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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 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

8 Benefits of Getting an Electric Car on Finance

Man using the console on his electric car

More and more people are choosing an electric car on finance. With good reason too. The choice combines the benefits of electric cars on their own with the flexibility and convenience of ever-popular car finance.

In this post, we’ll dig a little deeper into the trend with 8 benefits of buying an electric car on finance.

1. Fuel costs

Firstly, there are the benefits of electric cars compared to getting a petrol or diesel vehicle on finance. Now more than ever, people are looking to get away from the unpredictable (and generally sky-high) fuel prices. Electric vehicles are the best alternative.

According to EDF Energy, it costs around £7 for 100 miles of range from a rapid charge point. Even in a relatively efficient 50mpg car, that would require around 9 litres of fuel – costing at least £14 with today’s fuel prices.

2. Running costs

When you choose an electric car on finance, you also benefit from lower running costs. Aside from fuel, electric cars require less maintenance than those with internal combustion engines because they have fewer moving parts. At present, fully electric vehicles are also completely exempt from road tax. Not to mention the money you’ll save on inner-city emissions charges, with lots of cities looking to follow suit after London.

3. Spread the cost

Now onto the benefits of an electric car on finance specifically. Despite the cost advantages above, there’s no denying that electric vehicles come at a premium. At the moment, that’s because they’re produced in smaller numbers and use newer technology. But that doesn’t mean you have to wait until they become more commonplace to make the switch.

Car finance allows you to spread the cost of your electric car over two, three, four or even more years. Over 48 monthly payments, a £3,000 difference between a petrol and electric car becomes just over £60 a month, plus a little interest depending on the rate you’re offered.

4. Get the latest model

When electric cars were in their adolescence, range was one of the biggest stumbling blocks. Drivers were put off by cars that could only achieve 100 miles or so before they needed charging. Now, those worries have been swept aside with a standard electric car easily achieving upwards of 200 miles from a single charge.

That said, if you want the widest range, you’re best going for a newer model. Without car finance, you may have to settle for an older model and frequent recharging. By opting for an electric car on finance, you can enjoy the freedom of better range – not to mention all the other state-of-the-art features you’ll get with a newer model.

5. And carry on doing so

Enjoyed driving one of the latest electric cars? You can continue to do so with the right car finance on your side. Personal contract purchase (PCP) deals, for example, come with an optional balloon payment at the end of your deal. In simple terms, you make monthly payments towards the cost of the car, then choose whether you want to make one final, bigger payment to own it outright when your term ends.

If you want to stay up to date and swap your electric car for a newer model, you can do exactly that. Give the car back, sidestep the balloon payment, then take your pick from whatever the car world has to offer in a few years’ time. With the current pace of electric vehicle developments, there could be some pretty impressive cars to choose from.

6. Stay ahead of the curve

Because finance makes it easier to switch to an electric car, it allows you to do so right now. That means you won’t spend the next three, four, five or even more years wanting to make the switch – but putting it off.

Here’s why that’s such a boon – the sale of new petrol and diesel cars will end in 2030. The closer we get to that date, the more demand there is for electric cars and the infrastructure that supports them. We’re talking about home chargers, above all else.

By getting an electric car on finance, you can make the switch before most other drivers. You can get to grips with driving an electric car, kit out your home with a nice charger and then sit back while everyone rushes around in a few years’ time.

7. Don’t forget the environment

Have we really listed six points before getting to the environment? Apparently so. Because there’s no combustion to generate power, electric cars don’t emit harmful gases as they drive around. That’s not to say they’re completely eco-friendly at present.

According to the UK Government’s energy brief, just over 40% of electricity is generated by burning fossil fuels. That means that electricity and electric cars still impact the environment to some extent. However, it’s undeniably far less than the impact of petrol and diesel cars. As time goes on, that 40% share will only decrease, making electric cars even better for the environment.

8. Improve your credit score

Some people looking for an electric car on finance worry that their credit score isn’t up to scratch. Over time, that can also affect applications for loans, mortgages and even tenancy agreements. Thankfully, car finance is one of the areas where there’s a bit more leeway.

It’s absolutely possible to find car finance for poor credit. n doing so, as long as you keep up with repayments, you may also improve your credit score over time. That means your electric car on finance could well be the reason you get accepted for tenancies, mortgages or loan applications in the future.

Start your electric car journey today

If you want to make the switch to electric without the big upfront costs, My Car Credit can help. Using our large network of trusted lenders, we aim to find a deal that’s great for all kinds of drivers. Contact us today on enquiries@mycarcredit.co.uk if you have any more questions about getting an electric car on finance.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How Much Does a First Car Cost?

6 Advantages of Buying a Used Car

6 Advantages of Buying 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

electric environment EV Fuel cost PCP running costs

What’s the Cheapest Way to Finance a Car?

Car finance is an accessible way to purchase a vehicle. Whether you’re after a new or nearly new vehicle, there are various different kinds of car finance that can help you drive off into the sunset with minimal stress. In this post, we’ll explore them in a little more detail to determine the cheapest way to finance a car.

Financing a car – the cheapest options in the UK

Purchasing the vehicle itself is likely to be the steepest cost, but you should also consider other costs like running and maintenance fees, as well as any interest rates or other costs you may be required to pay. Here are the basics on each method of financing a car.

Cash

The cheapest way to finance a car is with one up-front payment. As a cash buyer, you’re able to fund the entire cost of the car immediately, meaning that you’ll own the vehicle outright. Being a cash buyer means you’re invulnerable to any interest rates, monthly loan repayments, or having to repay more on a finance agreement than the car is worth. You can also sell the car at any time.

However, you do have to be able to fork out what the car is worth in one go – which is a lot more than most individuals can afford. It also means you are entirely responsible for any servicing and maintenance costs.

Personal loans

Personal loan rates are nearing an all-time low, and are therefore the next cheapest way to finance a car after cash purchases. With personal loans – or unsecured loans – you’ll borrow a fixed sum which you’ll repay over a pre-determined amount of time (usually one to seven years) and will also pay interest at the same time.

If you have a good credit score, personal loans can be secured with relative ease, and by shopping around and comparing the APR, you can secure a competitive rate. You’ll be the legal owner of the vehicle, so can sell it whenever you want, but monthly repayments of a personal loan can be higher than with alternative car finance.

Finding the cheapest car finance

If neither of the above are viable options for you, there are alternative ways to get a car finance quote and secure a deal that suits you to save money. Be aware that you will likely receive better deals and cheaper monthly payments if you have a good credit score, but you can find a car finance company that will still accept you if your score is less than ideal.

Below we’ll run through three car finance options that are popular in the UK.

Hire purchase agreements (HP)

If you’re struggling to get a cheap personal loan, a hire purchase agreement may be for you. You won’t own the vehicle until you’ve made the final repayment – the car is used as an asset against the loan. As such, if you fail to make your repayments, the lender has the right to repossess the vehicle. A hire purchase differs from other options in this way.

You’ll typically make a deposit of around 10% (although there are no-deposit options) and from then on, you’ll have a series of pre-determined monthly repayments. These can, depending on the agreement, be low monthly payments. If you want to own the car outright at the end of the term, a HP agreement is a good route to take. Repayment terms are flexible, you’ll often be offered competitive fixed interest rates, there aren’t usually any mileage caps, and a hire purchase agreement is easier to be approved for than other car finance.

Personal contract purchase (PCP)

Personal contract purchase is another popular car finance option. If you’re hunting for the cheapest way to finance a car outright, PCP might not suit. But if you’re a fan of chopping and changing vehicles, this option is ideal.

PCP finance deals often have low deposits as well as flexible repayment terms with low monthly payments. That’s because you only cover the cost of a car’s depreciation, plus interest, when paying the finance company each month.

PCP explained

You can choose to own the car at the end of the finance term, in which case you’ll make one final payment. This lump sum is known as the balloon payment, often much larger than your other monthly payments. If you don’t make the final balloon payment, you can simply hand the car back to the dealer with the option of upgrading to another new car.

The key difference here is that lenders know they might be getting the car back. As a result, it’s common for them to impose mileage limits on cars to protect them from excess depreciation in their value. Limits are typically between 5,000 to 10,000 miles per year with additional payments for anything over the agreed amount.

Bear in mind that, although the monthly repayments for PCP can be lower than HP, you’ll often end up paying more overall if you want to buy the vehicle outright. If you exceed a mileage cap or cause wear and tear, you’ll also have to cough up.

Personal contract hire (PCH)

PCH is a way of leasing the vehicle – it’s essentially a long-term rental. Servicing and maintenance fees are included, though you may have to pay for car insurance and road tax separately.

There’s a mileage cap as well as an initial deposit. In many cases, PCH can work out cheaper overall than PCP as you don’t have any option to purchase the car.

With PCH leasing, you hand the car back to the dealer at the end of your finance term. Your repayments are fixed, but payment terms are flexible and you can generally change providers.

How to reduce your monthly payments

Make a larger deposit

A simple way to reduce your loan is by making a larger deposit. This cuts the amount you need to borrow, meaning less money is being spread across the agreement term. It will also minimise the amount of interest you owe your lender.

A larger downpayment also provides more security to the lender, which could get you a better rate on your loan.

Avoid all-inclusive deals

There’s no doubt about it. Paying one amount for your car makes life easier. With some providers, you can pay a single amount for the car, loan, insurance, tax, servicing, maintenance – the lot. However, you’re often charged a premium for the convenience.

If your budget is tight, you’ll typically get a better deal by arranging everything yourself. That means finding your own insurance, paying for tax and keeping up to date with servicing and maintenance to keep the car in a good condition.

Decide what you want earlier

Flexibility is a buzzword when it comes to car finance. But it does come at a cost. PCP deals offer the most flexibility as you get to decide whether or not to actually purchase the car at the end of the deal – having driven it for a few years.

If possible, it could work in your favour to make this decision before starting a loan. If you don’t want to own the car, PCH may be cheaper than PCP. If you do want to own the car, HP is often the cheapest way to pay.

Improve your credit score

Credit scores give lenders an idea of how much risk is involved in a car finance application. If all your bills are fully paid on time and you have a history of lending responsibly, you present less risk, so you could access better deals at a lower overall cost.

Take a look at our article on improving your credit score for more information.

Shop around

Last but not least, it always pays to shop around. Getting a loan or finance is no exception. Whether it’s with the bank or a specialist lender, you should never settle for the first deal you’re offered. Car finance brokers make this easier by comparing lots of deals without you having to jump through hoops over and over again.

Easily navigate the car finance market

Searching the car finance market and securing affordable car finance can feel overwhelming – but it doesn’t have to be. My Car Credit has hundreds of helpful blogs and articles for you to browse through. We also have a large network of trusted lenders to help you find the cheapest way to finance a car for your requirements. try our online car finance calculator to get the ball rolling.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How Much Does a First Car Cost?

6 Advantages of Buying a Used Car

6 Advantages of Buying 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

car finance options cash cheapest hire purchase Jan24 pch PCP personal loan

Can I Give My Car Back to the Finance Company?

Buying a car on finance can be a great way to spread the cost of a big purchase and get behind the wheel sooner. But life changes. Maybe your income has dropped, your family’s grown or the car you’re financing simply no longer fits your lifestyle. If you’re wondering: can you return a car on finance, the good news is yes – in many cases, you can. But your rights, costs and the process vary depending on your finance type.

This guide covers everything UK drivers need to know about returning a financed vehicle, from legal protections under the Consumer Credit Act to voluntary termination, surrender and alternatives like settlement or part-exchange.

Whether you’re deep into a PCP agreement or just starting a hire purchase plan, we’ll walk you through your options and help you weigh up the next best move when you want to return a car on finance.

Can you return a car on finance in the UK?

The short answer is yes. The long answer? How and when you can return a car depends on the type of finance you’ve taken out and how far you are into the agreement.

If your car is on a personal contract purchase (PCP) or hire purchase (HP) agreement regulated by the Consumer Credit Act 1974 you may have a legal right to end it early through something called voluntary termination, once you’ve repaid 50% of the total amount owed.

Before you make a decision it’s important to understand that returning a car isn’t always cost-free, especially if you haven’t hit that 50% threshold yet or your car has excess wear and tear. For other types of finance, like personal contract hire (PCH), your rights are more limited and returning a car may involve hefty fees that will leave you out of pocket.

Voluntary termination explained

Can you return a car on finance with a PCP or HP contract? Yes. Voluntary termination (VT) is a legal right under Section 99 of the Consumer Credit Act 1974. It allows you to end a PCP or HP agreement early by returning the car, provided you’ve paid at least 50% of the total finance cost, including fees and interest.

