Frequently asked questions about car finance
 | How much deposit do I need? |
| | Most car finance schemes ask for a minimum deposit of 10%. However, you can save money in the long term by paying more. |
| | What is the interest rate? |
| | It is important that you get an accurate comparison of interest rates charged. To do this, ask for the APR (annual percentage rate) and compare it with other finance. Do not get confused between APR and ‘flat rate’. By law any lender must give you a written document with the APR clearly stated. |
| | Can I reduce my monthly payments? |
| You can reduce your monthly payments by putting down a larger deposit or by deferring some of the finance until the end of the agreement. Talk to your lender about these options. |
| | Can I cancel the agreement? |
| | Your rights to cancel the agreement should be clearly explained to you before you sign. They should also be given to you in writing. Do not sign if you do not understand these rights. |
| | Can I settle the agreement early? |
| | Yes, but you will almost certainly have to pay a charge. Your lender should give you details about this. For information on paying early, click here. |
| | Can I sell the car? |
| | Most finance agreements require you to pay off the debt in full before you sell the car. Under certain circumstances you may be able to return to car to the finance company. If you are having difficulty making your payments, you should talk to the lender before you take any action. |
| | Can I add service and maintenance? |
| | Yes, most car dealers will be able to add a service and maintenance package. This may or may not be part of the initial car finance. Talk to your dealer about this option. |
What if ...? Questions about your agreement
This is general guidance only. You should talk direct to your finance provider or seek advice if you are unhappy about any aspect of your finance. You can also get advice from Consumer Direct or your local Citizens Advice Bureau.
| | I cannot afford my repayments |
| You must talk to your finance provider as soon as possible. Do not stop paying, or miss a payment, because this will put you in breach of your agreement. |
| | I want to cancel the agreement |
| Your rights to cancel the agreement should be clearly explained to you before you sign. They should also be given to you in writing. Do not sign if you do not understand these rights. |
| | I want to settle the finance early |
| If you have an agreement that comes under the terms of the Consumer Credit Act, you can repay your finance early at any time. If you took out your agreement on or after 31 May 2005, your lender should have given you details about early settlement: - in an information sheet given before you took out your finance; and - in your credit agreement. If you want to repay your agreement earlier than planned, you will almost certainly have to pay a charge, reflecting your lender’s costs. For more on paying early, click here |
| | I want to sell the car |
| Most finance agreements require you to pay off the debt in full before you sell the car. Under certain circumstances you may be able to return the car to the finance company. You should talk to the lender before you take any action. |
