According to the Finance & Leasing Association (FLA), Car finance from UK providers is increasing year on year, to the tune of around £128 Billion in 2017. While consumer volumes for financing new cars have fallen by 4%, there has been a 20% increase by value in the second-hand car finance sector for January 2018 compared to the same month in 2017.
With so many companies fighting for your business in this lucrative industry, it's worth doing your homework when trying to find cheap car finance to make sure you get the best deal possible. If you want to buy a car on finance and need to get a car loan to fund it, you will need to know where to start.
You have various options depending on whether you are looking for new or used car finance. Before you race around trying to get quotes from lots of different companies, it's good to start off with some idea of how much you can afford on the monthly payments, this will help guide you in your expectations as to how much you are likely to be able to borrow. It is also worth finding out what your current credit score is beforehand as this affects the interest rate you are likely to get on any car loans from UK providers. You don't want to be getting lots of quotes unnecessarily because too many credit searches will affect your credit rating, so start off using loan calculators that will estimate the monthly repayments using sliders to adjust the different options.
Confused Car Finance Calculator will give you a guide on the expected monthly payments based on how much you would like to borrow and the timeframe. They provide 3 representative apr levels (Low, Moderate, High) the likelihood of which one you would qualify for being based on your credit score.
Carfinance247 Car Finance Calculator will give you a guide based on the best available annual interest rate and detail the total repayment as well as the total cost of credit. Just adjust the amount you wish to borrow and/or the timeframe to see the figures based on different credit score profiles.
Zuto Car Finance Calculator will estimate the amount you can borrow based on your monthly budget and timeframe, but their APR rates are high, with excellent credit scores starting from 9.9% APR where others will start from 3.5% APR which results in a lower amount of borrowing for your budget.
Once you have an idea of the amount you are likely to be able to borrow, you can decide if you wish to purchase a new or used car and the type of motor finance you want to use.
There are a growing number of dealers offering 0% financing on some new cars, usually on their harder to shift models. So it's worth checking to see if the car you want is available on 0% finance:
If you are not picky about what car you want, there are some 0% finance used cars available too, but models are limited.
Yes, all manufacturers offer finance on new and used cars, usually HP or PCP deals. Leasing options typically are only available on new cars, but you may find some local dealers offering lease deals on used cars. Some dealers can provide their own franchised finance deals like Volkswagen - VW Finance, BMW Group - Aplhera Finance but it's worth checking out the independent auto financing companies too.
Some of the more well known independent vehicle financing companies:
There are plenty of other companies out there that can provide vehicle financing and to offer finance these companies have to be authorised and regulated by the financial conduct authority (FCA), so check they are registered before taking out any loans with them. Getting quotes from each one would be time-consuming, so it's worth using some of the comparison websites out there that enable you to quickly compare car loans: