Car Finance Options Archives

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 finance

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

Personal contract purchase (PCP)

In a personal contract purchase 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 finance agreement, you have three choices:

Return the car
Trade in the car for a new model, moving into a new car finance agreement
Make a large 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. The minimum guaranteed future value indicates how much a car will be worth by the end of a PCP finance agreement. Making the final balloon payment means paying off this amount to own the car for good.

Hire purchase (HP)

Hire purchase is a more straightforward type of car finance and puts you on a direct path to owning the car outright. The total cost of the car, minus any deposit paid upfront, is spread over fixed monthly payments for a hire purchase agreement. 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 finance 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 finance offers flexibility but stops short of ownership unless you’re willing to make a final 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 finance ideal for motorists with long-term ownership goals.

Monthly payments

Lower 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. This is due to the balloon payment, which covers the actual car cost should you want to buy outright.

Monthly payments are higher for HP agreements as you’re paying off the entire cost of the car, plus interest. You may prefer to save money with PCP finance compared to HP repayments and put money aside for the final lump sum.

Balloon payment

The need for a balloon payment at the end of a PCP agreement can catch some motorists off guard. As explained above, it covers the cost of the vehicle which isn’t included in PCP repayments. It is optional though, so you can choose to move to a new PCP finance deal with a car upgrade or just return the vehicle.

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 car’s mileage cap. The reasoning behind this is that the finance company wants to protect the value of new cars in case they’re returned at the end of the agreement. It’s well known that higher mileage means lower value, especially for newer cars.

Your mileage limit will typically be from 5,000 to 10,000 miles per year. This can make PCP limiting for high-mileage motorists. However, going over the agreed mileage limit doesn’t mean you can no longer use the car – it simply means you’ll pay extra charges (which will be outlined in your PCP agreement).

With HP, you’re free to drive as much as you like without worrying about mileage restrictions or penalties. That’s because, all being well, you will be the eventual owner of the car at the end of the HP finance term. For many motorists, this freedom makes the HP vs PCP decision easy.

Customisation options

Since you’re essentially leasing the car in a PCP agreement, there may be restrictions on customisations. That’s because the finance company may be getting the car back at the end of your term. It makes it harder for them to lease or sell it if it has custom features.

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. If you like to customise cars, hire purchase agreements are probably the car finance option for you.

Similarities between these two car finance options

While these two types of car finance have their differences, it’s worth noting the ways in which they’re similar too. These include:

Manageable monthly payments – Both PCP and HP finance make it more affordable to drive a new car, breaking down the cost into monthly repayments.

Term length – When comparing car finance options, PCP and HP finance both have similar repayment terms. You can typically expect to make monthly payments for 3-5 years, though shorter and longer deals are available.

Initial deposit – PCP and HP finance both require an initial deposit in most cases. This reduces the amount you’re borrowing which results in lower monthly payments. A smaller deposit will result in higher monthly instalments and could even affect the interest rate you’re offered.

New cars – Both of these options make it practical to drive a new car. Rather than facing one big lump sum, you’ll break the cost down into manageable monthly instalments. However, you can use PCP and HP for both new and used cars.

The bottom line on HP vs PCP

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 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).

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

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 10.9%

Evolution Funding Ltd T/A My Car Credit

Can You Modify a Car on HP Finance?

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

Car Finance for First Time Drivers: A Beginner’s 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 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 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 10.9%

Evolution Funding Ltd T/A My Car Credit

What is the Oldest Car a Bank Will Finance?

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

PCP Term: Everything You Need to Know

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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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 been refused car finance – from credit history to each lender’s criteria – and offer some expert tips on how to turn the tables.

1. Poor credit history

One of the most common reasons people are refused car finance is a poor credit history. Lenders rely on your credit score to assess your trustworthiness as a borrower. Credit scores are generated by credit reference agencies, which provide a credit report for car finance lenders.

Firstly, it’s important not to continually make multiple applications when you’ve been refused car finance. That’s because each hard search with a credit agency leaves a visible mark on your credit file. These can stack up and affect your credit score over time because they typically indicate previous rejections.