Eligibility

To qualify for voluntary termination:

You must be on a regulated PCP or HP agreement.
You must have paid (or be willing to pay) 50% of the total amount owed. This includes the car’s price, interest and any fees included in the agreement.

For PCP, the balloon payment is also counted. If you’ve not yet reached 50%, you may still terminate early by topping up the balance to hit that figure.

How to start the process

1. Get in touch with your finance company in writing (email or post)

Want to know more about whether you can return a car on HP finance? It starts with an email or letter. Let your lender know you’d like to explore returning your car, whether that’s via voluntary termination or another route. It doesn’t need to be War and Peace but putting it in writing gives you a clear record.

2. Ask for your settlement balance and check how much you’ve paid so far

This helps you figure out if you’ve crossed the 50% mark (which matters if you’re aiming for voluntary termination). The finance company will usually send a formal breakdown so you can see exactly where you stand.

3. Book a time to hand the car back (and expect an inspection too)

When can you return a car on finance? Before collecting the car, the lender will likely want to give the vehicle a once-over to check for wear and tear, mileage and overall condition. You might be asked to drop it off somewhere, or they could pick it up. Either way, give it a clean and make sure there’s nothing left in the glovebox!

Pro tip: Keep a paper trail. Save every email, letter and receipt. If you chat over the phone, follow it up with a quick note by email. A “just to confirm” goes a long way if anything’s disputed down the line.

Conditions to be aware of

The car needs to be in decent condition

Fair wear and tear (think worn tyres or a few light scuffs) is okay but expect the lender to raise an eyebrow (and possibly a repair bill) for anything major. For example, dents, deep scratches or a cracked windscreen. If the car’s been well looked after, you should be fine.

Mileage limits matter (for PCP agreements)

Can you return a car on finance if you’ve gone over the agreed mileage? Yes, but you’ll likely be charged for the extra. It’s usually a few pence per mile but it can add up fast, so double-check your contract and don’t guess.

Missed payments or arrears can muddy the waters

You might still be eligible to return the car if you’ve fallen behind on payments, but the lender may ask for arrears to be cleared first. It’s always better to be upfront.

Impact on credit score

Voluntary termination isn’t a default or missed payment so if handled properly, it won’t damage your credit score. The fact you used your VT rights may be recorded on your credit file, but it’s not a negative mark.

Voluntary surrender: what it means

If you haven’t yet reached the 50% repayment threshold and can’t afford to top it up, you may still be able to return the car. This is called voluntary surrender and it’s very different from VT.

Key differences from voluntary termination

You give up the car, but you’re still liable for the remaining balance

Unlike voluntary termination, voluntary surrender doesn’t wipe the slate clean. You hand the car back but you’re still responsible for repaying the remaining balance, which could be more than expected.

The finance company usually sells the car at auction

Can you return a car on finance early by selling it yourself? Probably not. The vehicle is typically sold off at auction by the lender, and the sale price is knocked off your remaining finance. If the car sells for less than what you owe (which it often does), you’ll be expected to make up the difference, aka the shortfall.

It’s treated more like repossession than a clean break

Because it’s not a legal right like voluntary termination, voluntary surrender can be recorded on your credit file in a way that doesn’t look great to future lenders. It’s not always flagged as a ‘default’ but it’s still a red flag.

Financial impact

Voluntary surrender can have serious financial consequences. You want to make sure you understand exactly what’s at stake before going down this path.

You may still owe a chunk of cash

Even though you’ve returned the car, the remaining finance doesn’t disappear. If the auction value is low, the leftover balance could be significant. And you’re on deck to cover the difference.

Your credit score could take a hit

Missed payments or unpaid shortfall? That could dent your credit score. If you struggle to repay what’s left, it could show up on your credit file and make future borrowing more difficult.

It’s not a protected right like VT, so you’ve got less control

Voluntary termination is enshrined in law. Voluntary surrender isn’t. That means fewer protections, and usually, worse outcomes.

In short? Voluntary surrender is usually a last resort. If voluntary termination or settlement is on the table, explore those first.

Can you return a car on PCH (lease)?

Yes, but only through voluntary surrender. PCH agreements don’t fall under the Consumer Credit Act, which means you don’t have the legal right to voluntary termination. If you want to return the car early, you’ll need to follow your lease provider’s early termination policy (and be prepared for potential fees).

Termination options

Most lease agreements require you to pay the full remaining balance if you want to end early.
Some leasing companies offer early termination terms, like paying 50% of your remaining rentals.
Others may allow lease transfer, where someone else takes over the contract (though this isn’t always guaranteed).

Recommendations

Check your lease agreement for early termination clauses.
Contact your leasing provider and request a termination quote.
Compare the cost of ending early vs. keeping the vehicle.

The verdict on whether you can return a car on finance with PCH? Yes, but PCH agreements are less flexible than HP or PCP, so exiting them early can be expensive.

Other ways to exit your car finance early

Voluntary termination and voluntary surrender aren’t your only options. Here are other common ways to end a finance agreement ahead of schedule.

Early settlement

You pay off the remaining balance of your finance agreement in full. This gives you full ownership (for HP or PCP).

Pros:

No ongoing repayments.
You may save on interest.
You own the car outright (except for PCP, where you may still need to pay the balloon payment).

Cons:

Requires a large one-off payment.
You need to request a settlement figure from your lender.

Part-exchange

You trade your current car in at a dealership and use its value to settle the outstanding finance.

Pros:

Quick and simple. The dealer handles the paperwork.
If your car’s value exceeds your remaining balance, the extra can go toward your next vehicle.

Cons:

Can you return a car on finance if your car’s worth less than the owed amount remaining? Yes, but you’ll need to pay the difference (called negative equity).
You may not get the car’s full market value from a dealer.

Renegotiation

If you’re struggling financially, it’s worth contacting your lender to discuss alternatives. Our advice? Be as honest as possible. Good lenders are usually more understanding than you might think.

Options may include:

Extending your loan term to lower monthly payments.
Requesting a payment holiday or temporary reduction.
Switching to a different agreement that better suits your needs.

Don’t wait until you miss a payment. Lenders are more open to helping if you communicate early.

How to return a financed car: step-by-step

Returning a car on finance doesn’t have to be overwhelming. Here’s how to handle it from start to finish:

Review your contract terms and agreement type

Confirm whether you’re on PCP, HP or PCH. Request your full contract and look for terms on early termination, mileage and condition.

Check how much you’ve repaid

You may qualify for voluntary termination if you’ve repaid at least 50% of the total amount owed. If you’re close to that mark, it’s worth holding off a bit as VT usually works out better than voluntary surrender.

Speak to your lender

If using voluntary termination, notify the lender in writing. Include your contract number and clearly state your intent to terminate under Section 99 of the Consumer Credit Act.

Request a settlement or termination quote

Ask your lender for your current settlement balance and a quote based on the return option you’re considering. Once you’ve got the figures, you can weigh up VT, early settlement, part-exchange or surrender to see which makes the most sense.

Arrange a return date and inspection

Your finance company will usually inspect the vehicle and confirm how it’ll be returned (either by drop-off or collection). Beforehand, give the car a clean, take out all your personal belongings and if you can, fix any obvious damage.

Document everything and keep copies

Hold on to all communication, including your return date documents and any final balance confirmations. A solid paper trail makes it much easier to resolve any issues later down the line.

FAQs

Can you return a car on finance early without penalty?

If you’ve repaid 50% of a PCP or HP agreement, you can terminate it without additional fees under voluntary termination. Outside of this, you may owe more.

Will returning a car affect my credit score?

Voluntary termination does not negatively impact your credit score, provided you follow the process properly. Voluntary surrender or repossession can damage your score.

What happens if I return the car before paying 50%?

You’ll need to top up the difference to meet the 50% threshold or consider voluntary surrender, which might leave you liable for the remaining balance.

Is voluntary termination a good idea?

Yes, for many it’s a fair and legally protected way to exit finance early. Just make sure the car meets wear and tear standards and that you’ve paid the required amount.

What if I’ve damaged the car or exceeded mileage?

You might face additional charges. PCP agreements, in particular, include excess mileage and condition clauses. Clarify any potential costs before pursuing this route so there are no nasty surprises down the line.

Can you return a car on finance if I’ve lost my job?

If you’ve hit the 50% threshold, yes, you can exercise voluntary termination. Otherwise, speak to your lender about hardship options, deferment or renegotiation before missing payments.

Need to return your car?

Worried about what happens if you take out car finance and things change? You’re not the only one. Car finance is a big financial commitment so it’s normal to ask questions like “what happens if my circumstances change?” and “can you return a car on finance without penalty?”

Maybe your income takes a knock, your expenses change or the monthly payments just don’t feel manageable anymore. Whatever the reason, it’s important to know this: you do have options. And you certainly won’t be on your own.

At My Car Credit, we don’t just help you find the right car finance. We stick around if things shift. From voluntary termination to refinancing or exploring more affordable alternatives, our team can support you if you ever need to rethink your agreement down the line.

We’ll help you understand your rights, explain your options clearly and work with you to find a solution that keeps you on track, without the stress. And if you have any questions about whether you can return a car bought on finance, we’re just a phone call away.

Still weighing things up?

Use our affordability calculator to check what’s realistic right now.
Or apply online with a soft search (no impact on your score) and explore your options with zero pressure.
Read our voluntary termination guide for a full breakdown of your legal rights.

When you work with My Car Credit, you’re not just signing up for car finance. You’re choosing support that goes the distance. This includes hands-on help if you choose to end your contract early.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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5 Different Ways to Pay for 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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Advantages and Disadvantages of PCP Car Finance

Roughly nine in 10 of all new cars sold in the UK are purchased using finance, with personal contract purchase (PCP) loans accounting for a significant portion of sales, according to the latest data from the Finance and Leasing Association (FLA). With attractive interest rates, long repayment terms and the opportunity to get behind the wheel of your dream car faster, it’s no surprise PCP is one of the most popular car finance options in the UK.

Of course, it’s important to factor in your unique situation and develop an in-depth understanding of PCP loans before you commit. This guide is designed to help you understand all the advantages and disadvantages of PCP car finance. Armed with knowledge, you’ll be able to make an informed and educated decision about whether a PCP loan is right for you.

What is a PCP loan?

Before we get stuck into the advantages and disadvantages of PCP car finance, let’s take a moment to define what personal contract purchase means. The term describes a type of loan that sees you put down an initial deposit on a car (although there are no-deposit options), and then continue to make repayments.

It builds on the concept of hire purchase agreements and includes the option to purchase the car outright at the end of the loan. The main difference is that the final resale value of the vehicle is calculated at the beginning of the loan. This figure is known as the Guaranteed Minimum Future Value (GMFV) and is assessed using several factors, including the age of the car at the end of the loan, and expected mileage.

Most PCP loans start with a deposit of around 10% though this can vary depending on the lender, your credit rating and the unique terms and conditions of your contract. After making an initial deposit you’ll continue to pay monthly instalments plus interest over the lifetime of the loan. Most PCP loans span for two to four years – though again, this can vary.

When your loan ends and all instalments have been paid, you have the option to purchase the vehicle outright by making a balloon payment. The value of the balloon payment is calculated using the GMFV agreed on at the beginning of the loan. Alternatively, you can choose to return the car and start another PCP loan, which gets you behind the wheel of a new model. If the vehicle is worth less than the GMFV, you will need to pay the difference when returning the car.

Now you know more about the specifics of personal contract purchase, let’s take a look at the advantages and disadvantages of PCP car finance.

Advantages of PCP car finance:

Upgrade to a new car frequently

PCP loans usually span for two to four years and offer the option to roll on to a new contract after the final instalment has been made. Many motorists choose this option as it’s an easy and affordable way to regularly upgrade your car.

Low fixed monthly payments

The fixed monthly payments of PCP loans are generally lower than hire purchase (HP) contracts. This makes PCP loans an attractive option if you’re on a strict monthly budget.

Affordable deposits

As well as low fixed monthly payments, PCP loans require small deposits, often as low as 10%. Our car loan affordability calculator makes it easy to get an idea of how far your deposit will go.

Flexible options

Flexibility is one of the biggest advantages of PCP loans. Depending on the GMFV agreed on at the start of your loan, you can choose to roll over to a new PCP loan, make a balloon payment to own the car outright or simply hand back the keys with no more to pay. If you love the idea of flexibility and aren’t sure if you want to keep the car or return it at the end of the contract, PCP loans are a great option.

Finance secured against the car

Unlike other finance options, PCP loans are secured against the value of the car. This means you don’t have to rely on other assets like a home or cash investments.

