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Car loans
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MoneySuperMarket is a credit broker not a lender. You must be 18 or over and a UK resident.
What are car loans?
A car loan is simply a personal loan that's earmarked to buy a new or used car. You can use the loan to fund all or some of the purchase price.
Once you’ve been approved for a car loan, you can choose to buy from a car dealer or a private seller.
The most important thing to note is that when you buy a vehicle with a car loan, you own the car from day one.
That’s in contrast to other ways of financing a car, such as hire purchase, where you pay in instalments and don’t own the vehicle until the last payment is made.
How do they work?
Decide how much you need: Lenders typically offer up to £15,000 on an unsecured personal loan. If you need to borrow more, secured loans are available where the debt is secured against your home
Think about loan term: Personal loan terms usually range from one year to five years. A longer term will mean lower monthly repayments, but you’ll end up paying more interest overall
Choose a suitable deal: We’ll show you car loans you’re likely to be eligible for and your chances of getting the deal if you apply. You can adjust the loan term and choose based on the interest rate and cost of monthly repayments
Repaying the car loan: The loan will be paid directly into your account so you can pay for your new car outright. Your monthly repayments will usually begin straightaway
Our best loan rate
5.8%^
Most common loan term
5^ years
Average car loan APR
10.1%^
How much could a car loan cost me?
Use our new loan calculator to estimate the cost of your loan with ease.
Loan calculator
Find out what monthly repayments would be, how much you'll pay overall and how much you could borrow.
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Based on the information you supplied, you would be borrowing XXX and repaying the loan in XXX monthly instalments of . The total sum to repay, subject to XXX% APR over the full loan term would be XXX. This assumes there are no extra fees and that your payments are made on time and in full.
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Based on the information you supplied, you could borrow XXX at a monthly repayment rate of to be paid over XXX monthly instalments. Over the full loan term at XXX% APR, the total amount repayable would be XXX. This assumes there are no extra fees and that your payments are made on time and in full.
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The maximum personal loan is £50,000
If you need a larger amount, consider a secured loan, which will allow you to borrow more but uses your home as collateral. Be aware that lenders can sell your house if you fail to keep up with repayments.
What are the pros and cons of car loans?
If you’re considering taking out a car loan, here are some downsides and benefits to weigh up:
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Advantages
Spreading the cost can make buying the car more manageable for you
If you keep up with payments, you could improve your credit rating
More options of new and secondhand cars than you’ll get with car finance
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Disadvantages
You’ll pay more than you borrow because all loans charge interest
You might not be able to borrow enough to buy your ideal car outright
If you miss payments, you risk damaging your credit rating
Am I eligible for a car loan?
Getting a car loan is usually straightforward, but there are a few key requirements you’ll need to meet, such as:
You must be a UK resident and at least 18 years old
You must hold a UK bank or building society account
You need a regular income to show you can afford repayments
You may also require a good credit score, though some lenders offer options for those with poor credit.
Can I get a car loan with a bad credit score?
Yes, you can still get a car loan with bad credit, but:
Interest rates may be higher due to the increased risk
You might not be able to borrow as much
Lenders will look at your overall financial picture before deciding what deal to offer. There are also lenders who specialise in helping bad credit customers.
It’s always sensible to check your credit score before applying and take steps to improve it. When it comes to finding the best deal, use our eligibility checker before you apply to see your chances of approval.
What's the difference between a car loan and car finance?
A car loan is a personal loan which you use to help pay for your vehicle outright, whereas car finance is a catch-all term used to describe different ways you can pay for a car on credit.
Car dealerships will typically offer ‘finance’ which is usually in the form of a personal contract plan or hire purchase. These deals typically involve a deposit followed by a series of monthly instalments.
Depending on the type of car finance, you might own – or have the option to own – the car at the end of the term.
Car finance often comes with conditions, such as maximum annual mileage, so ensure you fully understand the terms before entering into a contract.
If you’re unsure, our guide ‘Car finance or a bank loan?’ can help you decide on the best route to take.
How much can I borrow for a car loan?
The amount you can borrow for a car loan will depend on a few key factors, including:
Your credit score – better credit usually means access to larger loans at lower rates
Your income and outgoings – lenders will assess your affordability
Any existing debt and financial commitments
MoneySuperMarket’s free eligibility checker shows your chances of being accepted without affecting your credit score – so you can apply with more confidence.
