Buying a used car on finance: a plain-English guide

Most people buying a car from a dealer spread the cost with finance. This guide explains the main options and what to think about before you apply. It is general information, not advice about your own circumstances.

We are a credit broker, not a lender

When you apply for finance through us, we pass your application to a lender from our panel. The lender makes the decision, sets the rate and becomes the company you make payments to. Finance is always subject to status: each application is assessed individually, and terms depend on your circumstances and the lender's criteria.

Hire purchase (HP)

With hire purchase you usually pay a deposit, then fixed monthly payments over an agreed term. Once the last payment (and any small option-to-purchase fee) is made, the car is yours. HP is straightforward and there are no mileage limits.

Personal contract purchase (PCP)

PCP payments are often lower than HP because part of the car's value is deferred to a final "balloon" payment. At the end you can pay that amount and keep the car, hand it back (subject to mileage and condition terms), or use any equity towards another car. PCP availability depends on the car's age and the lender.

What lenders usually look at

• Your credit history and any existing borrowing
• Your income and regular outgoings, to check the payments are affordable
• How long you have lived at your address and been in work
• The car itself, including its age and price

You must be over 18 and a UK resident. A lender may carry out a full credit search before making a final decision.

Questions worth asking before you sign

• What is the APR, and what is the total amount payable?
• Is there a final balloon payment, and how much is it?
• Are there mileage limits or condition charges?
• What happens if I want to settle early?
• Is the dealer paid commission by the lender?

You are entitled to clear answers to all of these. Read the pre-contract information carefully and do not sign anything you do not understand.

Your right to withdraw

For most regulated credit agreements you have 14 days to withdraw from the credit agreement after it is made. You would need to repay the credit, plus any interest for the days you had it.

Next steps

See our finance page for how applying works with us, including our representative example, or browse our current stock to find the right car first.