Stretch your budget

With deposits as low as 10% and affordable monthly repayments, PCP loans stretch your budget much further than if you were to purchase a car with cash alone. This allows you to expand your search and consider cars that are newer or higher spec. In the long run, this can unlock big savings. For example, a PCP loan may mean you can afford a car with better mileage, which will significantly reduce your petrol expenses. Similarly, upgrading to a newer car with a PCP loan can slash maintenance and servicing costs.

Disadvantages of PCP car finance:

Capped mileage

Most PCP loans feature mileage caps written into the contract. This is because mileage can have a big impact on the value of a car. If you exceed the mileage cap used to calculate the GMFV at the start of your loan you could face extra charges. These may be applied whether you choose to return the car or purchase it via a balloon payment. Excess mileage penalties can be expensive and add a significant percentage to the total cost of your loan. To avoid nasty surprises at the end of your loan, it’s important to be realistic about your expected mileage when calculating GMFV.

Limits on wear and tear

Normal wear and tear is fine but if you plan to put your car through its paces on 4WD tracks or transport muddy pets on a regular basis, PCP loans can be a little restricting. Any damage that exceeds normal wear and tear can also see charges added to your final instalment or balloon payment.

Find out more about PCP car finance

Considering PCP car finance for your next ride? Our experienced team is always available to talk you through the advantages and disadvantages of PCP car finance. Get in touch by email or give us a call on 01246 458 810 to find out more.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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No Deposit Car Finance – How Does it Work?

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

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

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

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

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

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

Require more help?

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

or call 01246 458 810

car finance options PCP personal contract purchase

Can You Pay Monthly for a Used Car?

Opting for monthly payments is one of the smartest decisions you can make when purchasing a used car. Many Brits think payment plans are just for new vehicles and as a result, don’t ask “can you pay monthly for a used car?” when shopping for a second-hand ride. This is a big faux pas as car finance offers some fantastic benefits; when done right.

Want to know more? Read on as we answer all your questions about can you pay monthly for a used car.

Scenarios where used car finance steps up

Below, we explore some scenarios where used car finance can step up as a great purchasing option:

You want to stretch your budget

With the latest research from Auto Trader revealing the average cost of purchasing a used car in the UK is whopping £18,000, even second-hand vehicles are out of reach for many Brits. If you think this sounds high, you’re probably not alone. Over the past year, the typical cost of a pre-owned vehicle has increased by around £4,000. Large, family-friendly models are the most coveted, though the drastic price increase of almost 32% has hit all vehicle types.

If you’ve got a healthy deposit but can’t afford to pay the full amount in cash, car finance can help stretch your budget. It’s not about biting off more than you can chew and splurging on a vehicle you can’t afford. Instead, car finance can be a clever alternative to get behind the wheel of a used car within your budget, only faster.

Crunching the numbers is important, so take the time to factor in variables such as your budget, cash deposit, preferred loan term and your credit score, which can affect the interest rates you’re eligible for. Our cost of car finance calculator is a great place to start.

You want to boost your credit score

Committing to monthly payment plans, such as a car finance loan, can be a great way to boost your credit score. If a big financial move like applying for a mortgage or increasing your credit card limit is on the horizon, car finance can be a great way to improve your reputation as a borrower and prove to lenders that you’re a responsible applicant.

You want to be a competitive buyer

Factors like the global semiconductor chip storage, supply chain issues caused by the pandemic and conflict between Russia and Ukraine have hit the used car market hard. According to Richard Walker from Auto Trader, “the speed in which used cars are selling has also accelerated significantly, with the average car taking 11 days fewer to leave forecourts in February 2022 when compared to the same period last year.”

Demand for used cars is high which means you’ll likely face competition from other buyers. Car finance can help you make a realistic offer on a used car and give dealers the peace of mind that payment is guaranteed.

Understanding loan types for used cars

As a used car buyer, you enjoy the same auto loan options available with new models. These include:

Personal contract purchase (PCP)

PCP loans are one of the most popular ways to pay for used cars. Offered by car dealerships and independent lenders, they allow you to spread out payments for your vehicle over three to five years. You may need to make a cash deposit but options are available without.

Payments are calculated using the price of the car, the interest rate (APR) of your loan and most importantly, the expected depreciation rate of the vehicle. Your lender will calculate a guaranteed minimum future value (GMFV) and at the end of the loan, you’ll have the option to make a ‘balloon payment’ equal to the GMFV to keep the car. Alternatively, you can use the GMFV to fund a new PCP agreement.

Personal contract hire (PCH)

PCH loans are another great way to get into the driver’s seat of a used car faster. Also known as car leasing, you pay a cash deposit, then continue to make monthly payments for the duration of the lease term. Most agreements span for between two and five years, with longer terms translating to lower monthly instalments. At the end of the contract, you’ll give the car back to the dealer.

Hire purchase (HP)

As the name suggests, HP loans see you ‘hire’ a vehicle for a fixed period, usually between one to five years. You may need to make a cash deposit, but no-deposit options are available, then continue to make monthly instalments over the course of the loan. At the end of a HP plan you’ll have the option to take ownership of the car by paying a transfer fee.

Personal loan

If you want to own your car outright, a personal loan can be a good way to boost your budget. A lender will agree to a fixed sum, which you’ll use to purchase a used car. You’ll then repay the loan in monthly instalments, usually spread out over a year or more. Generally, the higher your personal loan, the lower your APR will be.

Can you pay monthly for a used car?

The final verdict on whether you can pay monthly for a used car? Absolutely. Auto finance can be a terrific way to pay for a used car, with different benefits appealing to different buyers.

Ready to get behind the wheel of your dream used car? Whatever your budget or credit rating, we’re here to help. With access to one of the biggest panels of lenders in the UK, we have the connections to secure you the best possible deals on finance for used vehicles.

You can calculate car finance and apply without impacting your credit score. Alternatively, get in touch by email or give us a call on 01246 458 810 to find out more about how can you pay monthly for a used car.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How to Strengthen Your Eligibility for Car Finance

Financing a Second-Hand Car: 4 Options

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 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 hire purchase hp monthly cost monthly payments pch PCP personal loan

Who is the Legal Owner of a Car on Finance?

happy man who has become legal owner of car

If you’re thinking about purchasing a car through a finance option, you’re not alone. Around nine out of 10 of the new cars sold in the UK are bought by people who use a finance option. However, there are still some grey areas when it comes to ownership.

More specifically, who is the legal owner of a car on finance? Is it the driver or the dealership? Read on as we provide the answers.

