Car finance helps to spread the cost of a new or used car. Instead of paying the full amount upfront, customers pay monthly. Most showrooms offer a range of finance products to suit individual preferences and circumstances, such as Hire Purchase, Conditional Sale, Personal Contract Purchase, and Lease Purchase. You can find out more about them by visiting our 'Your finance options' and 'Car Finance Products' pages.
How does car finance work?
Each of the products work a little differently but, in general terms, the finance company will buy the car on your behalf and then you will repay the value, plus interest payments. There are often 0% APR deals available, so it’s worth shopping around.
Car finance agreements are usually secured against the vehicle for the duration of the contract, typically 3-4 years, and during this time the car will be owned by the finance company (not the customer or the motor dealer).
At the end of the agreement, once all repayments have been made, you will ‘take title’ to the car and become its legal owner, unless you entered into a rental/hire agreement, in which case the car will generally be returned to the finance/hire company.
Finding it hard to get a deal?
If you’re having trouble finding car finance and you have been turned down by a lender, there are a number of reputable finance companies specialising in helping people with adverse credit history. Visit the Finance & Leasing Association’s membership directory for a full list.
Car history check
If you’re buying a used car, make sure you check its history before parting with your money unless you are buying from a dealership and it has confirmed a provenance check has been undertaken. You might find out that the mileage has been tampered with, or more seriously, that it’s been involved in a road traffic accident or is subject to outstanding finance (and therefore owned by a finance company).
Agencies offering these checking services include:
Specialist Automotive Finance
Specialist Automotive Finance (SAF) was introduced by the Finance & Leasing Association (FLA) in 2007 to boost professionalism in dealerships and increase consumer confidence in car finance. A SAF Approved sticker or certificate in the window means that you’ve chosen a dealership which puts its staff through the annual SAF Expert competence test to keep their technical knowledge of motor finance up to date. Over 2,500 UK showrooms are SAF Approved. Check out where your nearest one is located here.