the guaranteed minimum future value (GMFV) of the car.

Hire purchase (HP)

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

PCP vs HP: how the two compare

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

Ownership

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

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

Monthly payments

Affordable monthly payments are one of the top benefits of PCP. They’re generally lower than HP payments as you’re covering the car’s depreciation, not its full value.

Monthly payments are higher for HP agreements as you’re paying off the entire cost of the car, plus interest.

Balloon payment

The need for a balloon payment at the end of a PCP agreement can catch some motorists off guard.

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

Mileage limits

PCP agreements often come with mileage restrictions, with additional charges incurred for exceeding your cap. This can make PCP limiting for high-mileage motorists.

With HP, you’re free to drive as much as you like without worrying about mileage restrictions or penalties. For many motorists, this freedom makes the PCP vs HP decision easy.

Customisation options

Since you’re essentially leasing the car in a PCP agreement, there may be restrictions on customisations.

HP gives you the freedom to modify your vehicle. Whether it’s a custom paint job, tinted windows, tech upgrades or seating configuration, this is a big difference between HP and PCP.

The bottom line on PCP vs HP

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

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

Get in touch with a team member on 01246 458 810 to find out more or email us at enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Can I Give My Car Back to the Finance Company?

How Do Balloon Payments Work?

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

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

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

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

Require more help?

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

or call 01246 458 810

car finance credit score hire purchase Jan24 lenders PCP poor credit

What is a Conditional Sale for a Car?

While prices have dropped a little in 2023, the average cost of a new small car in the UK sits at more than £21,000. Opt for larger models and RRP increases significantly. Combined with issues like inflated petrol prices and the cost of living crisis, this figure puts car ownership out of reach of most motorists. With many Brits feeling the pinch, it’s no wonder auto finance options like conditional sale have surged in popularity over recent years.

There’s plenty to learn when it comes to car finance and conditional sale is one of many terms you may recognise. But what is a conditional sale exactly and how can it help you secure the keys to your dream car? Read on as we dissect everything you need to know about conditional sales, including how agreements work, the benefits and what to expect when signing a contract.

Understanding the basics of conditional sale

What is a conditional sale and how can it help you own your own car? The term describes a popular finance model that allows you to spread the cost of car ownership over a set time period, usually between two to five years. It’s essentially a personal loan that’s secured against the vehicle and funded by a lender. The finance provider pays for the car outright and maintains legal ownership of the vehicle for the duration of the contract.

As the borrower, you make regular repayments to the lender which cover the total cost of the car, plus interest accrued over time. After making your final payment, ownership of the vehicle is transferred to you. The model is straightforward and transparent, making conditional sale a great option for Brits who like to keep things simple. It offers a direct route to ownership without complications like mileage limits, wear and tear penalties or options to return the car or renew the contract at the end of the agreement.

Whether you’re looking at compact urban commuters like the Ford Fiesta or spacious, family-friendly SUVs like the Hyundai Tucson, Conditional Sale can be used to finance a huge range of makes and models. This flexibility is another key benefit associated with conditional sales.

Conditional sale vs hire purchase

What is a conditional sale agreement and how does it compare to hire purchase? If you’re familiar with the car finance landscape, you may draw comparisons with conditional sale and hire purchase (HP). And you’d be absolutely right. Conditional sale and HP share similarities and work in almost the same way, though there’s one major difference.

When a HP agreement winds up, you’ll need to pay a modest “option to purchase” fee to assume legal ownership of the vehicle. In comparison, conditional sale sees you automatically assume ownership after the final payment is made.

How conditional sale works

Now we’ve covered what a conditional sale agreement is, here’s a step-by-step breakdown of how the process works:

Choose your make and model

Like other auto finance options, conditional sale starts with choosing your dream car. Whether it’s a fresh out the showroom model or a used gem with low mileage and a great service history, conditional sale offers the flexibility to choose a vehicle that suits your personal budget, lifestyle and driving preferences.

Agree on terms

When you’ve chosen your new set of wheels, it’s time to agree on the terms of your conditional sale contract. This includes the duration of the agreement, along with your interest rate.

Make your deposit

Most conditional sale agreements start with an initial deposit designed to offset the total cost of the car. Keep in mind that your deposit can also help bring down your monthly payments and reduce the total amount of interest paid over the duration of the agreement.

Pay monthly instalments

The remaining balance of your car loan, minus your initial deposit, is split into fixed monthly payments. These payments cover both the principal loan amount as well as interest. For many Brits, the sense of financial stability that comes with conditional sale contracts is a major benefit.

