Jan24 Archives - Page 8 of 15

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 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 Does ‘Finance’ Mean When Buying a Car?

When it comes to car finance, there’s a lot of jargon and acronyms, and it’s easy to find yourself questioning what each finance agreement really means.

This post aims to help you get to grips with what different types of finance actually mean when buying a car, and how they work. Once you’ve understood the different kinds of agreements available, you’ll be on your way to securing a car loan quote that will work for your circumstances.

So, what does ‘finance’ mean when buying a car? Read on to learn more…

What does ‘finance’ mean when buying a car?

In essence, car finance makes the purchase of a car more affordable. It’s a credit agreement between you and the lender, allowing you to make full use of the vehicle whilst paying it off in cost-effective monthly instalments according to a pre-agreed schedule. The amount you pay off will also include additional interest on top.

What are the different kinds of car finance?

The right car finance for you will depend on the kind of agreement and terms that you’re looking for, as well as your own driving preferences and needs.

Car loan

A car loan is a type of personal loan but is specifically designed for use on vehicles.

With a car loan, you borrow the money from either a bank or building society. Once you’ve bought the car, you are its outright owner. You’ll repay the car loan over time via instalments, with added interest. Typically, a car loan is more likely to be granted to those with a good credit score – there are other kinds of car finance available for those with poor credit ratings.

Personal Contract Purchase (PCP)

Do you like mixing up the vehicles you drive? Are you happy sticking to mileage caps or paying excess fees for any vehicular wear and tear? Would you like flexibility in choosing whether or not to own the vehicle at the termination of the agreement? Then PCP is potentially the car finance for you. In fact, PCP is the most popular kind of car finance because of its low monthly repayments and flexibility.

With PCP car finance agreements, you’ll pay a deposit and monthly instalments (plus interest). The larger your deposit is, the lower these payments will be. These payments are typically lower than other kinds of car finance as you’re only paying for the car’s depreciation in value during the time that you’re using it.

You can also choose whether or not you want to own the car once you’ve fully paid off the finance. If you do, you’ll pay a final balloon payment to make up the remaining value of the car. If not, you can hand the car back to the dealer with nothing more to pay. Be aware that you won’t own the car unless you opt to do so at the agreement’s termination.

Hire Purchase (HP)

Hire purchase car finance is similar to PCP, but a little more straightforward. You’ll typically make a deposit of around 10% with HP finance, then make fixed monthly payments according to a pre-determined schedule. Repayment terms can be relatively flexible, and there are often competitive interest rates with HP finance.

Like with PCP, you won’t own the vehicle until you’ve made the final repayment of your agreement, but you can opt to do so with a final balloon payment. After this, you can choose to part exchange, sell or keep the car. However, unlike PCP, you won’t usually face mileage caps, so HP finance may be preferable for you if you’re regularly making long journeys.

Personal Contract Hire (PCH)

PCH car finance is when you lease the car, which is why it’s also known as a car leasing agreement. You will never be its outright owner – you’re essentially hiring it until the end of your finance agreement. In this way, PCH differs from either HP or PCP. Though it’s technically not car finance, as you’re not borrowing money, you’ll still see this term frequently used when discussing car financing options.

With PCH, you’ll typically pay a non-returnable deposit as well as your monthly repayments. At the agreement’s end, you’ll hand the car back. If you’ve gone over the mileage cap or have made unreasonable vehicular wear and tear, you’ll pay a penalty fee.

Find the right car finance for you with My Car Credit

Shopping around for car finance can seem stressful, but it needn’t be. My Car Credit aims to make the process of securing your dream deal stress-free and streamlined. Contact our expert team today on enquiries@mycarcredit.co.uk to start your car finance journey.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How to Finance a Car with Poor Credit

Can You Lease a Car with Poor Credit?

What Credit Score is Needed 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

car finance options car loan finance options hire purchase Jan24 pch PCP

Can I Finance an Automatic Car?

There are a number of benefits to automatic cars. From fuel efficiency and ease of use through to being more comfortable to drive during stop-start journeys in urban centres, there’s a reason why people opt for automatic vehicles. But can you secure car finance on an automatic car?

Can you finance an automatic car?

Yes, you absolutely can finance automatic cars. Your finance broker will be able to work with you to find a car finance deal that suits your circumstances, as well as covering the kind of car that you’re looking for, whether that’s a manual or automatic model. In fact, My Car Credit can even help you find car finance with poor credit, working with all kinds of drivers from a range of different backgrounds and with differing requirements.

This is obviously great news if you passed your test in a car with an automatic gearbox, as you’ll only be licensed to drive vehicles with automatic transmissions. However, many drivers simply prefer automatic cars even if they can drive manually.

Automatics can be more fuel efficient depending on your driving style. As well as better fuel economy, they eliminate the need to change gear, providing a smooth driving experience even in high traffic with no need to keep your foot over the clutch pedal. Not to mention making hill starts a breeze.

However, it’s worth noting that automatic cars may be more expensive to finance than manual options.

Why can automatic cars be more expensive to finance?

You’ll likely find that purchasing a manual, as well as insuring it, will tend to be cheaper than purchasing or insuring an automatic.

This is because automatic gearboxes such as continuously variable transmission (CVT) are more complex than manual ones. It requires more sophisticated technology, as the gearbox essentially chooses what gear you’re driving in. You’re just choosing between drive, park and reverse.

As such, automatic gearboxes tend to require more kit – meaning that they’re more expensive to produce, and more expensive to fix too. It also means that automatic vehicles have higher insurance premiums and are more expensive to buy in the first instance.

You’ll likely find that your finance agreement is therefore more expensive too, in order to reflect these costs. This may change over time as automatics become the norm. That’s because electric vehicles don’t need to change gear at all, so there’s no need for a gearbox.

As petrol, diesel and full hybrid cars are phased out, new and used automatic cars will become the norm, which could increase supply in line with demand to reduce costs.

Finance – automatic car options

Despite the higher cost, it’s well worth investigating your finance options if you’re set on cars with automatic gearboxes.

There are three main vehicle finance options, other than paying upfront with cash or via a personal loan. These are personal contract purchase (PCP), hire purchase (HP), and personal contract hire (PCH). All of these different kinds of car financing have advantages, depending on your needs as a driver.

Hire purchase

Hire purchase (HP) is arguably the simplest type of car finance for new and used automatic cars – as well as manual vehicles. The cost of your next car is broken down into monthly payments, plus interest. You then make these payments over the course of the repayment term, which can typically range from 3 to 5 years, until the cost has been paid for in full.

It’s very similar to a conditional sale, except that hire purchase has a small fee when you finish your agreement and purchase the car (rather than upgrading to a different vehicle, for example).

Personal contract purchase

Personal contract purchase (PCP) is another popular option for automatic cars. It’s similar to HP, but with a larger final payment. This is known as a balloon payment, which can be made if you want to buy the car outright.

Alternatively, you can opt out of the final payment and give the car back. In many cases, the money you pay will cover the car’s depreciation over the repayment term, with the balloon payment covering all of the interest (depending on representative APR) or a large portion of it.

Personal contract hire

Also known as leasing, PCH means you pay to use a vehicle for the length of your term. It takes the commitment out of your car search, as you know you’ll be able to switch to a new ride at the end of your deal – whether that’s automatic or manual.

Which is best for you?

Owning outright

One of the main factors when financing your next set of wheels is whether you want to own outright. If you definitely don’t, PCH is the best option, allowing you to continuously switch to your next car and drive newer models. If you definitely do, HP is for you. Alternatively, PCP offers more flexibility with the decision made at the end of your term.

Mileage

Mileage limits are another consideration. These are most common for PCP and PCH agreements to avoid excessive depreciation of the car’s value if you’re handing it back. You’ll need to pay if you exceed mileage limits, with charges per mile agreed as part of your deal.

If you don’t want to worry about mileage, HP may be the most suitable option. However, you’ll still need to check your agreement to make sure you don’t need to pay anything extra.

Availability

However, you may find that your finance provider will only finance an automatic car via one kind of finance deal. Whether or not that deal works for you will depend on your unique circumstances. That’s why it’s worth using a finance broker like My Car Credit, as you’ll be able to get the most competitive deal from our panel of lenders, rather than being restricted to just one.

Secure automatic car finance with My Car Credit

Compared to a manual car, one with an automatic gearbox can provide better fuel economy and an easier drive. With many new cars being automatic, there’s a better range than ever to choose from.

If you’re looking for finance on an automatic vehicle, find out how My Car Credit can help. Whether you want to discuss your finance options or your eligibility for finance, we’re on hand to support you through every step.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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What is heycar – And Should I Use Them?

What is the Safest Car for a Teenager?

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

automatic cars car buying car finance options hire purchase Jan24 PCP

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 you can kickstart your car finance journey by using our online car finance calculator or by emailing our friendly team on enquiries@mycarcredit.co.uk.

