Car Finance Options Archives

How to Use a Car Payment Calculator – What Can I Afford?

Shopping for a new car is exciting. From choosing the make and model you like through to deciding on accessories and design features, finding a new car is serious fun. But financing that purchase might be a different matter.

After a house, a car is likely to be the second highest purchase you ever make. As such, finding the money for that purchase may seem overwhelming, as you’re unlikely to be able to pay via cash up front. That’s where car finance can help. Car finance is a credit agreement that allows you to have full use of the car. You simply pay off via a series of pre-agreed monthly instalments plus interest. There are different kinds of car finance, and the right one for you will depend on your circumstances.

One of the key tools that will help you to determine the kind of car finance you can afford is a car finance calculator, and this article breaks down how to use a car payment calculator in order to calculate the kind of loan you can afford.

How to calculate your car finance

If you’ve started your search for car finance, you may have heard of the 20/4/10 rule. Per this rule, you should use the following parameters to find car finance that works within your means:

Make a down payment (deposit) of at least 20% of the car’s value
Choose car finance for a maximum of four years
Only spend 10% of your gross monthly income on the vehicle

Limiting expenditure on the car to 10% of your gross monthly income is arguably the most important thing to remember. Within this percentage, you also need to accommodate the vehicle’s running costs, like its insurance, maintenance expenses and fuel. This will also vary depending on factors including where you live and your annual mileage, but Nerd Wallet reports that it costs an annual average of over £3000 to run a car in the UK.

Establishing the budget that you have to work with for your car finance is therefore a vital first step. It will differ from your peers depending on the above factors (namely your salary and the running costs you can expect to pay for the car). Without establishing this budget in advance, you won’t have all of the information to know what you can afford, so it’s worth doing so before you use a car payment calculator.

Remember, you can often find car finance deals that will allow you to make smaller payments over longer periods of time, but this does mean you’ll be paying more on interest. This is why putting down a large deposit can have serious advantages, as it will make your monthly repayments smaller.

To calculate the kind of car finance loan you can afford, you’ll also need to know your credit score. You can use Experian’s free credit score checker to get this.

Once you’ve taken stock of your financial situation and set out a budget you can work with, you can use our car finance calculator to get an indication of what you’ll be able to borrow from us via an APR, a monthly repayment figure, total cost of credit and total amount payable.

What’s the APR?

All of the above factors will determine the annual percentage rate of interest (APR) that you’ll pay on your car finance.

You can get an exact APR (also known as a personal APR) by filling in our car finance calculator and choosing the ‘Apply now’ button. From there, you fill in a form which provides us with your personal information and financial history, as well as the kind of deal you’re looking for. We can then give you an APR.

Find out more about car finance today

If you have further questions or concerns about car finance, you can contact My Car Credit on enquiries@mycarcredit.co.uk. Our friendly team of specialists is on hand to address any queries you have, and will help to find you a finance agreement that works for your unique needs.

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

Is There a Maximum Age Limit for Car Finance?

Different car finance providers will have different maximum age limits for their loans, so it’s worth shopping around to find one that will work with your needs and within your life circumstances. The main things that any potential lender will scrutinise are your credit history, your income, and the status of your licence – however, there are still ways of securing car finance even with a poor credit score.

This article details the minimum and maximum age limit for car finance, laying out factors to consider before applying, so that you can go into your car finance search as informed as you can be.

Is there a minimum age limit for car finance?

In order to secure car finance, you need to be a minimum of eighteen years old. It might seem strange that you can pass your driving test and hit the roads at the age of seventeen yet be unable to take out car finance, but there’s a reason for this.

Car finance is a credit agreement – also known as a loan agreement. This is a legally binding contract established and agreed upon by a borrower and a lender. It’s an official document that typically lays out the terms of the loan, as well as details such as the total amount due, your rights as a borrower, any conditions surrounding early repayment, a timetable of expected repayments, and repayment terms.

Credit agreements can only be entered into by those over the age of eighteen. As car finance is a credit agreement, this means that you can only secure it once you hit that age.

At the age of eighteen, you’re unlikely to have built up a substantial credit history. Depending on the car finance provider you’re looking to enter into an agreement with, you may be able to apply for a guarantor loan. This is essentially where someone else with a good credit history – for example, a family member – agrees to pay off your debt in the instance of you being unable to. Be aware, however, that guarantor loans may have a maximum age limit.

Is there a maximum age limit for car finance?

Whether or not you have car finance eligibility varies between providers. Some providers will take retirees and pensioners, as they’ll scrutinise your credit score and history. It really depends on the provider that you’re seeking a car finance deal from.

However, in most cases, the maximum age for car finance eligibility is seventy-five. That said, if you are retired, we will work with you in order to help you find car finance. It’s your credit history that really matters, as well as proof of income. This can come from either a pension, investment or property rental income.

If you are either retired or a pensioner, it’s also worth being aware that any lender with whom you enter into an agreement will likely look to minimise the term of the loan, so as to share any associated risks.

What to consider when applying for car finance

There are ways to make yourself a more appealing candidate for car finance, even if you are close to a provider’s maximum age limit.

Checking your credit report before applying for financing can help you gauge what kind of candidate you might be, which will put you in the driving seat (so to speak) during your search for car finance. Although there are ways to secure car finance with a poor credit rating, you’ll get a better deal if you’re a low-risk borrower.

Having money to put towards a deposit on the car can also make you a more attractive candidate, as it will reduce the total amount that you’re borrowing. It will therefore be more affordable overall, and your monthly repayments will be more manageable. You’re also likely to pay lower overall interest, too.

You’ll experience similar benefits if you opt for a shorter-term car finance contract, too. You may end up paying more with every monthly instalment, but you’ll save on overall interest rates.

See how My Car Credit can help you

We’re happy to work with drivers in different age groups to help you secure your dream car finance. Find out how we can kickstart your car finance journey by emailing our friendly team on 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 CS Car Finance?

How Many Years in a Car Loan 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 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

age car finance eligibility car finance options considerations Jan24

Electric Car: Lease vs Buy – Which is Best?

An increasing number of Brits are embracing the EV revolution, with some choosing to lease and others opting to buy. Both options come with a unique set of pros and cons, which we explore in more detail below. But first, let’s dive a little deeper into the EV uptake in the UK.

EVs gaining popularity across the UK

The uptake of EVs is on the rise in the UK, with the latest statistics from the Department for Transport (DfT) confirming sales of battery-powered cars hit record highs in 2021. In the North, EV registration numbers jumped to almost 75,000 last year. This represents a leap of more than 50% compared to the previous year. Nationwide, the DfT estimates there are more than a quarter of a million EVs driven by British motorists.

To cope with demand, the government has pledged to install 300,000 public EV charge points across the country. This is almost five times more than the number of fuel pumps currently available to motorists. Transport Secretary Grant Shapps says it’s part of a plan to establish the UK as a global leader in EV uptake. He says supporting EVs will not only help motorists save money on fuel but will play a critical role in helping the country meet its net-zero targets.

Now we know more about how much momentum EVs have gained in the UK, let’s take a closer look at some different ways to get behind the wheel of these eco-friendly vehicles. Which is best – an electric car lease vs buying an EV? Or is there another option that combines the best of both?

The pros of leasing an EV

Maintenance and servicing costs are included in your monthly repayments.
Depreciation isn’t a concern, as you never take on ownership of the vehicle.
Similarly, you won’t need to worry about selling the car when you’re ready to upgrade.
At the end of the lease, you’re free to upgrade to a newer model. This makes leasing an appealing option for many motorists. If you love the butter-soft feel of new leather seats or enjoy the latest tech, sound systems and driver assist features, leasing can be a great solution.
If you use your EV for business, leasing can offer some tax write-offs.

The cons of leasing an EV

Mileage is generally restricted, which means you’ll need to keep tabs on how far you drive. If you’re planning to use your EV for road trips, long daily commutes or as a full-time business car, leasing can be restrictive.
Leasing agreements can also be restrictive when it comes to wear and tear. If you use your car to transport kids, pets or anything else that can make a mess, leasing may not be the best option.
You may still be liable to cover serious damage to the vehicle, which means leasing isn’t a 100% risk-free option.
You never acquire ownership of the EV, which restricts how you can use the vehicle. For example, you may not be allowed to take the car out of the country, which rules out a weekend away in France or a ferry to Ireland.
Charges may be applicable if you want to end the lease before the agreed term. This can make leasing a more expensive option in the long run.

The pros of buying an EV outright

You acquire full ownership of the vehicle the moment the transaction is approved. This gives you complete freedom over mileage, wear and tear, international destinations and other factors that can be restricted with leasing.
Buying an EV outright is the cheapest option as you don’t take on debt. This eliminates extra costs like interest, as well as fees and charges.

The cons of buying an EV outright

You’ll need to cover the total cost of the vehicle outright. In the UK, the cheapest electric cars like the Smart EQ Fortwo Coupe will set you back at least £17,000. Bestsellers like the Kia Niro EV are priced at almost £35,000 for new models, while the wildly popular Tesla Model 3 will set you back almost £45,000. Most Brits simply don’t have the cash to purchase a new EV outright.

EV Finance – The Best of Both Worlds

As we’ve explored, there are pros and cons to both leasing an EV and purchasing outright. This is where financing can be a clever option. Purchasing an EV on finance balances the two options and offers the best of both worlds – you take on full ownership of the car, with the freedom to spread the payment over a longer period.

Depending on the type of financing agreement you choose, there may still be limits and restrictions. However, in general you’ll enjoy far more freedom than on a lease contract. EV technology has improved in leaps and bounds over the past few years, with models like the Tesla Model S offering incredible range of more than 400 miles on a single charge. For family-friendly EV models like the Hyundai IONIQ 5, expect a top driving range of 315 miles.

These are impressive stats and have reimagined the functionality of EVs. Want to skip the forecourt, slash your carbon footprint and cover serious distance? Use our quick and easy calculator to get a car finance quote and unlock a budget for your EV purchase.

Finance for Second-Hand EVs

If you’re thinking about purchasing a second-hand EV, financing can help stretch your budget further and minimise the financial stress of buying a car. Unlike leasing agreements, which are generally reserved for only the newest models, car finance can be used to purchase a pre-loved EV. This can be a great way to get behind the wheel of an EV while keeping your monthly repayments as low as possible.

Join the EV revolution

Thinking of financing an EV? You’re not alone. The latest data from the Finance & Leasing Association confirms more than 90% of new vehicles are financed. In the UK, a personal contract purchase (PCP) is the most popular car finance option. Contracts generally span for three to five years and come with attractive interest rates when you shop around for the right provider.

PCP usually starts with an initial deposit, with the remaining cost spread over monthly repayments. At the end of the loan, you’ll have the option to purchase the car outright with a balloon payment. This payment tops up the total amount you’ve already paid to match the Guaranteed Minimum Future Value (GMFV) of the EV, which was agreed on at the start of the loan.

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

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Advantages and Disadvantages of PCP Car Finance

Is There a Maximum Age Limit for Car Finance?

Check for car finance without affecting your credit score

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 options car lease electric electric cars hire purchase personal contract purchase

What is a Balloon Payment on a Car Loan?

The car loan industry has its fair share of jargon, and as a prospective buyer, it’s important to understand the lingo. “Balloon payment” is one of the most common terms you’ll encounter when shopping for loans, which is why we’ve dedicated an entire article to it.

Read on to find out more about the definition of a balloon payment on a car loan, what to expect and how to get the best deals on vehicle finance.

What is a balloon payment on a car loan?

The concept of a balloon payment on a car is relatively simple. It’s a final instalment, paid to the lender in a lump sum at the end of your loan. The balloon payment is usually larger than other previous payments and is designed to ensure the lender isn’t out of pocket.

Balloon payment car loans are offered on two types of finance agreements – Personal Contract Purchase (PCP) and Lease Purchase. We take a closer look at each below:

PCP balloon payment

PCP loans are one of the most popular ways for Brits to get behind the wheel of a new car. Most contracts span for three to five years and require monthly payments. At the end of the contract, you’re offered the option of making a final balloon payment to purchase the car outright. Also called an Optional Final Payment, this final instalment gives you full ownership of the car.

How a PCP balloon payment works

At the beginning of your loan, the lender calculates the balloon payment based on the Guaranteed Future Value (GFV). This is the predicted resale value of the car at the end of the agreement. The balloon payment is designed to cover the remaining value of the GFV.
The GFV doesn’t change over the life of your contract, regardless of whether the value of the car fluctuates.
After making your final balloon payment, you take legal ownership of the car.

Think a PCP loan could be the right solution for you? Fast and easy to use, our car loan approval calculator is a great way to get the ball rolling and find out how far your budget can take you.