A history of late or missed payments on utility bills and finance repayments can drag down your credit score and make lenders cautious about approving your application. Other reasons for a bad credit score include a lack of credit history, common for younger customers, county court judgements and not being on the electoral roll.

To improve your chances, consider building a better borrowing history before submitting your next application. Joining the electoral register is a simple step to take, but you can also avoid missed payments and ensure you pay other finance agreements and bills on time.

2. High debt-to-income ratio

Mainstream 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 paying off debt. Many lenders use this to get a better idea of your current personal circumstances, rather than simply basing their decision on a low credit score or good credit score.

If you’ve been declined car finance, it may be that you’ve reached your credit limit. In other words, any more monthly payments would put you into financial difficulty. A responsible lender won’t knowingly approve your car finance application with that in mind. To lend responsibly, they need to ensure applicants meet their own criteria for affordability.

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 what you earn 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. Car finance deals make it easier to afford a better car compared to paying money up-front, but there are still limits to what you can afford in terms of repayments.

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 be refused car finance.

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 (self-employed) basis, lenders may view it as a risk factor and you could be refused car finance as a result.

Self-employed people usually struggle with their employment status as it’s hard to guarantee how much you’ll earn. This can be very frustrating, especially if you earn a good amount through self-employment but simply don’t meet the lender’s criteria. In this instance, it’s well worth comparing deals with a few finance companies. There are also specialist lenders for self-employed people.

Having a consistent job and regular income can increase your chances of being approved for car finance. Checking your employment status is just another form of affordability – lenders think that you’re more likely to keep up with loan repayments if you have a steady amount of money coming in each month.

5. Applying with multiple lenders

Another reason you may be refused car finance is having too many applications on your credit file. There are a few reasons for this, but above all else, it’s another factor that leads to a bad credit score (also known as a bad credit rating).

When you apply for car finance, most mainstream lenders carry out a ‘hard’ credit check as part of the screening process. As we mentioned earlier, multiple hard searches in a short period can negatively affect your credit score and make lenders wary. If you’re refused for car finance 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’ search that doesn’t leave a mark on your credit score. It’s good practice to check whether a lender will perform a hard or soft search to avoid unnecessary poor credit.

Tips to boost your application

Been refused car finance? 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 reduce your chances of being declined car finance.

Save for a larger deposit

A larger upfront deposit can reduce the amount you need from finance agreements and make your application more attractive to a car finance company.

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 file can open doors to better car finance options in the future.

Refused car finance? 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.

We’re not a standalone mainstream lender. Instead, we’re a car finance broker, helping people get car finance by working with a large panel of lenders. This makes it easier for for us to find suitable deals and get you approved for car finance, whether it’s hire purchase, personal contract purchase or leasing.

Give our free car finance calculator today!

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What is the Oldest Car a Bank Will Finance?

Is There a Maximum Age Limit for Car Finance?

How Does PCP Work at the End of the Term?

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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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 10.9%

Evolution Funding Ltd T/A My Car Credit

Advantages of Cars on PCP with No Deposit

How Long Does It Take to Buy a Car?

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

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

car finance credit score Jan24 poor credit

Leasing a Vehicle vs Financing: What’s the Better Option?

Red sports car bought on finance driving down the road

Leasing a vehicle vs financing it – what’s the actual difference? Car finance and leasing are two of the most popular kinds of auto loan agreements available. While both offer routes to vehicle ownership, they have unique pros and cons.

In essence, when you’re leasing a vehicle, you’re renting the car with no ownership option at the end of term.

Financing a vehicle involves making monthly payments towards ultimate ownership.

Whether you’re a new driver scoping out options by which to fund your first set of wheels, or you’re business owner looking for clarity on the difference in leasing and financing a car, this guide’s here to help.