Claim ownership

Unlike some auto finance options where you may have to return the vehicle or make a balloon payment at the end of the contract, conditional sale is all about easy ownership. After the final payment is made, you’re officially the legal owner of the car.

Why choose conditional sale?

Knowing what a conditional sale is gives you a few clues as to why it’s so popular with British motorists. Here’s a closer look at some of the top benefits:

A road to ownership

Ownership is the end goal of conditional sale contracts. Your payments cover the cost of the car which means you’re continually working towards ownership. There are no mileage restrictions, hidden costs or headache-inducing calculations to navigate. Instead, simply make your final payment and drive away as the legal owner of the vehicle.

No balloon payments

For many motorists the concept of balloon payments used in models like PCP can be frustrating. In contrast, conditional sale distributes the total cost of the car evenly over a pre-determined time period. This can make budgeting more predictable and means you’ll enjoy full ownership at the end of the lease.

Mileage flexibility

Conditional sale liberates you from the mileage caps that typically accompany PCP agreements. You’re free to drive as much as you like without worrying about breaking the terms of your contract and incurring penalties.

Customisation options

With full ownership, you have the freedom to modify your vehicle as you please. Whether it’s a unique paint job, upgraded tech or personalised accessories, the car is yours to customise.

Take the wheel with My Car Credit

Ready to get behind the wheel? My Car Credit can help you secure the best conditional sale deals, tailored to your personal needs. Our friendly team is here to answer all your questions about what a conditional sale is, provide guidance and ensure your road to car ownership is as smooth and stress-free as possible.

Looking for something different? At My Car Credit we specialise in matching clients with the best auto finance options for their needs. Every motorist is different which is why a one-size-fits-all approach never cuts it. Instead, we carefully assess every application to find the perfect match.

As well as conditional sale, we offer other popular car finance options like Hire Purchase (HP), Personal Contract Purchase (PCP) and Personal Contract Hire (PCH). It’s this open-minded approach, combined with access to a wide range of high street and non-traditional lenders, that gives us a competitive edge over other brokers.

Give us a call on 01246 458 810 to find out more or email us at enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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Car Finance: A Complete Guide

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

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

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

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

Require more help?

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

or call 01246 458 810

car finance conditional sale credit score Jan24 lenders new car used car

What is Hire Purchase? – Simple HP Explanation

Someone reseacrching what Hire Purchase is on a phone

Whether you’re eyeing a brand-new Nissan Qashqai or a used Volkswagen Golf, hire purchase (HP) is one of the most popular auto financing options in the UK, up there with personal contract purchase (PCP). The model allows you to spread out the cost of car ownership over time and secure the keys to your dream car, without hefty upfront costs.

You’ve probably come across the term when researching automotive finance options. But what is hire purchase exactly, and how does it pave the way to affordable, stress-free car ownership? In this guide, we’ll unpack everything you need to know about hire purchase, breaking down all the moving parts so you can navigate the auto finance landscape with confidence.

Hire purchase explanation

Hire purchase is a finance option that combines the benefits of car ownership with the practicality, affordability and predictability of structured payments. It’s one of the simplest types of auto finance and spreads out the cost of the car, plus interest, over a set period of time, usually between one to five years.

Think of it as a well-planned road trip. You get to enjoy the ride but instead of absorbing the entire journey cost upfront, it’s broken down into manageable pit stops, i.e. monthly payments.

How HP agreements work:

Choose your car

This is the fun part and involves researching vehicles, scheduling test drives and choosing your dream car. It’s always a good idea to crunch your number before you start the search to get an idea of how far your budget will stretch and what types of vehicles you can realistically consider.

Make an initial down payment

Most HP agreements start with a down payment, though this isn’t always essential. That said, it’s generally in your best interest to make an initial deposit as it will help bring down your total loan balance and minimise your monthly payments, as well as interest costs. If you already own a car, trade ins can be a great way to raise cash for a deposit.

Monthly instalments

After making a deposit, the remaining cost of the car is spread out across fixed monthly instalments. These payments cover both the cost of the car and interest applied by the lender.

Ownership

Unlike personal contract hire (PCH) where you hand back the keys at the end of the agreement, hire purchase steers you towards full ownership. Once the final payment is made, the car becomes yours outright.