Lease Purchase (LP) balloon payment

LP agreements give you the option to pay a percentage of your loan at the end of the contract. This figure is called the balloon payment and unlike PCP loans, it’s not optional. Over the lifetime of the agreement, you’ll need to set aside cash to pay off the balloon payment. Once the balloon payment has been made, you take on full ownership of the vehicle.

How an LP balloon payment works

At the start of the contract, you and the lender agree on a set amount to defer. For example, a car may cost £16,000 and you choose to defer £4000.
The remaining £12,000 is paid over the next four years, in monthly payments.
After making your final monthly instalment, you top up your balance with the balloon payment of £4000. This gives you legal ownership of the vehicle.

The benefits of a balloon payment on a car

Lower monthly repayments

Opting to make a balloon payment at the end of your contract is a great way to unlock lower monthly repayments. You’re essentially deferring a percentage of the total cost until the end of your finance agreement. This brings down your monthly repayments and can make it easier to incorporate a car loan into your budget.

Stretch your budget further

For many motorists, balloon payments are a great way to stretch the budget further. Instead of settling for a less-than-ideal vehicle, a balloon payment allows you to defer part of the cost and secure the keys to your dream car. With a responsible attitude towards finance, there’s plenty of time to save for your balloon payment.

Do all car loan contracts include a balloon payment?

No, not all contracts include a balloon payment. Options like Hire Purchase (HP) agreements incorporate the total cost into your monthly repayments. This means there’s no need to make a balloon payment at the end of your contract.

Can I refinance a balloon payment car?

We get it. Things come up and despite the best intentions, it’s not always possible to cover your balloon payment at the end of your contract. If you find yourself in this situation, it is possible to refinance a balloon payment car. Agreements usually take on a Hire Purchase model and spread the cost of your balloon payment across several months or years. At the end of the contract, you become the legal owner of the vehicle.

It’s worth noting that before opting to refinance a balloon payment, you should consider the current value of the vehicle compared to the cost you’ll have to absorb to keep it. If the vehicle is worth less than the balloon payment, it’s generally best to return it and purchase a similar second-hand car for less. Similarly, if the car is worth more than the balloon payment, it’s worth refinancing and committing to full ownership.

If you think refinancing your balloon payment could be a good option, the first step is to reach out to your lender. It’s also worth getting in touch with our team to discuss refinance options. Our panel includes plenty of lenders willing to offer balloon payment finance plans designed to help you stay behind the wheel.

Find out more about balloon payments

Want to know more about balloon payment car instalments and the different types of loans available to you? Send us an email or give us a call on 01246 458 810 to chat to an experienced team member. We’re here to help, so don’t hold back when it comes to questions and queries.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

8 Benefits of Getting an Electric Car on Finance

No Deposit Car Finance – How Does it Work?

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

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

balloon payment finance leasing PCP pcp balloon payment repayments

What is CS Car Finance?

When you’re financing a car, it’s important to compare all of your options to find what’s best for you. One of the options available is CS car finance – but not everyone is familiar with what it means and how it works. Read on as we outline what CS car finance is.

CS car finance explained

When it comes to car finance, CS stands for conditional sale – which goes some way to explaining how it works. The sale of the car is dependent on the buyer meeting conditions of their CS agreement.

These agreements are also known (and possibly better known) as hire purchase (HP). Here’s how it works:

The buyer makes monthly repayments towards the cost of their car, plus any pre-agreed interest charged by the lender.
Repayments are made over a course of 1-5 years. A longer term means lower monthly payments, as you’ll be spreading the cost more. However, it also means more interest overall as you’re borrowing for longer.
At the end of the term, you own the car. Unlike PCP, there is no option as to whether you do or don’t buy the car.
That also means there’s no balloon payment – by the end of your term, the car will be fully paid off.
An upfront payment isn’t always necessary, though it will reduce the amount left to pay each month – and, in turn, the amount of interest you pay.
Because you will own the car at the end of the term, there are no charges for damage, excess mileage or depreciation.

Car finance made easy

At My Car Credit, we’re dedicated to making car finance clear, simple and accessible for drivers throughout the UK. That extends from our straightforward explanations of car finance options like CS finance to our hassle-free online application process. Calculate your car loan today to put us to the test.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

No Deposit Car Finance – How Does it Work?

Is there such a thing as guaranteed car finance?

How Does Auto Finance 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 options conditional sale CS Car Finance hire purchase Jan24

Can I Get Car Finance with a Provisional Licence?