In fact, here’s a handy table breaking down the differences between leasing a vehicle vs financing it:

	Leasing	Financing
Ownership	No – at the end of a lease, you hand back the keys	Options to own the car once all repayments (plus interest) are made in full
Costs	Low upfront costs compared to financing a car Lease cars are also often covered by a manufacturer’s warranty, saving you money on repairs/maintenance	Higher monthly payments Maintenance and repair costs, as you’re responsible for the vehicle’s upkeep
Flexibility	Less flexibility compared to financing – you can’t customise your vehicle, and you can face restrictions like mileage limits and penalties if you hand the car back with unreasonable wear and tear	Freedom to customise the vehicle as you want No mileage or usage restrictions (with some financing agreements)

What does it mean to lease a car?

If you’re leasing a car, it’s like a long term rental. You’re making monthly repayments to the lender for full use of the car, which you then return at the end of the agreement.

One of the main attractions of a lease vs finance car is ownership. When you lease a vehicle, you return it at the end of term, giving you the flexibility to switch to a new car every few years.

What’s more, you can benefit from lower monthly payments when leasing a vehicle vs financing it. Plus, a lease car is often covered by a manufacturer’s warranty, meaning you won’t face maintenance or repair expenses.

However, with a leased car, you’ll also face mileage restrictions, and can be subjected to financial penalties if you return the car in less than good condition, or if you need to end the agreement early.

What does it mean to finance a car?

There are plenty of flexible, affordable car finance options for drivers with different circumstances and needs. Two of the most popular agreements are Hire Purchase (HP) and Personal Contract Purchase (PCP).

Hire Purchase (HP)

HP is one of the most popular and simplest kinds of car finance agreements. Your monthly repayments cover the entire cost of buying the vehicle, plus interest payments. You won’t face an optional balloon payment, so you’ll own the car outright at the end of the agreement. HP is an affordable and practical car finance agreement.

Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) offers low monthly payments, flexibility and the option to drive a new car more often. Unlike HP, at the end of a PCP contract, you have the option of making a final balloon payment to secure full ownership of the vehicle. PCP is a flexible car finance agreement for drivers with different financial circumstances.

Ultimately, both HP and PCP are like mortgage agreements – but for cars. You’ll make monthly payments that contribute towards ownership, and can benefit from options to keep, upgrade or trade in your vehicle at the end of term. You’ll face higher monthly payments if you finance a car compared to leasing, but financing can ultimately lead to asset ownership, building equity.

Key Difference in Leasing and Financing a Car

Ownership

Leasing – you’ll never own the vehicle at the end of term

Financing – you have options to either keep or trade in and upgrade your vehicle at the end of term

Payments

Leasing – you’ll cover the cost of vehicle depreciation in your leasing repayments, benefitting from lower upfront costs and monthly payments

Financing – you’re paying off the full value of the vehicle in a car finance agreement, so will have higher monthly payments compared to leasing, but you build personal equity with every payment

Flexibility

Leasing – less flexibility: you’ll face mileage restrictions and penalties for causing more than fair wear and tear on a vehicle, and can’t customise it to your needs

Financing – more vehicular freedom and flexibility

Which is cheaper – leasing or financing a car?

There are key cost differences when leasing a vehicle vs financing it.

With leasing, you’ll benefit from lower monthly payments. However, you’ll never own the vehicle, so there’s no investment or opportunity to build equity.

Financing agreements have higher monthly payments than leasing. However, you’ll benefit from building long-term value, and some agreements give you the option to fully customise the vehicle as you see fit.

When evaluating the cost of a lease vs finance car, you need to evaluate the total cost of ownership, your preferences for owning and customising a car, whether you can face mileage and usage restrictions and consider whether you’re looking to acquire a valuable asset.

Pros and cons of leasing vs financing

Leasing – pros

Lower monthly costs
Regularly switch up your vehicle to a new one
No resale hassle

Leasing – cons

No ownership
Mileage and usage limits
Can face end-of-lease charges
Not building asset acquisition

Financing – pros

Path to ownership
No mileage or usage caps with some agreements
Asset acquisition that you can later sell

Financing – cons

Higher monthly costs (including maintenance and repairs)
You cover the car’s depreciation

Leasing vs financing: which is better for you?