Who is the legal owner of a car on finance?

In truth, the answer is neither you nor the dealership. It’s the lender that provides the money. The person who drives the vehicle and maintains it – AKA you – is known as the Registered Keeper in legal parlance. In other words, you will make the repayments and deal with the day-to-day running of the car, but your name won’t be on the V5.

Is there any difference between the finance options?

Yes, there are, but only when the loan finishes. Both PCP and HP are agreements that require repaying before the V5 is transferred to you. However, something to keep in mind is the final payment regarding PCP. Unless you pay off the balloon repayment, you will not own the vehicle. Where you don’t have the cash or savings, you may have the option of taking out balloon payment finance instead. With Hire Purchase, the last instalment of your loan will clear the balance and make you the legal owner.

Do I have other options?

One thing you can do if you want to be declared the legal owner is to use a bank loan. That way, you pay back the money to the bank, and the vehicle is all yours from the outset. Of course, taking out an unsecured bank loan may not be an option for your circumstances. In addition, you may not find the terms competitive.

Find the right finance deal

At My Car Credit, we help drivers up and down the UK find the finance they need to upgrade their car – and eventually own it outright if preferred. It doesn’t matter whether your budget is small or if you don’t think you qualify, we try to accommodate everyone, including those looking for car finance with poor credit.

To find out more, please contact us on 01246 458 810 to speak to an advisor.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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PCP vs HP vs Leasing: Which Car Finance Option Is Right for You?

Balloon Payments Explained: What, Why & How

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 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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No Deposit Car Finance – How Does it Work?

New car bought with no deposit car finance

If you’re concerned about the fact you don’t have a deposit saved up for car finance, don’t panic. Not everyone has the savings to put down a deposit on a car. In fact, for many UK drivers, paying several hundred or even thousand pounds upfront simply isn’t realistic. And that’s completely normal.

As the cost of living continues to influence household budgets, no deposit car finance has become an increasingly popular way to access a reliable vehicle without draining savings.

No deposit car finance allows you to spread the entire cost of a vehicle across affordable monthly payments, plus interest. It means you don’t have to pay a lump sum at the start of any agreement. Instead, your finance lender covers 100% of the car’s value and you repay the full amount plus interest over an agreed term.

At My Car Credit, we work with a broad panel of UK lenders, many of whom offer no deposit options. Our online application uses an initial soft search, meaning you can check your motor finance eligibility without affecting your credit score.

Read on to find out more about how to secure car finance with no deposit. We’ll help you understand more about overall affordability and eligibility, guiding your ability to choose a finance structure that supports responsible budgeting.

What is no deposit car finance?

If you’re looking to secure a car on finance with no deposit, it’s sensible to know what this actually means.

No deposit car finance is a finance agreement that doesn’t require you to pay any upfront sum. Instead, the lender provides the full amount needed to purchase the vehicle. This type of finance can be applied to new, used or nearly-new cars, offering a great deal of flexibility for all kinds of motorists.

Compared to traditional motor finance, no deposit car finance has a different repayment structure. A deposit reduces the overall amount you need to borrow. As such, if you’re looking for car finance with no deposit, expect higher monthly repayments and an increased cost of borrowing overall.

No deposit car finance is especially useful for first-time buyers, drivers looking to quickly replace a written-off vehicle or anyone who needs a car quickly but doesn’t have the available cash.

How does no deposit car finance work?

With My Car Credit, the process for securing a car on finance with no deposit is comparatively straightforward:

Eligibility check (initial soft search) – Start your search for no deposit car finance with a quick online application. We’ll perform an initial soft credit search to gauge your eligibility without impacting your credit score.
Lender approval – Lenders will review your overall affordability, including your income, credit history, and any financial outgoings. This will determine the kind of finance terms they could offer you.
Choose your vehicle – When you’ve received approval in principle, you can choose a car from any approved UK dealership. With us, you’re not restricted to a single showroom or small selection of models – and you can also shop for nearly-new vehicles via My Car Search.
Final agreement & paperwork – Once you’ve chosen your vehicle and the finance agreement is finalised and activated, you’ll be expected to start repaying your loan.
Collect your car – Collect your car and take to the road.

Here’s an example of car finance with no deposit for a used car priced at £8,000:

Total amount financed: £8,000
Term: 48 months
Monthly payments: Higher than if you had paid an initial deposit
At the end of the agreement, you either own the car (HP) or choose whether to keep it (PCP)

No deposit finance options – PCP vs HP

The most suitable no deposit car finance agreements are personal contract purchase (PCP) or hire purchase (HP). The appropriate deal for you will depend on your circumstances and needs.

PCP with no deposit

Monthly payments are lower with PCP compared to HP. This is due to the optional balloon payment at the end of the agreement’s term. But you only pay this if you want to keep the car.

With PCP, you have three choices at the end of the agreement:

Return the car with nothing more to pay (subject to fair wear and mileage limits)
Pay the balloon amount and keep the car
Trade in or upgrade to a new vehicle, using any equity towards your next finance agreement

PCP no deposit car finance is suitable for drivers who like the flexibility of being able to change cars every few years, or motorists prioritising lower monthly payments.

HP with no deposit

Hire purchase is more straightforward. You’ll repay the entire value of the car over the finance term and won’t have a final balloon payment. Once the final instalment is made, you’re the car’s legal owner.

As such, monthly payments with HP are higher compared to PCP finance, but you won’t face any mileage restrictions on fees for undue wear and tear.

HP is a suitable agreement for drivers wanting full, long-term ownership of their car.

Can you get a used car on finance with no deposit?

In many cases, it’s actually easier to secure no deposit car finance on a used or nearly-new vehicle compared to a brand-new car.

This is because used cars are generally more affordable, which means the total amount borrowed is lower overall, and the risk to the lender is reduced.

My Car Credit can help finance a used vehicle from any approved UK dealership. With us, you’re not restricted to one supplier or limited stock, giving you access to thousands of options across different makes, models, ages and budgets.

For many drivers, securing no deposit car finance on a used vehicle is one of the most popular ways to finance a car. It’s a cost-effective, affordable means to get behind the wheel without needing cash upfront.

Can I get no deposit car finance with bad credit?

If you’re looking for car finance with bad credit and no deposit, don’t panic.

It’s certainly possible to secure no-deposit car finance even with bad or limited credit. But it will depend on the lender’s criteria and your ability to demonstrate affordability.

