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Min-max loan: £10,000 - £500,000
Cost: £207.5 per month
Term: 10 years
APR: 6.6%
£207.5 per month
10 years
more info Call now0800 0848 029

Representative APRC: 6.6%


Min-max loan: £7,500 - £350,000
Cost: £210.75 per month
Term: 10 years
APR: 6.86%
£210.75 per month
10 years
more info Call now0800 0848 029

Representative APRC: 9.2%


Min-max loan: £10,000 - £500,000
Cost: £226.13 per month
Term: 10 years
APR: 8.09%
£226.13 per month
10 years
more info Call now0800 0848 029

Representative APRC: 10.8%



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Used car finance

In recent decades, owning a car has become more than just a luxury; it's a necessity for many people and families.  

However, the ambition of purchasing a vehicle, especially a brand-new one, often comes with a hefty price tag which can be challenging to afford for many people. 

Thankfully, the rise in prominence of used car finance has opened up a world of possibilities for those without the cash to buy a used car upfront. 

This can provide an alternative and affordable path to owning a reliable set of wheels when you most need them. 

So, whether it’s your first time purchasing a car, or you’re looking to upgrade to a more recent model, used car finance could be an option to help you achieve your goals. 

This article will delve into the basics of used car finance, shed light on its advantages, drawbacks, and the specific intricacies involved in this type of borrowing. 

We will also take a look at the various types of finance options available for used cars, as there’s quite a few to choose from. 

What is used car finance? 

You may be surprised to know that car financing doesn’t just extend to brand new wheels. 

The term ‘used car finance’ refers to the financial arrangements and options which are available to you when you’re looking to buy a pre-owned vehicle, but don’t have the cash to fund a purchase up front.  

It can enable you to spread out the cost of a used car over a predetermined timeframe, which making the process more accessible if you don’t have the cash at hand.  

Normally, used car finance involves borrowing money from a certified lender, like a bank, a credit union, or the dealership who are handling the sale, to cover the cost of the car you’ve got your eye on.  

The borrowed amount is then repaid to the lender in instalments. Nine times out of ten, interest is tacked on. 

The repayments stretch over an agreed-upon period of time and lenders will work with you to ensure the arrangement is affordable for you during the term.  

The financing arrangement you enter will have terms and conditions, including the relevant interest rates, the repayment duration, and any deposit requirements, can vary widely depending on the lender you opt for. 

Other factors can influence the terms you may be offered, such as your credit history, as well as the specific details of the vehicle, such as its age or condition. 

Various financing options are available if you’re in the market for a used car, and we’ll cover these in the next section.  

Each option carries its own set of advantages, potential drawbacks, and eligibility criteria, allowing you to choose the option which will best suit your financial situation and preferences. 

Ultimately, used car finance can make it easier for you to overcome the financial hurdle of purchasing a vehicle outright.   

Whether you're looking for a commuter car, a family vehicle spacious enough for your little ones, or a daring, sporty ride, used car finance can open up a world of possibilities, potentially making it easier for you to live within your means. 

What financing options are available for used cars? 

When it comes to financing a used car, several options are on hand to suit different financial circumstances and any individual preferences you might have.  

Car Loans 

Traditional car loans are an enduringly popular choice for used car financing up and down the UK.  

To cover the price of the vehicle you want, you could secure a loan through many different avenues like banks, credit unions, or even online lenders, paying them back over time.  

The timeframe to pay back these loans typically ranges from two to seven years but can be tailored to your circumstances.  

Interest rates and loan terms can vary quite a bit based on a myriad of factors such as your credit history, the deposit amount you put down, and the age of the vehicle you’re purchasing. 

If you’re looking to buy a used car from a private seller on an outlet like eBay or Gumtree and need a loan, it’s best to seek a car loan to do so. 

This is because many of the other financing options won’t be at your disposal in this scenario. 

Hire Purchase (HP) 

Hire purchase agreements are another very common option for funding the purchase of used cars. 

With hire purchases, you’d likely be asked to pay a deposit upfront. Typically, this ranges anywhere from 10-20% of the vehicle's price.  

Then, you make regular fixed payments over a period agreed between you and the lender.  

Once all the payments required are complete, ownership of the car is transferred to you from the lender.  

Under the hire purchase arrangement, the finance company you’re working with retains legal ownership of the car you buy until the final payment has gone through.  

Personal Contract Purchase (PCP) 

Personal contract purchases are a relatively flexible financing option, making it a popular option for financing the purchase of used cars across Britain. 

Under a PCP agreement, you pay an initial deposit to the lender which is typically followed by monthly instalments repaid over a set period.  