Car finance is a popular option for all kinds of drivers, not least those getting their first car. But what about buyers who haven’t actually passed their test? There are lots of people out there who want to buy a car ready for the moment they pass or even learn and take their test in a new set of wheels.

In this post, we’ll explain whether you can get car finance with a provisional licence and the limitations in doing so.

Car finance with a provisional licence

The good news for the people mentioned above is that you can get car finance with a provisional licence. The main requirement is that you’re legally able to drive the car you’re buying.

With a provisional licence, that simply means you need someone with you who is over 21 years old and has held their own full licence for three or more years. Or a qualified driving instructor, of course. It’s also worth noting that you’ll need to be at least 17 years old, even though you can apply for a provisional licence once you reach 15 years and 9 months.

Because you haven’t passed your test (and there’s no guarantee you will), lenders may put some limitations on the kind of car they will help you finance – and how much you can borrow. An upper limit of around £25,000 can be expected, although this depends on affordability.

If you want to increase your chances of success or get more freedom when it comes to your car finance options with a provisional licence, consider the following:

Joint application – You can apply for joint car finance with someone living at the same address.
Guarantor – Getting someone to guarantee your loan will give lenders the reassurance they need.

Talk to our car finance experts

My Car Credit aims to make it easier to get the car you want and need, whatever your circumstances. Check your car finance eligibility online today to get started, and don’t hesitate to contact our team on enquiries@mycarcredit.co.uk if you have any questions.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

How Does Car Finance Work in the UK?

Financing a Second-Hand Car: 4 Options

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

car finance options guarantor Jan24 joint application learner driver provisional licence

How to Find Car Finance for Young Drivers

Getting behind the wheel of a car is an exciting milestone for young drivers. Whether it’s a brand-new Ford Fiesta or a second-hand SEAT Ibiza, the sense of freedom that comes with a new car is invigorating. Understandably, many young drivers don’t have the cash to purchase a car outright. This is where car finance for young drivers steps up.

With a strong application, a positive attitude and a good amount of groundwork, you can take advantage of car finance for young drivers and get the keys to your new ride ASAP. Of course, car finance for young drivers does have its challenges. That’s why we’ve put together this guide designed to help you build a strong and attractive application.

Expand your horizons with a large lending panel

When it comes to securing car finance for young drivers, a large lending panel makes a big difference. It’s definitely possible to find car finance as a young driver, but barriers like lack of experience and financial history make it a little harder than usual. Enlisting the help of a broker can be a great way to expand your horizons and expose your application to as many lenders as possible.

One of the first things a broker will assess is eligibility and of course, age is a factor. Can you get car finance at 18? Absolutely. Here’s how a broker can help:

Let a broker do the hard yards

Instead of individually contacting lenders, a broker does all the legwork for you. They have the experience and expertise to match your application with the right lenders and products, thus increasing your chances of success and helping you secure the best interest rates and loan terms on car finance for young drivers.

Contrary to popular belief, many lenders are excited to help young drivers get behind the wheel of their first car. They won’t automatically refuse applications based on age and some even offer products designed especially for young drivers. You just have to know where to look! Once again, this is where a broker comes in.

Brokers are also a fantastic resource as they can help get you up to speed on the different types of car finance for young drivers. There are several different options available in the UK, each with its own unique pros and cons. As a young driver it’s important to understand what you’re signing up for. Brokers can help you navigate the car finance realm and select a product that’s right for you.

Choose an affordable vehicle

Naturally, most lenders will be wary about offering car finance to your drivers eyeing vehicles featuring high-powered V6 engines. Similarly, your chances of securing car finance for young drivers are lower if you’re shopping for a top-of-the-range Jeep 4×4 or luxury model like a Chevrolet Corvette. Even if you have the best intentions, applying for car finance to purchase these sorts of vehicles can imply you’re a high-risk borrower. Keeping your application realistic and down-to-earth will help you win over lenders and find the best car finance deals for young drivers.

Choosing an affordable vehicle not only boosts your chances of being approved for car finance but can also slash the cost of insurance. Most young drivers are hit with big premiums during their first year of driving, with many paying more than £2,000. As a young driver, it’s worth considering models that are cheap to insure. This includes popular cars like the zippy Hyundai i20 and the much-loved Fiat Panda. Want to know more? Don’t miss our roundup of the 10 cheapest cars to insure for young drivers.

