Set your budget
Allow for insurance, tax, fuel, maintenance and unexpected costs alongside finance.
Start with the essentials
Understand car finance from start to finish
Learn how car finance works, what it can cost and which questions deserve an answer before you sign an agreement.
Car finance basics
What car finance is
Car finance is a way to spread or structure the cost of using or buying a vehicle. Depending on the product, you may borrow money to purchase the car, hire it for an agreed period or make payments that lead to ownership.
The monthly payment matters, but it is only part of the decision. Deposits, interest, fees, optional final payments, mileage rules, flexibility and the total amount payable can all change the overall picture.
Compare routes
Look at ownership, total cost, restrictions and end-of-term choices.
Review the offer
Check the exact agreement, credit information and affordability before signing.
Manage the term
Keep records, make payments and prepare early for changes or the agreement ending.
Ways to fund a car
The main choices
Products can look similar at first glance while producing very different outcomes. Start with how each option treats ownership and the car’s value.
PCP
PCP
Payments are based partly on the car’s expected value at the end, followed by a choice to return, keep or change it.
Understand this option →HP
Hire Purchase
Fixed payments generally lead to ownership after the final payment and any purchase fee.
Understand this option →PCH
Leasing
Pay to use the vehicle for a fixed period, then return it under the agreed mileage and condition terms.
Understand this option →Loan
Personal loan
Borrow separately and buy the vehicle, making you the owner from purchase.
Understand this option →CS
Conditional sale
A secured agreement where ownership normally transfers after all required payments.
Understand this option →Cash
Cash purchase
Pay in full without a finance agreement, while retaining money for ownership and running costs.
Understand this option →Look beyond the headline
Costs beyond the monthly payment
A manageable monthly figure can still sit inside an expensive or restrictive agreement. Compare the deposit, interest, fees and total amount payable. For PCP, include the optional final payment if keeping the vehicle is a realistic goal.
Eligibility and affordability
Providers may assess credit history, income, expenditure, employment and the proposed agreement. Passing an eligibility check does not by itself show that a payment is comfortable for your household.
Understand credit and applications →Credit searches
An initial check may be soft or hard depending on the service and provider. Confirm what kind of search will be used before submitting details.
Read about credit searches →Before signing
Read the pre-contract information and agreement. Check mileage, condition rules, ownership, fees, early settlement and what happens at the end.
Use the signing checklist →During and after the agreement
Manage changes before they become surprises
Keep the agreement and payment records somewhere accessible. If you want to change the car, settle early or expect difficulty paying, contact the provider and ask for the relevant figures and options rather than relying on an estimate.
Choose your next step
Understand the choices before you apply
Take time to understand the agreement before moving into the separate finance-options journey.