At the end of the agreement, you will usually have three choices at your disposal: return the vehicle to the lender you’ve used, make a final "balloon" payment to purchase the car outright and continue driving it debt-free, or use the car's value as a trade-in to secure yourself a new vehicle.  

Personal contract purchases can offer you flexibility if you’re not sure how long you need to drive a vehicle for. 

In addition, the requirement of a balloon payment at the end – should you opt to keep the car – means that the monthly payments you make are likely to be lower than with hire purchase or traditional loan. 

The key drawbacks of this option to bear in mind are that some PCP arrangements come with mileage restrictions and additional fees. 

It can be advantageous to clarify this with your lender before you sign to ensure you’re comfortable with the terms. 

Personal Loans 

Some borrowers opt to obtain a personal loan from a bank or other lending institution to finance a car purchase.  

Personal loans are typically unsecured, and can be used for various purposes, including buying a used car. 

Like car loans, this kind of financing might be a smart option to pursue if you are opting to buy a car from a private seller, as you can spend personal loans in a variety of ways, and there’s usually no requirement for the car purchase to be declared to a lender prior to you making a loan application. 

The personal loan you’d take out is repaid in fixed instalments over a specified period, meaning you know exactly how much the financial burden of this debt will set you back each month. 

Can I access car financing with bad credit? 

Accessing car financing with bad credit in the UK may be more challenging, but it is possible nonetheless. 

With specialised lenders and financial institutions on hand that cater to people with poor credit, there are options available to find a solution for your car purchase predicament. 

These types of lenders can consider other factors, such as your current level of income, your employment stability, and your ability to make regular payments, in addition to your credit history.   

By taking a more holistic view of your financial situation, these lenders can assess your creditworthiness more accurately and may be able to provide you with more suitable financing options.  

While the interest rates you might be offered are likely to be higher compared to those with good credit, these lenders may still be able to offer you the opportunity to secure car financing at a price which is affordable month-to-month.

Guarantor Loans 

As well as specialised lenders, another potential option if you’ve got bad credit is a guarantor loan.  

Under this arrangement, a family member or friend with good credit can act as a guarantor for the loan you take out to fund your car purchase.  

By agreeing to take on responsibility for the loan if you default on the regular repayments, the guarantor you select can provide the lender with an added layer of much needed security. 

Having a guarantor on hand to get your loan over the line can increase your chances of obtaining financing and may result in lower interest rates needing to be paid as the lenders’ risk is ultimately lowered. 

Subprime lenders 

Subprime lenders, also known as specialist bad credit lenders, are a further type of financial institution which specifically caters to those with a poor credit rating.  

They can be more willing to consider your application and understand the challenges associated with having bad credit. 

To help you fund your used car, these lenders may offer financing options tailored to your circumstances, although they sometimes charge higher interest rates to offset the higher level of risk they undertake. 

Carefully reviewing the terms and conditions of any loan offer before you sign it is valuable, to make sure you’re not caught off-guard by any fineprint. It can also help you make sure that the loan is wholly manageable within your set budget.

Can taking out a loan improve my credit score? 

Paying off a loan while you have a spot of bad credit under your belt can be a prime opportunity to improve your credit score, helping future lending prospects.  

By making regular, on-time payments and responsibly managing your finances associated with this loan, you can gradually rebuild your creditworthiness and access more attractive financing terms in the future, should you need them. 

While obtaining car financing with bad credit might require some extra leg work and consideration on your part, there are plenty of options available to help you secure a loan and make progress toward securing your own vehicle.  


What is a car loan? 

A car loan is a financial arrangement whereby a lender you approach provides you with a specific amount of money to purchase – you guessed it - a vehicle.  

It’s a pretty simple financial tool. 

You agree to repay the loan amount, usually with interest tacked on, through fixed monthly instalments. 

In exchange, you get to drive the car you want away and pay it off over time. 

What is hire purchase? 

Hire purchase is an increasingly popular financing arrangement to buy a car, used or new.  

It constitutes you paying an initial deposit and then making a series of regular payments across a fixed timeframe.  

Full ownership of the car is only transferred to you once all payments are complete. 

Until such time, the finance company you’re working with retains legal ownership of the car you’re driving. 

Can I get a car on finance if I have bad credit?

Yes, you’ll be pleased to know that it’s possible to get a car on finance, even if you’ve got bad credit.  

Poor credit can limit your options and result in higher interest rates, but there are specialised lenders that cater to those with less-than-perfect credit.  

They will often consider additional factors, such as your income, and can offer financing options tailored to your individual circumstances. 

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