There’s no straight answer as to whether leasing a vehicle vs financing it is best for you. It depends on your circumstances, as well as what you want from car ownership. Let’s consider the benefits of a lease vs finance car for different driver profiles:

If you’re a student or young driver, leasing a car is a more affordable path to car usage. However, car financing builds towards asset ownership, which is a great way to build equity.

Alternatively, car financing gives long-term stability for families looking to secure and eventually own the next set of wheels.

But if you’re a business owner, car leasing may be a more tax efficient means by which to have a company car.

Lease vs finance car deals

There’s no one-size-fits-all approach when it comes to leasing a vehicle vs financing. The right agreement for you depends on your motoring needs and personal circumstances.

If you’re leaning towards car financing, My Car Credit gives you access to one of the UK’s widest panels of lenders, helping you to secure a suitable deal that fits you.

Use our car finance calculator to discover the kind of car finance agreement you could access, or contact our friendly team for expert advice.

Leasing vs financing FAQs

Is leasing the same as renting a car?

Leasing a car is much like a long-term rental. You’ll benefit from lower monthly payments compared to car financing, and get to hand the vehicle back at the end of your agreement, allowing you to regularly switch up your next drive.

Can you buy a car after leasing it?

There’s no option for car ownership on a leasing agreement. If you think you might want to own the car at the end of term, a car finance agreement is more likely to be suitable for you.

Is financing a car better for bad credit?

If you’ve got poor credit, car leasing can be more difficult to secure. Companies like My Car Credit can work with individuals of all credit profiles to help secure the most appropriate poor credit car finance for your circumstances – without judgement.

Can I get out of a lease or finance agreement early?

Provided you’ve met certain conditions, you can return your financed car to the lender through the voluntary termination process. If you end a car lease early, you could face a penalty for doing so – this figure will be specified in your contract.

Which is more flexible if my circumstances change?

A car financing agreement is more flexible if your circumstances change, as you have the opportunity to end the agreement early by paying the voluntary termination figure. Lease agreements can have substantial penalties you’ll need to pay for ending an agreement early.

Is PCP the same as leasing?

PCP is a type of car finance deal that differs from car leasing. When you lease vs finance a car, you’re essentially benefitting from a long-term rental, whereas PCP has ownership options at the end of agreement.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What is Hire Purchase? – Simple HP Explanation

How Much Does Car Finance Cost? Check Now!

Can You Get Cars on HP with No Deposit?

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

car ownership finance hp Jan24 leasing pch PCP

What Is PCP Car Finance? A Simple Guide to Personal Contract Purchase

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.

A new car on the driveway feels great. A huge upfront payment? Not so much. That’s where personal contract purchase (PCP) finance comes in.

PCP offers low monthly payments, lots of flexibility and the chance to drive a newer car more often. At the end of the term, keep it, swap it or hand it back. No pressure, just options. It’s no wonder PCP is one of the most popular auto financing options in the UK.

Looking for a clear guide on PCP finance explained? Continue reading to get a simple, easy-to-understand breakdown of how PCP finance works and what it means for you, from deposits and balloon payments to hidden costs and the best ways to save money.

What is PCP car finance?

Personal contract purchase works differently from other auto finance options like personal contract hire (PCH) and hire purchase (HP). Instead of paying off the full cost of a car, PCP covers only depreciation (this is the difference between the car’s price today and its predicted value at the end of the contract).

Lower monthly payments than options like HP
More choice at the end of the contract. Keep the car, swap it or hand it back
Access to newer, more expensive cars for less

No big upfront payments

Like other finance options, PCP helps spread the upfront cost of getting behind the wheel. Instead of saving for months or dipping into savings, drivers pay an initial deposit and start driving straight away. Some deals even offer zero-deposit PCP, making it easier to upgrade without a large lump sum. Since monthly payments only cover depreciation, rather than the full cost of the car, upfront costs stay low while still providing access to newer models.

PCP works best for those who change cars frequently or want an affordable way to drive something newer. If you want personal contract purchase explained in a way that highlights affordability, this structure makes it clear why PCP is such a popular option.

PCP finance explained: how does finance work on a car?

Instead of paying off the full value of a vehicle, drivers cover depreciation only. This means lower monthly payments compared to options like hire purchase. At the end of the term, instead of owning the car outright, there’s a decision to make:

Keep it
Trade it in for something new
Hand it back and walk away

The process starts with an initial deposit, followed by fixed monthly payments over an agreed period, usually between two and four years. When the contract ends, a balloon payment (also called the Guaranteed Future Value) determines whether the car stays or goes.

For those who like swapping into something fresh every few years, personal contract purchase keeps things simple – providing lots of options without long-term commitment.

A PCP deal breaks down into three key parts:

Deposit – the upfront payment

Unlike a traditional down payment that reduces the total loan amount, a PCP deposit helps cover the car’s depreciation.

A higher deposit lowers the monthly payments and makes finance more affordable over time. Some dealers offer zero-deposit PCP deals, but these usually mean higher monthly costs. The deposit also reassures lenders, showing commitment to the agreement and improving approval chances.

How much is a PCP deposit?

Usually 10% of the total value of the car. So, if you’re buying a new Ford Fiesta worth £20,000 you’ll pay a deposit of £2,000 upfront. If you’re looking at a BMW X5 worth £70,000 your deposit will be £7,000.

Can you get a PCP deal with no deposit?

Yes, some lenders offer zero-deposit PCP deals. But they’re usually reserved for applicants with excellent credit scores. Keep in mind that monthly payments increase without a deposit, because the entire finance amount is spread across the contract term. Skipping the deposit keeps upfront costs low but it also means higher long-term payments and potentially more interest paid overall.

Just want PCP car finance explained simply? A deposit reduces the amount borrowed, which lowers monthly costs and the total interest paid.

What happens to the deposit?

The deposit isn’t refunded at the end of the agreement. That said, if the car is worth more than the Guaranteed Minimum Future Value (GMFV) at the end of the contract, this difference can go towards the deposit on a new PCP deal.

Is it worth paying a bigger deposit?

While a larger deposit lowers monthly payments, it doesn’t always make financial sense. Paying too much upfront ties up cash that could be used elsewhere, and since PCP isn’t structured for outright ownership, a big deposit won’t necessarily bring major benefits. If keeping the car at the end is a priority, some drivers prefer to spread costs evenly and put money aside for the final balloon payment instead.

Can a part-exchange be used as a PCP deposit?

Yes, a trade-in vehicle can be used towards the deposit on a new PCP deal. If the car being traded in is worth more than the settlement figure, the difference can go towards the next agreement, lowering the amount borrowed. This can be a great way to upgrade without needing a lump sum upfront.

The amount you borrow

Unlike HP, where the loan covers the full cost of the car, Personal Contract Purchase only finances a portion of the vehicle’s value. The amount borrowed is based on how much the car is expected to depreciate over the course of the agreement, not the car’s total price.

How is the PCP loan amount calculated?

PCP finance is structured around three key figures:

The car’s price today
The Guaranteed Minimum Future Value (GMFV)
The deposit paid upfront

The difference between the purchase price and the GMFV (minus any deposit) is what gets financed.

For example, a £30,000 car with a GMFV of £15,000 after three years means the car is expected to lose £15,000 in value over the contract term. If a £3,000 deposit is paid upfront, the amount borrowed would be:

£30,000 – £15,000 – £3,000 = £12,000 financed

This £12,000 loan is then spread across monthly payments. Explaining PCP finance simply – borrowers only pay for the car’s depreciation, rather than its full value.

How depreciation affects monthly payments

Depreciation plays a major role in PCP affordability. Cars that hold their value well (think premium brands like BMW, Audi or Lexus) often have lower monthly payments because the gap between the initial price and the GMFV is smaller. On the flip side, payments can be higher for vehicles that lose value quickly, as the finance company takes on greater risk.

This means two cars priced at £30,000 but with different depreciation rates could result in very different PCP payments:

Car A (low depreciation)

GMFV of £18,000 after three years.

Borrowed amount: £30,000 – £18,000 = £12,000

Car B (high depreciation)

GMFV of £12,000 after three years.