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

How to Strengthen Your Eligibility for Car Finance

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

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

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

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

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

Require more help?

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

or call 01246 458 810

age car finance eligibility car finance options considerations Jan24

Car Loan Early Repayment – Is It Worth It?

There are many reasons why people consider paying off their car finance early. But whether you are eligible to do so depends on your personal circumstances, as well as the details of your car finance agreement.

You should expect to pay a settlement fee if you opt for early repayment of your car loan. As such, whether or not early repayment is worth it will vary from person to person, but you do need to think hard about whether you can afford to do so.

What is an ERC?

An ERC (early repayment charge, also known as a settlement figure or resettlement fee) is a penalty charge that you’ll likely have to make if you opt for early repayment of your car loan. This charge typically amounts to two months’ worth of interest, depending on your lender. Whether or not your car finance lender will charge you an ERC, depends on their policies and the type of car finance agreement you have.

Before you decide on an early repayment, it’s essential to know whether you may be liable to pay an ERC, so check with your finance provider first. Once you’ve asked them for this figure, you usually have around 28 days to decide if you want to proceed with the early repayment of your car loan.

How does car loan early repayment impact your credit score?

You may think that making an early repayment of your car loan would improve your credit score, but this isn’t necessarily the case.

If you pay off your car loan early, the account will show as closed within your credit report. It’s only open accounts that have an impact on your credit score, and other lenders sometimes like to see these accounts, so they can gauge how timely you are with repaying your debt. However, once your car finance account is closed, any benefit on your overall finance management won’t be evident on your credit report.

If you need your credit report to work in your favour – for example, if you’re applying for a mortgage or re-mortgaging – then you may be better off keeping your car finance open on your credit report.

Is it worth early repayment of a car loan?

Whether or not the early repayment of your car finance is worth it depends entirely on your situation and the terms of your agreement. You need to ask yourself whether you can truly afford the early repayment or settlement fees, and whether it might be beneficial to stay in the finance deal for the sake of your credit score.

Other factors to consider include whether you’re in negative equity. Essentially, if the settlement figure that you’ll have to make for early termination is higher than the value of the car, it’s probably worth waiting out your car finance term in full until you’re in positive equity.

Similarly, if you’re already close to the end of your finance term, it’s likely cheaper to stick to your current finance deal and finish all of your repayments, rather than face the settlement (ERC) fee.

Returning the vehicle

Another factor to consider if you’re on either HP or PCP finance is whether you want to return the car at the end of the finance term. Under the Consumer Credit Act of 1974, you can opt for ‘voluntary termination’ of the agreement, provided you’ve already paid half the cost of the car or will make up the difference between what you’ve paid and that number. However, if you do so, you won’t be able to return the car to the finance provider – you will be its legal owner.

This may be beneficial if the car’s value is higher than that of your remaining payments, as, once you’ve paid any settlement fee, you can then sell the car on and make a profit. But you may still be charged by your lender if you opt for voluntary termination. This amount is capped by law, but it’s still worth considering. Companies may also react badly to frequent voluntary terminations on your credit file, too.

Discuss your car finance needs today

If you want to get a car finance quote, discuss early repayment of your car loan, or have any further questions about the process, you can email My Car Credit on enquiries@mycarcredit.co.uk today.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How to Finance a Car with Poor Credit

Can You Lease a Car with Poor Credit?

What Credit Score is Needed 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

car finance options car loan credit score early repayment Jan24

What is CS Car Finance?

When you’re shopping around for the right car finance agreement for you, you’ll come across plenty of jargon. As such, it’s easy to feel overwhelmed – but if this sounds like you, don’t panic!

At My Car Credit, we’re dedicated to helping you find the right car finance agreement for your unique needs. That’s why we’ve got a complete guide to car finance to help you secure a suitable deal for your circumstances.

Below, we’ll break down one specific kind of auto finance – conditional sale – into simple, digestible terms.

Similar to hire purchase (HP) car finance, conditional sale (CS) finance is an ideal agreement for motorists who want to own the car at the end of the term without facing extra conditions. Read on to find out the answer to: What is CS finance?

What is CS finance?

Conditional sale car finance – or CS car finance – is one type of auto finance agreement.

With CS car finance, you’ll benefit from affordable monthly payments and will own the vehicle in full once all your agreement’s conditions are fulfilled.

CS car finance is very similar to hire purchase (HP) car finance. However, to own the car at the end of an HP agreement, you have to pay a small ‘option to purchase’ fee. With conditional sale finance, provided that you’ve made all the monthly payments, the car is automatically yours at the end of the term – you won’t face a final fee.