Some lenders specialise in supporting applicants with lower credit scores. At My Car Credit, we’ve got the broadest lender panel out of any UK broker. This means we’re more likely to match you with a specialist lender who may be better able to accept your application.

Plus, by using an initial soft credit check, your credit rating is protected during your initial enquiry.

Be aware that you may face a higher APR if you’ve got poor or bad credit. Alternatively, you may need a guarantor. It all depends on your circumstances.

Lenders will assess your overall affordability, including your income, existing commitments, employment stability and recent credit behaviour.

That’s why it’s important to be realistic about what you can afford monthly.

Who is eligible for no deposit car finance?

Eligibility for no deposit car finance is often broader than people assume.

You don’t need perfect credit, a high income, or a long credit history, but lenders will expect certain basics. These include:

Regular income – Whether you’re salaried or self-employed, you must be able to show you can afford repayments.
UK residency – Most lenders require applicants to be UK residents for a minimum period.
Age requirement – Usually applicants should be 18+, though some lenders may require applicants to be 21+.
Valid driving licence – A full UK licence is standard, though in some cases provisional licences may be acceptable, depending on the lender.
Reasonable credit history – A poor score doesn’t mean automatic refusal, but lenders will look for signs of responsible financial behaviour.
Debt-to-income ratio – Your existing financial commitments must not leave you overstretched.

If you’re unsure whether you qualify for car finance with no deposit, a soft-search application gives you a clear answer without harming your credit score.

Pros and cons of no deposit car finance

Pros

No upfront cost – With no deposit car finance, you don’t need to pay an initial lump sum, making it ideal for those without spare savings
Immediate access to a reliable vehicle – Securing car finance with no deposit gives you speedy access to a car
Predictable budgeting – You’ll benefit from fixed monthly payments and a pre-agreed term
Useful for emergencies or first-time buyers – If you’ve faced unexpected vehicle issues, no deposit car finance is highly advantageous

Cons

Higher monthly repayments – You’re financing the full vehicle price, so will face higher monthly repayments compared to an agreement with an initial deposit
Higher total cost over the life of the agreement – Because you’re not offsetting the overall loan with a deposit, the total amount you pay back will be higher
Approval not guaranteed – Your approval for no deposit car finance depends on lender assessment

How to improve your chances of getting no deposit finance

There are practical steps you can take to boost your likelihood of approval, even if you’re unsure of your financial position:

Check your credit report – It’s easy to check your credit report for accuracy and to correct any errors.
Register on the electoral roll – Doing so helps confirm your identity.
Reduce existing debt – Before applying for no deposit car finance, reducing your debt and streamlining any financial commitments (where possible) can help improve your likelihood of approval.
Provide clear proof of income – This is particularly important for self-employed applicants.
Choose a realistic vehicle price – You need to select a car that fits comfortably within your budget.
Apply through a broker – By applying for no deposit car finance with a broker like My Car Credit, you’ll have access to multiple lenders, rather than relying on a single finance provider.

Taking these steps can significantly improve your auto finance eligibility, helping you to secure a fair and competitive agreement.

Why apply through My Car Credit?

Our goal is to make your process of securing no deposit car finance smoother, speedier and more accessible. Here’s what sets us apart:

Soft search – no credit score impact

Our application begins with an initial soft credit search. That way, we can give you instant insight into your eligibility without damaging your credit rating.

Access to a large panel of UK lenders

We’ve got access to a wide range of lenders, many of whom specialise in no deposit car finance. As such, we can increase your chances of approval and help you secure competitive rates.

Clear, fair & transparent pricing

With us, the rate you see is the rate you get. We don’t go in for surprise fees or confusing small print.

Finance any approved dealer vehicle – not stock-restricted

Rather than being tied to a single dealership’s inventory, with us, you can choose from thousands of cars nationwide.

Friendly UK-based support

Our expert team of car credit specialists are on hand to offer guidance and reassurance from initial application through to key collection.

No deposit car finance FAQs

Can I get car finance with no deposit and bad credit?

It’s certainly possible to secure car finance with bad credit and no deposit. That said, final approval depends on affordability and lender criteria, so it’s not always guaranteed. Using a broker like My Car Credit can grant you access to specialist bad credit lenders.

Do I need a guarantor for no deposit car finance?

A guarantor isn’t always required for no deposit car finance. You’ll only need a guarantor if your credit profile or income make you a riskier borrower to lenders.

Does no deposit mean higher monthly payments?

Without paying a deposit, you’re financing the full cost of a vehicle. As such, monthly repayments will typically be higher, and you’ll likely pay more overall than if you had a deposit.

Can I part-exchange a car instead of paying a deposit?

Part-exchanging a car can reduce the total amount you need to finance, which may lower your monthly payments. Your eligibility for part exchange will depend on your finance agreement.

Can students get no deposit car finance?

If students meet lenders’ affordability requirements and other criteria, students may be able to secure no deposit car finance. Having proof of a stable income is essential.

Can I get no deposit finance on a used car?

You may be more likely to secure no deposit car finance on a used or nearly-new vehicle compared to a more recent make and model.

Is no deposit finance available on PCP and HP?

Most lenders offer no deposit finance options for both PCP and HP agreements. You’ll be subject to affordability and credit checks, and need final lender approval before securing the loan.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How to Strengthen Your Eligibility for Car Finance

Can I Give My Car Back to the Finance Company?

Am I eligible for car finance?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

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

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

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

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

Require more help?

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

or call 01246 458 810

deposit hp Jan24 no deposit car finance PCP

How to Refinance a PCP Balloon Payment

car bought on pcp finance with balloons in back

There’s no doubt that COVID-19 has affected all of our lives. For many of us, finances are tighter, and we must watch the pennies, now more than ever. As a motorist, you may be coming to the end of a PCP deal and cannot afford to buy a new car in the current climate. You also don’t want to lose out on a car you’ve been waiting years to finally purchase outright. Perhaps you have also grown attached to the vehicle and don’t want to hand the keys over at the end of the PCP agreement.

If this is the case, consider your PCP finance balloon payment. My Car Credit can help you with refinancing your balloon payment, leaving you free to keep driving your car with a new agreement in place.

What is a PCP?

A PCP (Personal Contract Purchase) is a very common way of purchasing a new or nearly new car. Unlike a traditional personal loan or HP (Hire Purchase) agreement, you won’t be paying off the full value of the vehicle, and you won’t own the car at the end of the finance agreement – unless you choose to.