Hire purchase explained: a closer look at the benefits

Easy, affordable and predictable, it’s no wonder HP is one of the most popular auto finance options in the UK. Here’s a little more information to help explain what hire purchase is and why the model wins over so many Brits:

Budget-friendly beginnings

Thanks to affordable down payments, hire purchase allows you to kickstart your car ownership journey without depleting your savings. This sets you up for success on the road to car ownership.

Predictable payments

Monthly HP instalments are fixed which makes budgeting easy. No surprise expenses, just predictable monthly payments.

A road to ownership

One of the top benefits of hire purchase is the option to own at the end of the agreement. After your contract has expired, the car is yours to keep.

Flexibility

Whether you’re eyeing a zippy commuter, sleek convertible or family-friendly SUV, hire purchase offers loads of flexibility when it comes to makes and models. You’re free to choose a vehicle that best suits your budget, lifestyle and driving preferences.

New or used

Can you use hire purchase for a used car? Absolutely! As well as the flexibility to choose different makes and models, HP agreements offer the freedom to finance new or used vehicles. Auto finance isn’t just for showroom cars. Analysts estimate a huge 1.5 million used cars were financed by British motorists in 2023, with agreements worth £23 billion. The trend is set to continue in 2024 as Brits continue to use HP agreements to fund used car purchases.

Factors to consider when opting for Hire Purchase

Now you know more about what hire purchase is and how the model works, let’s take a closer look at some important factors to consider before committing to an agreement.

Understand interest rates

Like any financial agreement, it’s important to understand the interest rates applied to your hire purchase deal. Over time they will have a big impact on the total cost of your loan.

Evaluate your budget

While hire purchase makes car ownership accessible, it’s essential to carefully evaluate your budget before committing. Crunch your numbers to ensure your monthly instalments align with your financial situation.

Check for early repayment options

Some HP agreements allow for early repayment, an option that can potentially reduce the overall cost of your loan.

Factor in depreciation

All cars depreciate over time and vehicles financed using HP are no exception. Be sure to factor this into your decision making process if the value of the car at the end of your HP agreement is important.

Start your journey to ownership with My Car Credit

If ownership is your ultimate goal, hire purchase could be your ticket to ride. As covered in our hire purchase explained guide, the format is easy to understand and offers lots of flexibility when it comes to makes and models. Plus, you’ll enjoy the stability of structured payments which takes the stress out of budgeting.

At My Car Credit, we’re committed to helping Brits secure the best auto finance deals, including Hire Purchase agreements. Contact us today to find out more about how to qualify for HP finance and kickstart your journey to car ownership. Our friendly team is always happy to chat, answer questions and give you the full hire purchase explanation.

As well as hire purchase, we specialise in industry-leading deals on other car finance options, including popular models like personal contract purchase (PCP) and personal contract hire (PCH).

Give us a call on 01246 458 810 or email us at enquiries@mycarcredit.co.uk to find our more.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

How to Get Car Finance with Poor Credit

Can You Pay Monthly for a Used Car?

No Deposit Car Finance – How Does it Work?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

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

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

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

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

Require more help?

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

or call 01246 458 810

car finance credit score hire purchase hp Jan24 lenders new car used car

Car Finance Declined: 5 Possible Causes

There’s nothing more disheartening than dreaming of a brand new car, only to have your finance application declined. Before you feel too deflated, remember that it’s not necessarily the end of the road. There are various reasons why car finance applications can be turned down and understanding them can help improve your chances of success next time.

In this article, we’ll explore five possible reasons you’ve had your car finance declined and offer some expert tips on how to turn the tables.

1. Poor credit history

One of the most common car finance decline reasons is a poor credit history. Lenders rely on your credit score to assess your trustworthiness as a borrower. A history of late payments or defaults can drag down your credit score and make lenders cautious about approving your application. To improve your chances, consider building a better borrowing history before submitting your next application.

2. High debt-to-income ratio

Lenders not only look at your credit score but also your debt-to-income ratio. This number measures the percentage of your monthly income that goes towards debt payments. Multiple existing loans like credit card balances, a mortgage or other financial commitments can negatively affect your ability to take on additional auto finance debt. Reducing your existing debts or increasing your income can help lower this ratio and make your application more appealing to lenders.

3. Unrealistic expectations

Lenders want to ensure you can comfortably manage your leasing or car finance payments. If your income doesn’t meet their affordability criteria, your application may be declined. For example, it’s unlikely you’ll be approved for a £60,000 car loan on a £30,000 salary. Before applying for car finance, assess your budget and factor in all monthly expenses to determine how much you can realistically afford. Yes, that brand new Audi SQ5 Sportback set to launch in 2024 is a dream. But if it doesn’t match your borrowing power there’s a high chance you’ll have your car finance declined.

4. Lack of employment stability

Stable employment is one of the most important things lenders consider when assessing car finance applications. If you’ve recently changed jobs, have gaps in your employment history or work on a temporary or freelance basis, lenders may view it as a risk factor. Having a consistent job and income history can increase your chances of approval.

5. Applying with multiple lenders

When you apply for car finance each lender carries out a ‘hard’ credit check as part of the screening process. Multiple hard searches in a short period can negatively affect your credit score and make lenders wary. If you’re declined by one lender and immediately apply with another, you may be seen as a high risk borrower.

This is why it’s important to be strategic when it comes to car finance. Working with a broker like My Car Credit can help you establish your borrowing power before sending through an application. Instead of a hard search, we’ll take a ‘soft’ approach that doesn’t leave a mark on your credit score.

Tips to boost your application

Car finance declined? Here are some expert tips to boost your chances and get your application over the finish line:

Choose the right lender

Different lenders have different approval criteria. Some specialise in car finance for poor credit and others focus on prime borrowers. Finding a lender that aligns with your credit profile will help improve your chances of success.

Save for a larger deposit

A larger upfront deposit can reduce the amount you need to finance and make your application more attractive to lenders.

Secure a guarantor

If your credit history is a concern, asking a financially responsible guarantor to co-sign your car finance agreement can improve your approval chances.

Review your budget

Make sure your budget is realistic and that you can comfortably afford the monthly payments before applying for car finance.

Improve your credit score

A proactive approach to improving your credit score can open doors to better car finance options in the future.

Car finance declined? We’re here to help

We love a good challenge at My Car Credit, which is why we’re happy to work with applicants who have been declined in the past. Instead of giving up, we see rejections as an opportunity to assess your financial situation and address outstanding issues. Plus, we work with a large panel of lenders which makes it easier for us to push through applications.

Give us a call on 01246 458 810 to find out more or email us at enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

How Do Car Finance Calculators Work?

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What Happens if I Can’t Pay My Balloon Payment?

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

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

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

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

Require more help?

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

or call 01246 458 810

car finance credit score debt employment Jan24 lenders poor credit

Is It Hard to Get Car Finance?

Auto finance is a popular way to secure the keys to a new car but for many Brits it remains a mystery. If you’re wondering ‘is it hard to get car finance’, this guide is for you. We’ll cover everything you need to know about car finance, including how to ace the application process.

Understanding the car finance landscape

The first step is to understand your different options when it comes to car finance. In the UK, the most popular auto finance options are Personal Contract Purchase (PCP), Personal Contract Hire (PCH) and Hire Purchase (HP).

Overcoming poor credit

The next step is addressing the potential roadblocks that might make you think getting car finance is challenging. The most important is your personal credit history. Lenders typically use your credit score to assess your reliability as a borrower. A solid credit score helps support your application while a track record of late payments or defaults can raise red flags.

Is it hard to get car finance with poor credit? A less-than-ideal credit score can be a hurdle, but it doesn’t mean finance will definitely be declined. Many lenders are happy to work with applicants who have poor credit scores and offer options tailored to this scenario.

Options for success

Wondering how hard it is to get car finance with poor credit? Below, we’ll explore a few different options to boost your application and improve your chances of success.

Partner with a broker

Enlisting the help of a broker can be a great way to overcome issues like poor credit. The best brokers work with high street banks as well as independent lenders who are more flexible when it comes to applicants with poor credit. You may not enjoy the same best-in-class deals as applicants with excellent credit scores, but your chances of approval will be significantly higher.

Build your credit score

Taking steps to improve your credit score is another easy way to secure car finance.

Consider a guarantor

Another approach is to secure a guarantor, a co-signer who vouches for your ability to repay the loan. Sharing the responsibility can increase your chances of approval.

Increase your down payment

Increasing your initial deposit can make your application more appealing to lenders as it reduces the amount you need to finance and proves you have the capacity to save and budget.

Give your application the green light

At My Car Credit, we don’t see challenges as roadblocks. We see them as opportunities to assess and improve your financial situation. Our dedicated team will help build you a strong application, then expose it to a broad network of lenders to improve your chances of approval.

Is it hard to get car finance without a broker? While it’s definitely possible, help and support from the experts will make your experience a whole lot easier. If you’re ready to get started, give us a call at 01246 458 810 or email us at enquiries@mycarcredit.co.uk to find out more.

Rates from 9.9% APR. Representative APR 12.4%

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

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

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

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

Require more help?

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

or call 01246 458 810

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

Red sports car bought on finance driving down the road

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

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

Leasing: an alternative to vehicle purchase

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

The benefits of leasing a car

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

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

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

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

The downsides of car leasing

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

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

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

Finance: a ticket to ownership

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

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

Personal contract purchase

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

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

Hire purchase

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

The benefits of financing

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

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

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

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

The downsides of financing

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

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

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

Lease vs car finance: which is better for you?

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

Options to own the car outright

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

Monthly payments

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

Mileage habits

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

Customisation

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

Long-term plans

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

Maintenance responsibilities

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

Financial stability

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

The final word on leasing vs finance

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

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

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

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

How Does Auto Finance Work?

What is the Oldest Car a Bank Will Finance?

Can I Finance an Automatic Car?

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

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

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

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

Require more help?

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

or call 01246 458 810

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PCP Finance Explained – Personal Contract Purchase Guide

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

Want to know more? Read on for a complete guide to PCP finance explained, including how it works and why it could be a great solution for your next car purchase.

What is PCP finance?

PCP is a type of car finance that allows you to secure the keys to a reliable car, without the hefty upfront costs or ownership commitment of a traditional purchase.

Here’s how it works:

Get the ball rolling: The early stages of a PCP agreement usually see your financial provider perform a credit check. Ideally, they’ll use a ‘soft search’ that won’t leave a mark on your credit score. The fun part is researching cars and deciding on a vehicle. When this is done, you’ll discuss the terms of your PCP agreement with the lender. This usually includes the value of your initial deposit and how long you’d like the agreement to be.

Deposit: You put down an initial deposit to show the dealer you’re serious and lock in your preferred car.

Drive away: Once the paperwork is sorted, it’s time to drive away in your new car and enjoy the open road.

Monthly payments: After your initial deposit, you pay manageable monthly instalments. These payments typically cover the depreciation of the car over the agreed term. With PCP finance, your monthly payments are typically lower than with other options as they don’t cover the full cost of the car. This can make getting behind the wheel of a new model surprisingly affordable.

Balloon payment: At the end of the PCP agreement, you have a few choices. You can either return the car (in good condition, of course), part-exchange it for a new one, or pay a final ‘balloon payment’ to buy the car outright. If you need more clarification on how balloon payments work, simply ask your lender for more Personal Contract Purchase information.

The benefits of PCP finance explained

Wondering if PCP finance is the right route for you? Let’s break it down with a closer look at some of the key advantages:

Lower monthly payments

PCP payments are usually lower compared to a traditional car loan or Hire Purchase (HP) agreement.

Flexible choices

PCP gives you options at the end of the agreement, allowing you to decide if you want to keep the car or swap it for a new one. If you need your options at the end of your Personal Contract Purchase, don’t hesitate to ask your lender for clarification.

Newer cars

Love that new car smell? PCP agreements allow you to get behind the wheel of a car that’s fresh from the showroom.

Lower upfront costs

Smaller deposits make PCP a real drawcard for motorists without much capital to invest.

Fixed interest rates

With PCP you’ll enjoy the comfort of fixed interest rates, making it easier to budget.

Warranty cover

Many PCP deals come with manufacturer warranties, giving you peace of mind when it comes to maintenance.

PCP vs. other auto finance options

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

Hire Purchase (HP)

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

Personal Contract Hire (PCH)

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

Personal loan

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

Hit the road with PCP Finance

Ready to start your PCP finance journey? Remember, it’s important to fully understand the terms and conditions of your PCP agreement before you sign on the dotted line. It’s like checking the weather forecast before a long drive – being prepared is the key to a seamless trip.

Why choose My Car Credit for PCP finance?

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

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

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

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

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

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

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

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Check for car finance without affecting your credit score

Advantages and Disadvantages of PCP Car Finance

How Does Car Finance Work in the UK?

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

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

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

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

Require more help?

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

or call 01246 458 810

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How Long Does It Take To Get Car Finance Approved in the UK?

So, you’ve found your dream car, a suitable car finance deal, and you want to hit the road instantly. But how long does it take to get car finance approved in the UK?

How long does it take to get car finance approved?

