Car loan
Borrow to purchase the car outright and then pay off the personal loan in fixed monthly repayments.
Car finance
Compare our best car finance deals.
Rates from 7.9%
MoneySuperMarket is a credit broker not a lender. You must be 18 or over and a UK resident
Compare over 50 car finance deals from across the market
Our partner Motiv works with a large panel of lenders, including the big car finance brands, to help you borrow the money you need.
What is car finance?
'Car finance' is a general term that encompasses the many options available to you if you're looking to borrow money to fund the purchase of a new or used car.
The term also covers the options on offer if you'd like to lease a car for a set period.
As the loanee, you'll be responsible for repaying the money you've borrowed in instalments. That means you can spread the cost of your car over several years.
Common methods of financing a car include leasing, personal contract purchase, hire purchase, and car loans.
How does car financing work?
Agree on contract length and conditions: You’ll have to agree on how long you want to pay for the car. You’ll also agree to certain conditions, such as annual mileage where relevant
Borrow money: You’ll borrow money from the lender to cover the cost of the car. You will pay an initial deposit to begin with and then make regular payments
Contract ends: Once the contract is over and depending on the type of car finance, you own the car, hand it back to the dealership or start a new car finance deal
What are the different types of car finance?
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Hire purchase (HP)
Pay a deposit and monthly payments to a finance company. You own the car after the final payment.
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Personal contract purchase
Pay a deposit and instalments to cover depreciation. Make a final larger payment to keep the car or return it.
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Car leasing
Lease a brand-new car by paying regular monthly instalments and return it at the end of the contract.
How much will a car finance deal cost me?
Car finance calculator
Tell us how you'd like to finance your car, the size of your deposit and the price of the car and we'll calculate your costs in seconds.
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Choose PCP and you'll pay an initial deposit and monthly payments to cover the remaining value of the car, plus interest. At the end of the term, you can buy the car or walk away.
Optional purchase lump sum
At the end of your PCP, you will have the option to keep the car if you pay lump sum. We've estimated this to be taking your total cost to .
Find car finance loanChoose HP and you'll make monthly payments and usually pay a deposit. At the end of the contract term, you'll own the car.
What is the best financing option for me?
When deciding, consider the affordability, how long you want the car for, and if you want to own the car once the deal is finished.
Personal loan | HP (Hire Purchase) | Personal Contract Purchase (PCP) | |
|---|---|---|---|
Deposit needed | No | Likely | Likely |
You own the car straight away | Yes | No | No |
You’ll own the car at the end of the deal | Yes | Yes | No (unless you pay off the remaining balance – but this is likely to be a large final payment) |
Secured (against the car) | No | Yes | Yes |
Excess mileage charges | No | No | Yes |
Monthly payments | Yes | Yes | Yes (are often lower due to the balloon payment) |
Available with bad credit | Yes, but expect high rates | Likely | Likely |
Should I get car finance or buy a car outright?
There are different advantages to paying for a car upfront and in or taking out finance:
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Buying outright
Avoids interest charges (unless you get a car loan), saving money in the long run
Immediate ownership without restrictions such as annual mileage limits
Potentially a wider choice of vehicles including lower cost, second-hand runarounds
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Using finance
May help make expensive cars more accessible
Keep savings intact for emergencies or other investments
Flexible finance deals give you the choice to buy or lease
How much does car finance cost?
How much your new wheels will cost will depend on the type of car finance you choose, how long you’ll be paying it back, and any interest added.
We’ve put a table together to compare the different types of car finance (PCP, HP and taking out a personal loan) factoring in the deposit and interest rate applied or APR.
Hire Purchase | Personal Contract Purchase | Personal Loan | |
|---|---|---|---|
Car Value | £15,000 | £15,000 | £15,000 |
Deposit | £1,000 | £1,000 | £1,000 |
Total Borrowing Price | £14,000 | £14,000 | £14,000 |
Representative APR* | 9.9% | 9.9% | 6.1% APR |
Monthly Cost (3 Year Term) | £448 | £287 | £426 |
Total Cost of Credit*** | £2,141 | £3,073 | £1,318 |
GMFV - Final Payment | £10 | £6,750** | None |
*Assuming a perfect credit score, **45% of car price, ***fixed-rate APRs. Source: Motiv Finance
For instance, financing a car worth £20,000 over 60 months may cost
Our expert says…
How can you recognise a car-finance mis-selling scam?
"With the car-finance mis-selling case making headlines, be wary that scammers might contact you to say you're owed compensation and may ask for your details so they can steal your identity. In general, if you're contacted out of the blue by someone about mis-sold car finance, they're not to be trusted. "
"In the meantime, it's emerged that delays mean that consumers who were victims of car finance mis-selling now won't find out if they're due compensation until December 2025. However, assuming there will be a lot of claims for lenders to deal with, it's important you get your complaint in to your lender as soon as possible."
Kara Gammell Personal Finance & Insurance Expert
Who are Motiv?
Motiv offer a free service that lets you compare a wide selection of car finance options.
Founded in 2018, they have helped nearly 10,000 Britons finance a vehicle purchase. Here’s some of the reasons we chose to partner with Motiv:
Options to suit you: You can pick from hire purchase, personal contract purchase, unsecured loans and leasing car finance deals
Trusted lenders: Motiv cater for customers with a broad range of credit histories, with a panel of over 30 lenders that includes household names such as The AA, Lendable and Zopa
Pre-approved loans: Lending partners can often pre-approve finance deals and guarantee a rate. So when you apply you know exactly what you’ll be paying and it won’t damage your credit score
What can I do if I’ve been mis sold a car finance deal?
If you think you’ve been mis sold a car finance deal, you can lodge a complaint to the Ombudsman.