How does conditional sale work?

Here’s a step-by-step breakdown of how CS finance works:

Choose your car. Shopping for a new, nearly-new or used car is one of the more fun parts of life. Don’t forget you can use My Car Credit’s one-stop shop of FCA-vetted dealers to find a nearly-new vehicle.
Speak to a lender about a conditional sale finance agreement.
Make your fixed monthly payments. Depending on the type of contract you agree with the lender, these payments typically extend over a period of time ranging from one to five years. A longer term means lower monthly repayments, but more interest overall.
No balloon payment. With CS finance, you’re the guaranteed car owner after you’ve made your final finance payment.

With CS finance, a deposit is optional and often flexible, depending on the lender. However, opting to make a deposit can reduce the amount left to pay per month, and the overall interest you owe.

Remember that your monthly payments will cover the full cost of the vehicle plus interest.

Who is CS finance best suited for?

CS car finance is particularly suitable for drivers who:

Want full ownership of the vehicle at the end of an agreement’s term.
Don’t want final balloon payments or mileage restrictions whilst using the car.
Value predictable budgeting – like My Car Credit’s other car finance agreements, CS finance breaks the cost of the vehicle into affordable monthly instalments, making budgeting easier.

CS car finance may also be a good fit for non-prime credit customers (subject to lender approval).

Pros and cons of CS finance

Pros	Cons
You own the car automatically	Monthly payments may be higher than PCP car finance
No balloon payment	Less flexible at the end of the term than PCP
Fixed payments help with budgeting	Ownership comes with maintenance costs
No mileage or condition charges	If you plan to switch your vehicle at the end of the term, CS may not be ideal

Is conditional sale right for you?

There are a few easy questions you can ask yourself to establish whether CS finance is right for you:

Do you want to own your car at the end of the term?
Do you prefer simple budgeting?
Do you want to avoid surprise charges?
Are you comfortable with standard monthly payments?

If the answer to these questions is ‘yes’, then conditional sale car finance may be right for you.

You can always check the affordability of a conditional sale agreement by using My Car Credit’s car finance calculator.

What is the difference between hire purchase (HP) and conditional sale (CS)?

Conditional sale (CS) car finance is often described as similar to hire purchase (HP) car finance.

There are some likenesses between these two car finance agreements, but they also differ in key ways. Being able to distinguish between the two will help you understand which type of agreement might be better for your motoring needs.

Ownership timing

With HP finance, you’ll usually need to pay an ‘option to purchase’ fee at the end of your agreement in order to fully own the car.

Alternatively, you’re automatically the vehicle’s owner after you’ve made the final monthly payment of a CS agreement. In other words, unlike with HP, you won’t face an additional fee.

Agreement structure

With both HP and CS agreements, you’ll be paying for the full cost of the vehicle over time, plus any interest, via affordable monthly instalments.

Deposit & term

The deposit and term of both CS and HP car finance are very similar. You’ll benefit from an optional deposit and flexible repayment term with both.

End-of-term simplicity

If you prefer simplicity at the end of your car finance agreement, CS is likely best for you compared to HP.

With CS, there’s no need to make a final decision or payment to secure vehicle ownership.

Who it’s best for

If you know that you want to own the car outright at the end of your car finance agreement and avoid any mileage restrictions and end-of-agreement admin, CS car finance might be right for you.

HP car finance is also suitable for drivers looking to own their vehicle but want to delay a guaranteed commitment to do so until the final payment.

Apply for conditional sale car finance with My Car Credit

Now that you know the answer to ‘what is CS finance’, you can decide if it’s the right choice for your car financing needs. At My Car Credit, our goal has always been to make securing online car finance as simple and accessible as possible. As part of the UK’s largest motor finance broker, we combine award-winning technology with a broad lender panel to improve your chances of being accepted for the right car finance agreement for your needs.

Our initial credit check is only a soft search. As such, it won’t leave a mark on your credit report, but will give us a sense of your circumstances and borrower profile.

Use our online application form to kickstart your conditional sale car finance journey with My Car Credit today. A simplified application process will give you a no-obligation quote in mere minutes, putting you in the driver’s seat as speedily as possible.

Frequently asked questions

Do I need a deposit for CS car finance?

Any deposit for CS car finance is optional, depending on lender flexibility. That said, if you do pay an initial deposit, this can reduce both your monthly repayments and any interest you owe on a CS car finance agreement.

Is CS better than HP?

If you’re looking for simplicity at the end of your finance agreement and know that you want to own the vehicle in full, CS car finance might be a more suitable agreement compared to HP.