The initial submission for car finance can take mere minutes. However, you’ll then need to wait for any initial quote to be approved.

The turnaround time for this will vary between car finance lenders. As a general guide, assume that you will wait at least 24 hours to hear if you’ve been accepted. That could even extend to 48 hours and longer, depending on the factors we detail below.

What factors impact how long it takes to get car finance?

Credit scores

Car finance providers will perform a hard credit check to assess your car finance affordability. These take a little longer to perform than any initial soft credit check, and will impact your overall credit score too.

It’s absolutely possible to secure car finance with a poor credit rating, but your application may be swifter with a higher score. Plus, you’ll be eligible for better terms.

Use free online tools like Experian to get a free credit score check and establish whether your report has any issues before applying for car finance. This will help to speed the application process along.

ID checks

Any car finance provider will need to perform an identity check. You’ll typically be asked to submit copies of your driver’s licence, which therefore needs to be valid – you’ll be instantly rejected if it isn’t.

As well as your driving licence, you’ll most likely need to provide a complete address history. Lenders will ask for the past three years of your address, and may ask for current proof of address too. You’ll also need proof of income, or evidence of profit for self-employed businesses, for many providers.

Having all the relevant documentation to hand can significantly speed up the car finance approval process. Ensure that you have the relevant ID, and that it’s all up-to-date before applying for car finance.

Time of day

If you’re after same-day approval for car finance, apply as early in the day as possible! Some lenders will only turn around same-day approval if you apply by a certain time, so it’s worth checking this.

Secure timely car finance with My Car Credit

Email us on enquiries@mycarcredit.co.uk to get the ball rolling with your car finance journey.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

How to Finance a Car in 4 Easy Steps

Will I Get Accepted for Car Finance?

I want to buy a car on finance, how much can I borrow?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

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

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

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

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

Require more help?

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

or call 01246 458 810

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How Should New Drivers Start Saving for a Car?

If you’re a new driver, you may find yourself asking ‘but can I afford to buy a car?’ After a house, a car is one of the most expensive purchases you’ll make in your lifetime. As such, it’s sensible to start saving for a car as soon as possible.

In this post, we’ll cut out the jargon and explain how to start saving for a car.

Why should you start saving for a car?

With all the car finance that’s available, you may find yourself wondering why it’s even worth saving for a car.

With car finance, you borrow a pre-determined amount of money against the purchase of a vehicle. You then pay this money back via a series of monthly instalments – plus interest.

As such, if you can start saving for a car deposit (sometimes called a down payment), you’ll be reducing the sum of your monthly car finance repayments. You’ll also be saving on the total car finance that you owe, because you won’t have as much interest to pay.

For example, if you borrow £7,000 for your car finance, you may face monthly repayments of £265. The overall amount that you might pay for your car finance could therefore reach £9,500. However, by putting down an initial deposit of £2,000, your monthly repayments would drop to £190. You’d be paying back £8,800, saving you £700 overall.

The higher your interest rate, the higher the amount you’ll save if you put down a deposit. Aiming to save between 10 and 20% of the overall amount is a good figure to go for.

How to start saving for a car

Your unique circumstances will determine what car finance is right for you. The size of deposit you can aim for will also be unique to you, and will vary according to the kind of car you’re saving up for.

Although it’s beneficial to have a higher deposit saved up, you should also be realistic. Break down your monthly budget, factoring in all expenditure, and establish a realistic figure for the amount that you can expect to save each month.

Also, remember that once you’ve secured car finance and a new vehicle, there will be other vehicle expenditures, such as maintenance and insurance fees.

Once you’ve established a realistic figure to save towards a car, you can decide where to store that money.

If you already have a savings account, you could set up a regular direct debit or standing order. This will automatically transfer a set amount each month, so that you don’t have to think about it. If you don’t have a savings account, take the time to compare different options.

If you already have a car, remember that you can trade it in or sell it. That can help to offset the cost of your next vehicle. Just remember to compare offers from different dealers or private buyers before settling on your final choice.

Find car finance today

Now that you’ve learned why and how to start saving for a car, you can start to think about your car finance. Contact My Car Credit on enquiries@mycarcredit.co.uk to learn more.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

What is a Guarantor Loan?

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

Balloon Payments Explained: What, Why & How

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

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

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

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

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

Require more help?

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

or call 01246 458 810

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Cons of car finance:

Personal loan: simple and straightforward

Pros of personal loans:

Cons of personal loans:

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