At the end of the term, you can either pay a final lump sum balloon payment to keep the car, hand the car back and walk away, or get a new car with a brand new agreement.

What is a PCP balloon payment?

A PCP finance balloon payment is the final lump sum needed to take ownership of a car at the end of an agreement. Most car finance paperwork refers to this as the optional final payment. When you first take out the loan, the vehicle costs are split across an initial deposit, a series of monthly payments and then this optional final payment if you choose to buy the car.

The balloon payment is fixed at the beginning of the contract, so you should be aware of the cost of buying the vehicle before you get to the end of the deal. The balloon payment is an estimate of the vehicle’s value at the end of the finance agreement, and it offers protection against an unexpected decline in your car’s value. It is also known as your car’s guaranteed minimum future value.

Should you refinance a balloon payment?

The current COVID-19 pandemic may have influenced your decision on whether to keep or buy your vehicle. Perhaps you’re a key worker and need a vehicle to rely on every day. Or maybe you’ve lost work and are looking for smart ways to save more money.

It is worth bearing in mind that due to the current difficulties in changing vehicles, some lenders are offering an extension to your current agreement.

However, if you want to keep the car, you would need to make the balloon payment. This is possible by paying the lender in cash or by refinancing the payment, which usually takes the form of a Hire Purchase agreement and will leave you as the car’s owner at the end.

Before making a final decision on whether to hand your car back or refinance the balloon payment, it’s important to consider your car’s current value with how much you’d have to pay – or refinance – to keep it. A good rule of thumb is if the car is worth less than the balloon payment, you may want to give it back and purchase a similar used model for less.

However, if the vehicle is worth more than the balloon payment listed on your agreement, you are better off paying – or financing – this amount to own the car for less than what a similar model would have cost you.

How do I refinance a PCP balloon payment?

If you want to keep the vehicle but cannot afford to pay the full optional final payment in cash, talk to My Car Credit about balloon refinancing. We have a number of lenders on our panel who offer balloon finance, so long as it is the right option for your circumstances.

Balloon payment finance is a Hire Purchase agreement. You can finance cars up to 10 years old or 100,000 miles at the start of the contract. Keep in mind that this will mean that you won’t own the car outright until you’ve made the final payment. However, if you refinance, you can settle your agreement at any point during the agreement.

There’s no doubt, this is an accessible and affordable way to spread the cost of car ownership. Best of all, at the end of the term, often between 24 and 60 months, the car becomes yours!

Another option for refinancing is opting for a bank loan. If you have a good credit score, you may be able to take advantage of low-interest rates. However, be aware that a personal loan does not have the same consumer protection rights as a hire purchase agreement. You may find you’re able to get a better deal with car finance, so it’s worth getting Hire Purchase quotes, too. My Car Credit offers rates from as low as 6.9% APR and will give you an instant online decision along with your expected rate of interest.

Get started today

Have you been thinking about purchasing your car at the end of your PCP agreement for a while? If you’ve been waiting years to finally own the car, don’t miss out! You don’t have to wait until the end of your PCP agreement before talking to your lender about refinancing. You may even be able to reduce your monthly payments by refinancing early.

• Start by applying for finance. Our dedicated car credit advisors will work with you according to your chosen financial plan and goals. We’re always on hand to help and are happy to guide you through the process.

• Calculate your budget. Get an idea of how much you can afford to spend.

• Let the team at My Car Credit handle the rest. We can help you land the right refinancing option that suits your needs and budget.

Find a financial plan to suit you

At My Car Credit, we understand that it’s a troubling time for everyone. That’s why our dedicated agents work to secure the right plan to suit your needs, vehicle and budget. To get expert advice and guidance, call us on 01246 458 810 or email us at enquiries@mycarcredit.co.uk. We look forward to hearing from you.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Car Finance: A Complete Guide

How Do Balloon Payments Work?

How Much Car Finance Do I Qualify For?

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

balloon payment finance balloon refinance end of agreement end of pcp PCP pcp balloon payment

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

calculator being used to work out how to pay car finance

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

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

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

Review your paperwork

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

Contact your lender

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

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

Handing your car back

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

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

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

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

Expert financial advice and support

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

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

Citizens Advice – www.adviceguide.org.uk

National Debtline – www.nationaldebtline.co.uk

Money Advice Service – www.moneyadviceservice.org.uk

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

5 Different Ways to Pay for a Car

What is a Balloon Payment on a Car Loan?

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

balloon refinance coronavirus covid-19 financial difficulty payment options PCP

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.

What is a balloon payment on a car loan?

PCP balloon payment

How a PCP balloon payment works

Lease Purchase (LP) balloon payment

How an LP balloon payment works

The benefits of a balloon payment on a car

Lower monthly repayments

Stretch your budget further

Do all car loan contracts include a balloon payment?

Can I refinance a balloon payment car?

Find out more about balloon payments

Rates from 9.9% APR. Representative APR 10.9%

Related articles

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More and more people are choosing an electric car on finance. With good reason too. The choice combines the benefits of electric cars on their own with the flexibility and convenience of ever-popular car finance.

1. Fuel costs

2. Running costs

3. Spread the cost

4. Get the latest model

5. And carry on doing so

6. Stay ahead of the curve

7. Don’t forget the environment

8. Improve your credit score

Start your electric car journey today

Rates from 9.9% APR. Representative APR 10.9%

Related articles

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Financing a car – the cheapest options in the UK

Cash

Personal loans

Finding the cheapest car finance

Hire purchase agreements (HP)

Personal contract purchase (PCP)

PCP explained

Personal contract hire (PCH)

How to reduce your monthly payments

Make a larger deposit

Avoid all-inclusive deals

Decide what you want earlier

Improve your credit score

Shop around

Easily navigate the car finance market

Rates from 9.9% APR. Representative APR 10.9%

Related articles

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Can you return a car on finance in the UK?

Voluntary termination explained

Eligibility

How to start the process

3. Book a time to hand the car back (and expect an inspection too)

Conditions to be aware of

The car needs to be in decent condition

Mileage limits matter (for PCP agreements)

Missed payments or arrears can muddy the waters

Impact on credit score

Voluntary surrender: what it means

Key differences from voluntary termination

You give up the car, but you’re still liable for the remaining balance

The finance company usually sells the car at auction

It’s treated more like repossession than a clean break

Financial impact

You may still owe a chunk of cash

Your credit score could take a hit

It’s not a protected right like VT, so you’ve got less control