What’s the difference between CS and leasing?

With a leasing agreement – also known as personal contract hire (PCH) car finance – you’re essentially renting the vehicle for a set period of time. At the end of the term, you’ll hand the car back. Alternatively, with CS car finance, you’re guaranteed to own the vehicle at the end of the agreement.

What happens if I want to end my CS early?

Cancelling a car finance agreement early is known as voluntary termination. It is possible to secure voluntary termination on CS car finance, but you’ll need to notify the lender in writing and have paid at least half of the total amount payable under the agreement.

Can I get CS finance with bad credit?

My Car Credit offers CS finance even to drivers with poor credit by looking at each case individually and without judgement. Be aware that poor credit history can result in higher monthly payments and interest rates.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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

Can I Finance an Automatic Car?

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 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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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 10.9%

Evolution Funding Ltd T/A My Car Credit

No Deposit Car Finance – How Does it Work?

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

PCP: Is It Worth It?

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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Refused Car Finance – What to Do Next

Car finance can be a fantastic way to secure the keys to your dream ride. However, it’s not uncommon to be refused the first time around. There are all kinds of reasons why you may have been refused car finance, some easy to overcome and others a little more complicated.

The good news is, there are always options. If you’ve been refused car finance but believe you’re a reliable and worthy borrower, this guide is for you! Read on as we cover everything you need to know about how to deal with a rejected car finance application, what to do next and the steps you need to take to get behind the wheel of a new car.

Step 1: Understanding why you were refused car finance

The first step is to get a better idea of why you were refused car finance. Understandably, most lenders are strict about who they approve for finance. After all, a car finance loan is a big commitment and lenders want to make sure they recoup their investment. Here’s a few of the most common reasons why you may have been refused car finance:

A bad credit score

A bad credit score is one of the most common reasons applicants are refused car finance. Most lenders use consumer credit reporting agencies such as Equifax or TransUnion to assess the suitability of car loan applicants. Equifax issues scores of between 0 and 700, with the average Brit clocking in at around 380. TransUnion rates borrowers on a 0 – 710 scale, with averages in the UK sitting at around 610. Experian is another popular agency and ranks you on a scale of 0 – 999.

Why do you have a low credit score? It’s due to poor credit history. Credit reference agencies keep track of bad credit activity, such as missed payments on utlity bills, outstanding debts on finance or a lack of steady income. Hard searches on your credit file typically display this for up to six years before the date you’re applying.

It’s not always easy to maintain a glowing credit score, as many Brits know. If you’ve ever missed a payment on your credit card, you’re not alone. The latest YouGov research revealed around 15% of UK adults have defaulted on credit card payments, which can knock a decent amount of points off your credit score. The figure is even higher in London, where 19% of credit card holders have missed a payment.

An ambitious budget

In other cases, your budget may be too ambitious for car finance lenders to approve. When assessing your application, lenders will consider personal circumstances, such as your employment status, income and ongoing life expenses to determine if you can afford the loan. If there are any doubts, your application may be refused.

Let’s say you want a hire purchase deal that costs £500 a month and you have regular income of £2,000 from your monthly salary. You might think applying for car finance is a sure-fire thing. But once you factor in mortgage or rent payments, utility bills and other typical outgoings, you might only just have enough left to make the payment to your finance company.

Even with a good credit score, it might be too much. But pair that with a less-than-perfect credit score, and many lenders won’t want to take the risk. As well as risking missed or late payments for themselves, mainstream lenders have to lend responsibly to avoid finance agreements leaving customers worse off. So, without the right affordability, lenders could refuse your car finance.

Incomplete application

Your application doesn’t just offer lenders insight into your borrowing history but also your competency and organisational skills. Incomplete applications can be an instant turnoff for lenders, so it pays to give your documents a thorough once over before hitting send.

When you apply online, it can be tempting to send old documents that are stored on your computer or phone, for example. Maybe you have recently changed address, meaning you’ll need different documents to apply for car finance. That’s often the case for younger customers who have just moved out having passed their driving test!

Finance companies have their own criteria, so every little error could negatively impact your chances of securing that dream car.

Now you have a better idea of why you were refused car finance, let’s take a look at what to do next…

Step 2: Enlisting the help of experts

Car finance can seem complicated but with the help of experts, it doesn’t have to be. At My Car Credit we specialise in getting Brits into the driver’s seat of their ideal car, no matter what their credit score. How do we do it?