Your grounds for complaint could be that you feel the terms of the contract weren’t made clear to you. Or that the lender failed to carry out the stringent affordability checks that they’re obliged to do.
At the time of writing, the Financial Conduct Authority (FCA) is still investigating car finance mis selling. The investigation was launched after it emerged that millions of Britons may have been charged too much on car finance deals before January 2021.
The FCA was due to publish the results of its investigation in September 2024, however delays relating to an ongoing court case mean it will likely now not do so until December 2025. As a result, it looks like would-be claimants could be waiting much longer than anticipated to know if they're eligible for compensation.
Among the lenders under investigation are Barclays Partner Finance, Blackhorse and Santander. If you think you may have been affected, it’s a good idea to register your complaint as soon as you can so that you’ll be first in line for compensation in the event that the probe clears the way for a claim.
Refinancing to get a better car finance deal
Refinancing your car can be a smart move because it could help you secure a better rate, or lower your monthly payments.
Opting to refinance your car can also help you fund a balloon payment if you have a Personal Contract Purchase agreement on your current car.
Under what circumstances could refinancing make sense?
If your credit rating has improved since you initially signed your finance deal, there’s a good chance you may be able to refinance for cheaper payments.
You may also be able to save money if you didn’t shop around when you secured your current car finance arrangement.
Finally, in the event that market conditions have changed (for instance, if interest rates have fallen), you might be able to refinance for better terms.
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Compare car finance with MoneySuperMarket and our partner Motiv
Find the right car finance option for you and see which rates you’ll be guaranteed to get
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Make your choice
Decide which car finance option is right for you, from PCP or HP.
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Just tell us a little about you, your finances and what you’re looking for
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Compare car finance
You’ll be able to review car finance options once you’ve been approved so you can proceed with confidence.
Who can get a car finance deal?
You generally have to be over 18 to get car finance, and lenders will often have their own specific requirements. You can find out more by looking at their website or contacting them directly, by phone, email, or post.
What is car refinancing?
Car refinancing involves moving onto a new car finance deal, and using this to pay off your existing agreement, usually to benefit from lower interest rates or lower monthly payments.
What details do I need to provide when applying for car finance?
To apply for a loan you’ll need your address, contact details, details about your income, expenditure and employment. You’ll also need to mention how much you want to borrow, and for how long.
Can I repay my car finance deal early?
This depends on the lender. Some loan providers will charge you extra fees if you start making higher repayments than have been agreed, but others may allow it. There may be an early repayment penalty charge if you want to clear the loan in full before the end of the term.
What happens if I miss my repayments?
Missing repayments could have several negative effects so always speak to your lender as soon as possible if you are experiencing difficulties. The lender should be able to offer options to help you mitigate the problem. A missed debt payment could harm your credit score and result in a County Court Judgement against you. Any assets secured against the loan could eventually be repossessed. Try to avoid missing repayments as it is likely to make borrowing more difficult and more expensive in future.
What is the cheapest way to finance a car?
When looking to finance your new car consider what is most affordable for your circumstances, not what is necessarily the cheapest.
If you can’t afford to pay for your car upfront with cash (which will usually be the cheapest way to buy a car), taking out a personal loan could be a way to spread the cost of the purchase over a number of years to make it more affordable.
When deciding what is the best way to finance a car, you’ll need to consider the interest, the loan term and any charges added to the finance plan you take out, as well as the size of your monthly repayments.
How quickly can I get a car finance deal?
It can take a few minutes to a few days to get approved for a car loan, depending on what type of lender it is, the type of loan you’ve applied for and the type of car you’re looking to buy.
Which is best: hire purchase or PCP?
Whether it’s better to choose a hire purchase or personal contract purchase (PCP) contract will depend on a range of factors, including costs, what you want out of the deal and your personal circumstances.
PCP car finance can offer cheaper monthly payments but you won't own the car at the end of the agreement unless you can make the optional final payment - sometimes known as a balloon payment.
With hire purchase you know that once you’ve paid the final instalment the car is yours to keep.
It is also worth comparing any conditions, such as maximum annual mileage, which might influence your decision as to the best type of finance for you.
Is the car finance industry regulated?
Yes, the car finance industry in the UK is regulated by the Financial Conduct Authority (FCA).
The FCA ensures lenders adhere to strict guidelines regarding transparency, affordability assessments, and fair treatment of customers.
Regulations aim to protect consumers from predatory lending practices and ensure clear terms and conditions are in place for car finance products.
Lenders must be authorised by the FCA to offer car finance, providing consumers with recourse in case of disputes.
Can I get car finance with bad credit?
If you’ve struggled to keep up with repayments in the past or you don’t have a credit history, it may still be possible to get car finance.
We work with specialists in car finance for bad credit, and we might be able to match you with a car loan that works for you.
Taking out car finance won’t lower your credit score unless you fail to keep up with your payments.
In fact, showing you can handle car finance responsibly over the long term can help make you more appealing to future lenders.
Representative 29.9% APR
Do I need to get insurance on my financed car?
Yes, as with any other road vehicle, you need to be insured to drive your financed car.
Some finance companies may make it a condition of the contract that you take out fully comprehensive insurance, and may even offer insurance as part of the overall package.
Always check your finance agreement for specific insurance requirements.
Reviewed on 12 Dec 2025 by
Lowest rate for a car finance deal. Rate offered will depend on your individual circumstances. Accurate as of 5th November 2025. Subject to credit status.
YouGov Survey 1st July 2024 to 30th June 2025. Net Recommend score derived from “Which of the following online service websites would you recommend to a friend or colleague, or tell them to avoid?” Base: Current Customers of (MoneySuperMarket n=18,382, Compare the Market n=16,802, Go.Compare n=10,162, Confused.com n=8,229, Uswitch n=528).