Consider ‘black box’ insurance

As well as bringing down your premiums, ‘black box’ car insurance can be a great way to win over lenders. Also known as telematics, this type of insurance policy sees a black box installed in your car. It uses GPS to collect data on your driving behaviours, including things like speed, mileage, braking habits and the time of day you get behind the wheel. This data is used to assess your driving style and calculate a premium, ideally less than the blanket policies offered to other young drivers.

Ultimately, motorists who drive safely and responsibly are rewarded with lower premiums. Black box insurance can also help show lenders you’re committed to being a conscientious, low-risk driver.

Take advantage of young driver incentives

While car finance for young drivers does have its challenges there are also some great perks and incentives out there. Some dealerships offer student-friendly incentives while others attract young drivers with special rebates. You may also be eligible for discounts on your insurance premium, gifts such as retail vouchers and cashback schemes.

Shopping around for these deals can be tricky, which is where a broker can help. They’ll assess your application and match you with lenders who are most likely to approve your loan and ideally, offer you some great perks.

Tips to boost your credit score as a young driver

Lack of financial history is one of the biggest barriers young drivers face when applying for car finance. Below, we cover some quick and easy ways you can build a borrowing history and boost your credit score. In a matter of months, you can drastically improve your chances of securing car finance for young drivers.

Apply for a low-limit credit card

Many banks offer low-limit credit cards designed with students and young people in mind. Applying for one of these products can be a great way to build your credit history, as long as you use it responsibly and pay off your debt every month.

Pay off any existing credit card balances

If you already have a credit card with a significant balance, doing everything you can to pay it off is a guaranteed way to improve your credit rating.

Set up direct debits for bills

Rather than topping up your phone on a pay-as-you-go basis, consider setting up a direct debit. This helps pad out your credit history and shows lenders you’re capable of committing to regular monthly payments.

Car finance made easy for young drivers

Whether you’ve passed first-time in your late teens or you’re a twenty-something ready to upgrade your car, My Car Credit aims to make it easy to find car finance for young drivers from all backgrounds. Ready to get your application rolling? Reach out to our team by email on enquiries@mycarcredit.co.uk or give us a call on 01246 458 810 to find out more car finance for young drivers.

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

affordability car finance options credit score Jan24 young drivers

How to Finance a Car in 4 Easy Steps

Car finance is growing in popularity in the UK. In fact, the Finance & Leasing Association (FLA) recently announced that consumer car finance has increased by 39% from February 2021 to February 2022.

Why? Car finance is an affordable, accessible way of purchasing a new or nearly new vehicle. There are various kinds of car finance available, depending on the circumstances of the buyer, and many lenders will now work to provide car finance to those with a poor credit rating.

If you’re new to the car finance world, you may be wondering how to actually finance a car. This article is here to help you gauge what to look for when considering car finance, helping you to stay in the driving seat.

How to finance a car: 4 steps

Establish your priorities

There’s no ‘one size fits all’ approach – different kinds of car finance will suit different people differently! One of the best ways to work out which type of car finance would suit you is by asking yourself key questions.

Are you looking for a new or nearly-new vehicle? Would you prefer to own your car at the end of your car finance deal, or will you plan to sell it? What kind of credit score are you working with? Can you work with mileage and other usage caps?

Once you’ve got an idea of the answers, you’ll be better able to tailor your car finance search.

Ask yourself what you can afford

Remember, car finance can be made up of different kinds of payment, depending on which finance option you opt for (more on that later). You need to ascertain what you’re able to afford, so that you can choose a deal that suits you.

You may prefer higher monthly repayments and a shorter term or lower deposit, or favour things the other way around. If you want to purchase the car at the end of the finance term, you’ll need to factor in this one-off payment. Remember, if you opt for a finance term with mileage or other limits, you may face penalties if you exceed these.

Your credit score will play a significant role in the kind of car finance you can secure. Higher credit scores tend to result in lower interest rates and better deals, but plenty of car finance providers can still work with you if you have a poor credit score – just be sure to determine who these are from the beginnings of your search.

Decide which car finance is for you

There are different kinds of car finance – your perfect deal depends on your needs. The most common are car loans, personal contract purchase, hire purchase, and personal contract hire. All of them involve making affordable monthly repayments over a pre-determined period of time, alongside interest.