A large lending panel

With access to one of the largest lender panels in the country, we take a wide-reaching approach to car finance. Instead of considering just a handful of preferred lenders, we reach out to dozens of finance companies across the country. This drastically improves your chances of being approved for car finance, no matter what your circumstances, borrowing history or credit rating.

If your credit profile doesn’t meet one lender’s criteria, you still have a chance of being approved by one of our other lenders. That’s how we secure finance agreements for young drivers, self-employed applicants and more.

Award-winning technology

We’re part of Evolution Funding, one of the largest and most trusted car finance brokers in the UK. Our service is backed by their award-winning technology, making it faster and easier for us to match your loan application with the right lender.

A personalised approach

There’s no one-size-fits-all approach at My Car Credit. We assess every car finance application individually, meaning you’re matched with the best possible lenders for your unique circumstances. If you’ve had previous rejections due to a poor credit rating, that doesn’t mean you can’t get car finance with us.

For more information, check out our guide on car finance explained.

Step 3: Improve your chances of a car finance agreement

After you’ve developed a good understanding of why you were refused car finance and have enlisted a team of experts to help with your application, it’s time to start improving your chances. Here’s how:

Boost your credit score

There are lots of ways you can boost your credit score, some easy and others requiring a little more time and dedication. Registering on the electoral roll and keeping on top of regular payments such as a credit card repayments or your phone bill are both great ways to improve your credit score. If your credit score is lacking due to a lack of financial history, applying for a basic credit card can be a good way to develop a positive paper trail that establishes you as a reliable borrower.

Pad out your deposit

A small deposit suggests you’re just scrimping by and can be a red flag for lenders. Saving cash where you can and using it to pad out your deposit is a foolproof way to improve your status as a borrower and show lenders you can commit to a regular savings regime.

If you can afford a larger deposit sum upfront, it’s always worth putting it towards your new car. It will reduce the total loan amount, making car finance less of a risk for the lender. It will also reduce your monthly repayments, so you can soon save back the money you added to your deposit.

Securing car finance with poor credit history

Just because you have a less-than-perfect credit history, it doesn’t mean you’re out of the running for a loan. With the right approach, your chances of securing car finance with poor credit are high. If you’re struggling with other barriers such as being self-employed or a lack of credit history, we can help.

At My Car Credit, we understand the difficulties you face with a poor credit rating. Not least that a hard search will stay on your credit file. That’s why we only use a soft search initially to get an idea of your credit profile before moving onto the next steps.

Whatever information we receive from the credit agency, the search won’t appear on your credit report. But even if we find you have bad credit, we can still work to get your application approved if repayments are affordable.

Ready to get the wheels moving on your application? Get in touch by emailing enquiries@mycarcredit.co.uk or give us a call on 01246 458 810 to find out more about how to proceed after being refused car finance.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How to Finance a Car with Poor Credit

Can You Lease a Car with Poor Credit?

What Credit Score is Needed 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

car finance options credit score Jan24 poor credit refused

How to Find Car Finance for Young Drivers

Getting your first car is a big deal. It’s freedom, independence and the ability to do what you want, when you want. Whether it’s driving to a part-time job, road-tripping to Alton Towers with your mates or just avoiding the endless faff of unreliable buses, having a car gives you flexibility and freedom.

But here’s the sticking point – cars are expensive. And most young motorists don’t have the money to buy one outright. That’s where car finance for young drivers comes in, allowing you to spread the cost over time and get on the road sooner.

That said, car finance can feel like a maze. Between credit checks, finance types, deposits and jargon, it’s easy to feel like the whole thing isn’t made with young drivers in mind.

We’re here to fix that. This guide will cover everything you need to know about cars on finance for young drivers in the UK. Yep, even with little credit history or part-time income. We’ll break down what lenders actually look for, how to choose the right car and finance type, and what steps will help you get approved.

Can young drivers get car finance in the UK?

Yes! More young people are doing it every year. In fact, getting a car on finance for young drivers has become one of the most popular ways for under 25s to secure a first or second vehicle.

But there are a few things that make it trickier when you’re just starting out. Here’s what you need to know:

You must be 18 or older to apply for car finance in the UK.
If you have little or no credit history, lenders can’t easily judge how responsible you are with money.
Many young drivers are in part-time or gig work, which can make income harder to verify.
Lenders see new drivers as higher risk, since younger people are more likely to make insurance claims or miss repayments.

That doesn’t mean you’ll be turned down automatically. It just means lenders will look at your whole financial picture, not just your age. Plus, there are steps you can take to make yourself a stronger applicant and score the best car finance for young drivers.