Borrowed amount: £30,000 – £12,000 = £18,000

Despite the same purchase price, Car B costs £6,000 more to finance, meaning higher monthly payments.

How to reduce the amount borrowed

Drivers looking to cut monthly costs have a few options:

Choose a car with strong resale value – A higher GMFV means borrowing less.
Increase the deposit – A larger upfront payment reduces the amount financed.
Opt for a shorter term – Lowering the contract length can improve the GMFV.
Negotiate a lower interest rate – A lower APR means smaller finance charges.

The balloon payment

A balloon payment is the final lump sum due at the end of a PCP agreement. Unlike HP, where monthly payments gradually cover the full cost of the car, PCP leaves a significant balance unpaid until the final stage of the contract. This unpaid balance is called the Guaranteed Minimum Future Value (GMFV) and is an estimate of the car’s worth at the end of the agreement.

This model keeps monthly payments low but leaves drivers with a decision at the end of the term. Three options are available:

Return the car – Walk away with no further costs
Buy the car – Make the balloon payment
Part-exchange – Trade it in for a new deal

What if the car is worth more than the balloon payment? Good news. If the car holds more value than expected, the extra amount can go towards a new finance deal.

We’ll cover all three in more detail below!

How does PCP work at the end of the term?

PCP finance explained – it keeps things flexible right up to the final stretch. When the contract ends, there’s no pressure to stick with one path. Drivers choose what works best for them. Whether it’s handing the car back, keeping it or using it to fund a newer model, the options stay open.

Here’s how it plays out:

Return the car

Nothing more to pay with this option. Just hand the car back to the lender and walk away.

Best for: Drivers who like to upgrade their car regularly or want flexibility at the end of the contract.

No extra cost if: The car stays within mileage limits and remains in good condition.

Possible charges: Exceeding mileage limits or returning the car with excessive wear and tear could result in fees.

Buy the car

Want to keep the car? You’ll need to cover the balloon payment in full. This figure is set at the start of the agreement and reflects what the car should be worth at the end of the term. No surprises. Just a final bill standing between you and outright ownership.

Best for: Drivers who want long-term ownership or find the car’s value higher than the agreed GMFV.

No more finance payments: Once the balloon payment is settled, full ownership transfers to the driver.

Consider the cost: The final payment can be hefty. Some drivers choose to refinance the balloon payment with another finance deal to spread the cost.

Part-exchange

If the car ends up worth more than the GMFV, the difference can go towards the deposit for a new PCP deal. A handy way to roll into a newer model without a big upfront cost.

Best for: Drivers who like upgrading without saving for a large deposit.

Equity boost: If the car’s market value exceeds the GMFV, the extra amount reduces the deposit on a new PCP deal.

No guaranteed profit: If the car holds less value than the GMFV, no equity remains for a new deal.

Choosing the right PCP exit strategy

Flexibility sits at the heart of PCP. No long-term commitment, no pressure to stick with the same car. Just options that fit different needs. Whether it’s upgrading, keeping or trading in, drivers stay in control.

Best choice for frequent upgraders? Hand the car back and start a new PCP deal.
Best choice for keeping the car? Cover the balloon payment or refinance.
Best choice for rolling into a new deal? Trade the car in and apply the equity towards a fresh PCP agreement.

Benefits of PCP

There’s lots to love about PCP finance. Here’s a closer look at the benefits:

Lower monthly payments

PCP agreements focus on the car’s depreciation rather than its full cost. Instead of covering the entire value, payments go towards the difference between its original price and its expected worth at the end of the contract. With smaller monthly costs than options like hire purchase (HP), this keeps budgets in check while keeping options open.

More car for your budget

PCP stretches budgets further. A standard finance deal might cover a reliable runaround, but PCP offers access to something newer, sleeker or better equipped. A mid-range trim instead of the base model, a hybrid instead of petrol, leather seats instead of cloth. For drivers after the latest comfort or tech without breaking the bank, PCP makes it possible.