We’ve written plenty about the pros and cons of these different kinds of car finance elsewhere – just browse the hundreds of helpful blogs and articles that we’ve compiled – but a quick summary goes as follows:

Car loans are like a personal loan, making them more expensive and better for those with good credit scores, but you will own the car from the get-go.
Personal contract purchase is a flexible option and you can opt to purchase the car at the end of the finance term.
At the end of hire purchase, you’ll automatically own the car and you’re paying less interest, but your monthly repayments are higher.
Personal contract hire is essentially a long-term rental with mileage caps but lower monthly repayments.

Reach out to car finance providers

Now that you know what kind of car finance terms you’re looking for, you can reach out to car finance providers, many of whom will have an online application process to determine whether you’re suitable for car finance.

At My Car Credit, we make things easier by comparing deals across our large network of trusted lenders. You’ll get a no-obligation quote within minutes with simple, straightforward online applications. You just tell us about yourself and your priorities, and we’ll use our unique technology and stellar network with the best lenders to find the right car finance deal for your circumstances.

Car finance made easy

Don’t panic if you still have questions about how to finance a car – My Car Credit’s friendly team of specialist advisors are available to answer any questions that you may have.

We aim to take the stress out of the search, so get in touch today on 01246 458 810 or email 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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Why Does Car Financing Take So Long?

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

affordability application process car finance process Jan24 lenders

Should I Lease or Finance a Car?

Choosing between leasing or financing a car will depend on your needs and circumstances. In both instances, you’ll be able to use a vehicle as you pay a series of pre-determined monthly instalments – but the main difference between leasing and financing a car is whether or not you end up the vehicle’s owner.

As such, there’s no right or wrong answer to the question of whether you should lease or finance a car – it’s all about your priorities. Read on to find out more.

Car leasing and car financing – what’s the difference?

Leasing and financing a car may sound similar, but they do have key differences.

The main difference between leasing and financing a car is ownership. When you lease a vehicle, you’re essentially borrowing the vehicle from a dealer for a specified period of time – usually anywhere from 12 months up to 60 months. You’ll pay a monthly fixed amount which usually includes service and maintenance fees. At the end of the lease’s term, you hand the car back – you’re never its owner.

With car financing, however, you have the option of owning the car at the end of your finance term. Much like leasing, you’re making a series of fixed monthly repayments over a pre-agreed time period, after which time you have the option of making a final payment, making you the car’s legal owner.

Buying a car outright is the other option when buying a car – but you need savings or a personal loan in order to finance this.

Should you lease or finance a car?

As with anything, whether or not leasing or financing a car is most appropriate for you will depend on your priorities and preferences.

Leasing a car – the advantages

When you lease a car, your monthly repayment amount will typically cover service and maintenance costs.
As you are never the vehicle’s owner, you don’t have to worry about the car depreciating in value over time.
If you like to change your car frequently, leasing is a far more appealing option.
Because you won’t own the vehicle, you also don’t have to worry about reselling it at the end of the lease term.
If you use your car for business purposes, you may benefit from greater tax write-offs with a lease (unless it’s a luxury vehicle).

Leasing a car – the disadvantages

There’s usually a mileage limit for leased cars, and you do have to pay a penalty if you exceed this, so if you’re a driver of long distances, leasing may not be for you.
Although service and maintenance costs are covered, if you cause any serious damage to the vehicle, you may incur further charges.
You don’t ever own the vehicle.
You may also incur charges if you want to end the lease deal early.

Financing a car – the advantages

Car financing tends to be more flexible than leasing a car. Similar to leasing, you can use the length of the agreement, and you may be able to decide on an annual mileage limit and deposit amount.
Car finance is typically available on both new and used cars, whereas leasing is only available for the newest vehicles.
If you’re after the lowest possible monthly repayments, car finance on a used car is the best option.
At the end of car finance, you’ll own the car. Depending on which finance you’ve gone for, you may need to make a final payment, after which you are the car’s legal owner.

Financing a car – the disadvantages

With PCP finance, you can choose whether or not you want to own the car at the close of your deal. However, as with leasing, if you opt to return the car, but have exceeded the mileage limit or caused excessive damage to the car, you will incur extra charges.
You are locked into a repayment schedule, so you need to ensure that your financial circumstances aren’t likely to change whilst you’re repaying your car finance. Missed repayments will affect your credit score – though there are ways of securing car finance even with a poor credit rating.

Talk to us about car financing and leasing

If you still have questions about whether car finance or a car lease is best for you, get in contact with My Car Credit on 01246 458 810 or email 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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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 calculator car finance options car lease Jan24 leasing

Can I Give My Car Back to the Finance Company?