What lenders look for in young driver applications

Lenders aren’t expecting you to have a glowing credit report and a £40k salary at 19. But they do want reassurance that you’re a safe bet. Here’s what they’ll be checking:

Age

You need to be 18 to legally enter into a credit agreement. Some lenders prefer applicants aged 21+, but many now offer flexible options for 18-20-year-olds, especially with a guarantor.

Employment and income

Most lenders want to see some kind of regular income, even if it’s from part-time work or self-employment. You don’t need a full-time office job (even shifts at Costa or Deliveroo earnings can help) but the more predictable your income is, the better.

Credit score

A good credit score shows you can manage money responsibly. But if you don’t have a score at all yet, don’t panic. Many young applicants are in the same boat. Lenders may just ask for a bit more info or suggest a guarantor.

Affordability

Lenders calculate whether the monthly repayments, plus your insurance and living costs, are realistic. Applying for a £15k car with a £400/month repayment when you earn £900/month won’t fly. £150/month for a £5k car? Much more doable.

The best types of car finance for young drivers

There’s no one-size-fits-all answer. The reality is that some plans suit young drivers better than others. Here’s a rundown of your options for car finance for young drivers:

Hire purchase (HP)

HP is one of the most popular finance options for new drivers, because it’s simple and stable.

Pay a fixed amount each month
No mileage restrictions
You own the car at the end of the term

It’s easy to understand, budget-friendly and often more accessible for those with limited credit.

Example: You’re 19, working part-time and want to buy a £6,000 car. With HP, you might pay around £140/month over four years, and it’s yours once you’ve made the final payment.

Personal contract purchase (PCP)

PCP lets you lease the car for a fixed term with the option to:

Return it at the end
Pay a balloon payment to buy it
Trade it in for a new model

Monthly payments are lower than HP, but you won’t automatically own the car unless you make the final payment. PCP is great if you like the idea of upgrading every few years or want lower payments short-term. Just keep an eye on mileage limits and wear-and-tear terms.

Example: You finance a nearly-new Ford Fiesta for three years. You only pay for the depreciation, not the full cost, which keeps your payments low.

Personal loan

You can also take out a personal loan from your bank or another lender to buy the car outright.

You own the car from day one
Use the money wherever you like (including private sales)
Great for those with strong credit or parental co-signers

It’s not always ideal for first-timers, but if your credit’s decent or you have a guarantor, it can offer more flexibility.

Guarantor finance

This is when a parent or family member agrees to cover the loan if you can’t.

Can open up better deals and lower rates
Lenders see it as less risky
Everyone involved needs to understand the legal responsibility

Guarantor finance is a useful option for students or young people without a credit record. Just make sure both parties are 100% clear on the terms.

Family support: help from the Bank of Mum and Dad

Let’s be real, getting on the road isn’t cheap. From buying the car itself to sorting insurance and ongoing running costs, it’s no surprise that many young drivers turn to family for help.

Research from the AA found that over a third of young drivers (26%) received some form of financial help toward purchasing a car, whether that was with the deposit, monthly finance payments or insurance costs. The top reasons? A reward for passing the driving test, a birthday gift, starting university or celebrating exam results.

It’s nice to have help. But of course, lots of young drivers don’t benefit from that level of support. Around 66% of young motorists haven’t received any financial help from family. If you’re in that majority, don’t panic. You’re certainly not alone and there are still affordable ways to get behind the wheel, especially when you work with a broker like My Car Credit.

How to boost your chances of getting approved

There are lots of practical steps you can take to improve your odds, even with limited credit or income.

Use a broker

A broker like My Car Credit has access to dozens of lenders, not just one. This increases your chance of being matched with someone who understands young drivers and offers better rates.

Improve your credit

Start building your credit before you apply. The below steps can work wonders for your score:

Register to vote
Use a credit builder card and pay it off in full each month
Avoid missed payments on bills or subscriptions

Every little bit helps, especially over 6-12 months.

Get a guarantor

A parent or guardian can act as your financial safety net, which reassures lenders. It’s not always needed but it helps if you’re still living at home or just starting work.

Apply for what you can afford

Lenders love realism. Start with a modest, reliable car to show you’ve got your head screwed on. You can always upgrade later once your credit and income grow.

Pick the right car

Small, fuel-efficient, and low-insurance group cars are a good bet. Think:

Ford Fiesta
Renault Clio
Honda Jazz
Volkswagen Polo
Mini Cooper
Kia Picanto

Avoid anything flashy, thirsty or expensive to fix. It’ll only bump up your repayments and insurance. Not to mention bring down your chances of approval.