Flexible at the end

PCP offers more than one way out. Pay the balloon payment and keep the car. Trade it in and roll any equity into a fresh deal. Or hand it back and walk away. No pressure to commit upfront. No long-term ties. Just options that suit different circumstances.

Smaller upfront costs

PCP explained – it makes car finance more accessible, with lower deposits, or sometimes none at all. No need to drain savings or hold off for months to build a deposit. Just a manageable way to get behind the wheel.

Equity potential

If the car’s value sits higher than the GMFV, the difference rolls into the next deal as a deposit. A model with strong resale value means a better starting point for the next agreement. While never guaranteed, this can work in favour of drivers looking to upgrade without saving separately for a deposit.

Drawbacks of PCP

PCP has some great benefits but it’s important to understand the full picture before committing. Here’s a look at some of the potential drawbacks:

Mileage restrictions

Every PCP agreement includes a mileage limit. Drive beyond it, and fees apply per extra mile. The cost might seem small per mile, but over the years, it adds up. Best to estimate mileage honestly at the start rather than face a surprise bill later.

Condition requirements

Normal wear and tear are expected, but anything beyond that might mean extra charges. Scratches, dents, scuffed alloys or a coffee-stained interior could lead to fees. Keeping the car in good nick avoids unexpected costs at the end of the contract.

Final payment required to own the car

PCP doesn’t include ownership at the end unless the balloon payment is settled. Drivers wanting to keep the car need to cover this amount, often requiring extra savings or a refinancing deal.

Total cost may be higher

Interest applies not just to the borrowed amount but also to the balloon payment. This means, over time, the total amount paid could exceed what a similar car would have cost with an outright purchase or HP. Weighing up affordability against flexibility is key.

How to cut your monthly PCP car finance payments

PCP already stands out for its lower monthly payments. But with a bit of strategy, those payments can shrink even further. Here’s how to make PCP even more affordable.

Increase the deposit

A bigger deposit means borrowing less from the lender. Less borrowing leads to smaller monthly payments, keeping costs manageable over time. Most PCP agreements require at least 10% upfront, but putting down more trims down repayments even further. Worth considering if savings allow, but balancing affordability is key. No point in sinking all available funds into a deposit if it leaves nothing for running costs.

Choose a car with slow depreciation

Cars lose value over time, but some hold onto their worth better than others. Luxury brands, electric vehicles with strong demand and popular models tend to retain value, making them better suited to PCP deals. A higher resale value means a lower balloon payment at the end, keeping costs lower throughout the contract. Checking resale trends before picking a car can save a fair bit over the term of the deal.

Extend the contract length

PCP agreements usually run for two to four years, but stretching to five years spreads the cost further. Monthly payments drop, making it easier to budget. A longer contract does mean paying more interest overall, but for those prioritising lower monthly outgoings, it’s a sensible trade-off. Don’t forget, keeping within the expected mileage limit is important! Going over could mean extra charges, even with a longer term.

Look for low APR deals

Interest rates play a big role in the overall cost of PCP finance. A lower APR reduces the total amount paid over time, so it’s worth shopping around to find the best deals. Some dealerships and manufacturers offer promotional APR rates at certain times of the year, so timing a deal well can also mean decent savings.

What you need for PCP finance

Before getting started with a PCP deal, lenders check a few key details to make sure applicants meet the requirements. Nothing too complicated but having everything in order speeds up the process. Here’s what’s needed:

Personal details – Full name, date of birth and residential address history (usually covering at least three years). Lenders like stability, so a consistent address history helps.

Employment details and income – Current employer, job role and income details. Self-employed? Some lenders ask for tax returns or bank statements as proof of earnings.

Bank details – Account number and sort code for setting up the monthly payments. Some lenders also check banking history to assess financial stability.

Identification documents – A valid UK driving licence or passport confirms identity. You might also be asked for proof of address, like a recent utility bill or council tax statement.

Credit history check – Lenders run a credit check to see past borrowing behaviour. A strong credit score helps unlock better rates, but options exist for those with less-than-perfect records.

With these details ready, the PCP process moves along smoothly. A bit of prep upfront makes all the difference.

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 the 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.