We get it, things change. Whether your car no longer suits your lifestyle or you’re struggling to stay on top of monthly payments, there are many different reasons why you might be asking “can I give my car back to the finance company?” The answer will depend on the type of contract you’ve taken out, as well as other factors like how much of your loan has been paid off.

Below, we take a closer look at this scenario and answer all your questions about whether you can give your car back to the finance company.

Common scenarios where motorists return cars

Life doesn’t always work out how we plan it. Whether it’s finances or personal circumstances, things can change at the drop of a hat. With car finance deals lasting several years, those changes may well impact your affordability or the suitability of your car.

For one, your financial circumstances may have changed, and you can no longer commit to monthly repayments on your vehicle. This may happen for all kinds of reasons, from switching jobs or changing careers to absorbing additional expenses like purchasing a house or welcoming a baby to the family.

Alternatively, your personal circumstances might have changed, and your current vehicle no longer suits your lifestyle. For example, you may have purchased a compact Fiat 500 on a three-year PCP loan but find that two years later, it’s far too small to accommodate your new mountain biking hobby or pet dog.

What to do when car finance isn’t working out

If finances are the reason you want to cancel your car loan contract, the first step is to talk to your finance provider. It’s best to do this as soon as possible and honesty is always the best policy. Defaulting on your payments could not only incur extra charges but leave a black mark on your credit score, which could affect your eligibility to take out loans in the future.

Many lenders are happy to chat about your options and come up with a solution, especially if your financial difficulties are temporary. This could include deferring payments for a few months or extending the period of the loan to bring down your monthly repayments. Contrary to popular belief, most lenders don’t want to squeeze you dry and are keen to help you stay in the driver’s seat as long as possible, if it’s what you want.

If you can’t find a solution or you simply want to hand back the car, you’ll need to consider what type of finance contract you have. Read on for a closer look at the different types of car finance available in the UK and which ones offer the option of returning the vehicle.

Personal Contract Purchase (PCP)

Can I give my car back to the finance company with a PCP loan? If you financed your car with a Personal Contract Purchase loan and you’ve already paid off at least 50% of the amount owing, you can hand it back to the lender. Keep in mind that this 50% figure also includes fees and interest. This option is known as voluntary termination and will be written into your PCP contract.

If you haven’t paid off 50% of the loan, you’ll need to top up the balance before you have the option to return the vehicle. Unfortunately, if you’ve paid off more than 50% of the loan you won’t receive a refund. Ideally, you should try to return your car as close to the 50% mark as possible to avoid unnecessary payments. Of course, damage that exceeds everyday wear and tear can result in additional charges. You’ll also need to meet any mileage terms and conditions you agreed to.

Hire Purchase (HP)

Hire Purchase contracts are very similar to PCP loans and usually make it relatively easy to return the vehicle, so long as you’ve paid at least 50% of the amount owing. Under UK law, HP contracts are also eligible for voluntary termination which keeps your options open. It’s part of the Consumer Credit Act 1974, Section 99, which clearly states:

“At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement.”

While it’s likely voluntary termination will appear on your credit history, it won’t affect your score as long as you meet the 50% repayment requirement and don’t default on any additional fees or charges.

Want to know more? Don’t miss our complete guide to voluntary termination for car finance where we dive into this option in more detail.

Personal Contract Hire (PCH)

If you’ve purchased a car on a PCH loan the process of returning the vehicle can be a little more complicated. Most lenders will ask you to pay off the remaining balance in full, which can make for an expensive lump sum. So, can I give my car back to the finance company with a PCH loan? Yes, however, you may be in for some hefty fees. It’s best to contact your finance company directly and discuss solutions like deferring payments or extending the period of the loan before opting to return the vehicle.

Need to return your car?

Whether you want to know more about solutions like deferring your payments or have made up your mind and are ready to get the ball rolling on cancelling your car loan contract ASAP, My Car Credit is here to help. If you have a finance deal with us, you can call us on 01246 458 810 or email enquiries@mycarcredit.co.uk for any queries.

Or, perhaps you’re in the process of researching car loans and simply want to know more about your options when it comes to returning financed cars. If this is the case, our car loan affordability calculator is a great resource to help you decide what you can afford.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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What is CS Car Finance?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 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 agreement hire purchase pch PCP return

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