Choosing the right car for your finance application

The car you choose has a huge impact on your application. Here’s what matters:

Car value

Lower value = lower repayments = easier approval. Basically, lenders are more likely to offer car finance for young drivers if the value is modest.

Insurance groups

Choosing a car in a low insurance group (models like the VW Up, Hyundai i10 and Toyota Aygo) can be a great way to win over lenders and boost your chances of approval. Looking for car finance for young drivers with insurance rates you’ll love? Check out our roundup of the 10 Cheapest Cars to Insure for Young Drivers.

Consider used

Used or nearly new cars don’t just cost less. They hold their value better and can be just as reliable as showroom vehicles. Avoid write-offs or private sales. Lenders prefer trusted dealers like the ones you’ll find in My Car Search.

Insurance and finance: why they go hand-in-hand

It’s easy to think of car insurance and car finance as separate things. Not true! They’re linked and lenders know it.

When reviewing your application, lenders consider:

Insurance costs as part of your monthly expenses
Your ability to afford both the loan and the insurance
How likely you are to make repayments long-term

Consider black box insurance

Looking for ways to save on car finance for young drivers with insurance? A black box (or telematics) policy tracks your driving and rewards you for being careful. It can lower your premium significantly and show lenders you’re a low-risk driver.

Ideal for under-25s
Proves you’re responsible
May positively influence lender decisions

Tips to improve your credit score as a young driver

Your credit score is like your financial reputation. The better it looks, the better your finance options.

Here’s how to start building it, even as a student or first-time earner:

Get on the electoral roll – This proves your identity and address – a quick win if you want to boost your score.

Use a credit-builder card – Spend a little each month (like your Spotify or Netflix bill) and pay it off in full.

Avoid missed payments – Set up direct debits for your phone, utilities and subscriptions.

Keep credit utilisation low – If you have a £500 limit, try not to use more than £150-£200 at any one time.

Check your credit file regularly – Use tools like Experian, ClearScore or Credit Karma to spot errors or see progress.

Remember, building credit takes time. But starting now pays off when you’re ready to upgrade or apply for a mortgage down the line.

Don’t forget: young driver incentives

Some lenders, car brands and dealerships offer special deals on car finance for young drivers. These can include:

Cashback offers
Deposit contributions
Discounted servicing packages
Free insurance for a year
Student-specific deals (especially through unis)

Always ask what offers are available. You might be surprised by what’s out there! Every little saving helps when you’re just getting started.

Why use My Car Credit to find young driver car finance?

At My Car Credit, we’re here to make your first (or second) car finance experience smooth, safe and totally stress-free.

Here’s what makes us different:

Wide lending panel – We work with the UK’s biggest panel of lenders, including high-street banks and alternative options. More variety means more options for young drivers.
Our soft credit check means zero impact on your score.
Quick, online application – No paperwork piles or long phone calls when you’re trying to cram for a uni exam.
Expert support from real people who know how to finance cars for young drivers. We know our stuff and can also help with tips on car finance for young drivers with insurance.
Transparent terms – What you see is what you get with My Car Credit. No sneaky fees or jargon. Just the best car finance for young drivers.

It’s everything you need, minus the headache. Whether you’re a student in Sheffield, a new apprentice in Reading or have just scored a post-grad job in London, we’ve got your back.

Ready to get started? Use our car finance calculator to see what you could afford or apply online now.

FAQs

Can I get car finance at 18?

Yes! 18 is the legal minimum to get a car on finance for young drivers in the UK. Your options may be limited without income or a credit score, but a guarantor can help.

What’s the best car finance option for young drivers?

Looking for the best car finance for young drivers? Hire purchase is the most straightforward. PCP is good for flexibility and lower payments. Guarantor finance works well if you’re just starting out.

Can a student get car finance in the UK?

Yes, especially with a part-time job or a guarantor. Many lenders are happy to work with students as long as repayments are affordable.

Do young drivers need a guarantor?

Not always, but it helps if you’re under 21, don’t have credit history or aren’t earning much yet.

What credit score do I need for car finance?

There’s no fixed score, but the higher your score, the more options and lower rates you’ll get. You can still get finance with fair or limited credit.

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?

Electric Car: Lease vs Buy – Which is Best?

Can You Pay Monthly for a Used 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

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 10.9%

Evolution Funding Ltd T/A My Car Credit

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

How Much Does Car Finance Cost? Check Now!

What’s the Cheapest Way to Finance 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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