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.

Frequently asked questions about PCP

What does PCP stand for?

Personal Contract Purchase.

Is PCP car finance a good idea?

PCP works well for low monthly payments and flexible choices at the end.

What if I want to end my PCP car finance contract early?

Early termination is possible but may include settlement fees.

How does PCP work at the end of the term?

The car can be returned, traded in or bought outright.

What are the risks of PCP car finance?

PCP keeps things flexible, but it’s not without its pitfalls. Go over the mileage or hand the car back with a few too many scuffs, and expect extra charges. That balloon payment at the end? Not exactly pocket change. And if the car’s value takes a nosedive, there’s no leftover equity to put towards your next set of wheels.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What is a Balloon Payment on a Car Loan?

5 Different Ways to Pay for a Car

How Long Does It Take to Buy a 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 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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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 10.9%

Evolution Funding Ltd T/A My Car Credit

Financing a Second-Hand Car: 4 Options

What’s the Cheapest Way to Finance a Car?

Car Finance vs Personal Loan, what’s best for me?

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

approval car buying car finance credit score Jan24 time

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 10.9%

Evolution Funding Ltd T/A My Car Credit

What is a Balloon Payment on a Car Loan?

How Does Auto Finance Work?

Leasing a Vehicle vs Financing: What’s the Better Option?

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

car buying car finance credit score savings young driver

Can You Get Zero Deposit Used Car Finance?

Securing used car finance with no deposit may sound like a pipe dream. In fact, there are lenders around who can help you to find finance for a used car whilst paying no deposit. That said, there are potential barriers to doing so.

Can you find used car finance deals with no deposit?

The short answer is – yes. Many lenders will work with you to find a no-deposit car finance deal on a used vehicle. There are many benefits to this option. You don’t have to pay a hefty lump sum upfront – typically just a modest reservation fee – and can crack on with full use of the vehicle.

However, typically only candidates with high credit scores will secure zero deposit used car finance. Individuals searching for car finance with a poor credit rating are unlikely to be offered a no deposit car finance deal, whether for a used vehicle or not.

Remember, too, that there are benefits to paying an initial deposit. Car finance deals like Hire Purchase (HP) or Personal Contract Purchase (PCP) require a deposit, which in turn reduces the size of your overall monthly repayments, as well as any interest rate attached.

By not paying an initial deposit, you have more money to pay back overall, which might also translate to a longer repayment period too.

As such, although no deposit used car finance might sound appealing, candidates with less than excellent credit ratings, or those who want more affordable repayment schemes, might want to reconsider whether it’s the most suitable option.

Find the right car finance for you

Find out if zero deposit used car finance is right for you with help from the My Car Credit team. Email us on enquiries@mycarcredit.co.uk and get behind the wheel of your ideal car finance today.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What Does ‘Finance’ Mean When Buying a Car?

What’s the Cheapest Way to Finance a Car?

PCP Term: Everything You Need to Know

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

car buying car finance credit score Jan24 zero deposit

Understanding the difference between HP and PCP finance

PCP vs HP: how the two compare

Similarities between these two car finance options

The bottom line on HP vs PCP

Rates from 9.9% APR. Representative APR 10.9%

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How conditional sale works

Why choose conditional sale?

A road to ownership

No balloon payments

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Customisation options

Take the wheel with My Car Credit

Rates from 9.9% APR. Representative APR 10.9%

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Factors to consider when opting for Hire Purchase

Understand interest rates

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Start your journey to ownership with My Car Credit

Rates from 9.9% APR. Representative APR 10.9%

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1. Poor credit history

2. High debt-to-income ratio

3. Unrealistic expectations

4. Lack of employment stability

5. Applying with multiple lenders

Tips to boost your application

Choose the right lender

Save for a larger deposit

Secure a guarantor

Review your budget

Improve your credit score

Refused car finance? We’re here to help

Rates from 9.9% APR. Representative APR 10.9%

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Partner with a broker

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Give your application the green light

Rates from 9.9% APR. Representative APR 10.9%

Key Difference in Leasing and Financing a Car