According to our data, the average loan amount our customers borrow for a car is £12507.71
How quickly can I get the funds?
It depends on the loan provider but it is usually fairly quick. Once you’ve been accepted for a loan the cash could arrive in your bank account within hours, but more usually within a couple of days.
What are the repayment terms?
Repayment terms will depend on the structure of your loan agreement, but most car loans involve fixed monthly repayments over a set term – typically between one and five years.
It’s important to check the terms carefully:
Missed payments can lead to penalty fees and damage your credit score
Early repayment charges may apply if you pay off the loan ahead of schedule
Always read the small print and make sure the repayments fit your budget before committing to a deal.
How much do people borrow for car loans?
The most common loan amount for those looking to fund a car purchase is between £7,500 and £14,999, based on MoneySuperMarket data from February 2025. Our chart shows how much people typically borrow.
How to get the best car loan
To get the best car loan deal, follow these simple tips to boost your chances of approval and secure better rates:
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Choose the right loan term
A longer term could cost more overall, but be sure you can afford monthly payments
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Check your credit score
The better your credit rating, the more likely you are to get approved with lower interest rates
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Shop around
Compare deals from multiple lenders to find the most competitive rates and terms
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Use an eligibility checker
Our free eligibility checker helps you see your chances of approval without impacting your credit score.
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Check the small print
Understand what will happen if you miss a payment or want to clear the loan early
How can I improve my credit score for a car loan?
You can take steps to improve your credit score by:
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Registering to vote
It may seem unrelated, but being on the electoral register can positively impact your creditworthiness
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Checking your credit report for errors
Mistakes happen, and incorrect information can negatively affect your score. Make sure everything is accurate and dispute any errors. You can access your credit report for free with MoneySuperMarket
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Pay bills on time
Late payments can significantly damage your score. Set reminders or consider direct debits to ensure timely payments
Is a car loan right for me?
A car loan could be right for you if you need a vehicle but don’t have the full amount upfront. It allows you to spread the cost over fixed monthly repayments, making budgeting easier.
However, it’s important to consider whether the repayments fit comfortably within your budget. You’ll also pay interest, so the total cost will be more than you borrow.
What are my alternatives to a loan?
Personal Contract Purchase (PCP)
With PCP, you pay an initial deposit and then make a fixed number of monthly payments to cover the car’s depreciation.
When the contract ends you can make a final ‘balloon’ payment to own the car or return it to the dealer.
Hire Purchase (HP)
With Hire Purchase (HP) you usually pay an upfront deposit and then make fixed monthly payments for an agreed period. With HP, the finance company has security in the form of the car, so if you don't keep up with repayments, they can take it away.
Though similar to PCP, the monthly payments made under a PCP agreement only cover the depreciation of the car, not its full value. This means that under hire purchase, ownership is guaranteed after the final payment.
Leasing
Car leasing is a type of car finance that works like long-term vehicle rental.
You sign a contract to pay a monthly fee, which gets you full use of a brand new car for a set period – usually between two and four years. At the end of the contract, you hand the keys back to the leasing firm – and if you’ve stuck to the terms of the contract then there's nothing more to pay.
Our expert says…
The beauty of a car loan is that it gives you the flexibility to buy a new or second-hand car up to your budget, and because you fully own the car from day one, there aren’t limitations on modifications or mileage like with other types of car finance. Undertaking any sort of borrowing is a big commitment though, so make sure it’s the right move before you apply.
Emma Lunn Personal finance expert
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Learn more about car financing
Compare car loans with MoneySuperMarket
Comparing car loans couldn’t be easier with MoneySuperMarket. Our eligibility checker tool will show you the loans you are most likely to be approved for – so you can protect your credit score
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Tell us about yourself
We’ll ask you a handful of simple questions about you, and your finances and the car loan you need
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We browse the market
We’ll sift through car loans from across the market, and show you the deals that suit you best
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Pick the loan you want
You’ll be able to sort car loans by overall cost and interest rate, and the likelihood you’ll be accepted
Which is the best bank for a car loan?
Most of the main high street banks offer personal, unsecured loans which you can take out to buy a new or used car. If you apply to a bank for a loan it will conduct a credit search to work out whether you can afford it.
In contrast, if you look for a loan through MoneySuperMarket, we can search the market without it affecting your credit rating. Then you can see which loans from across the market, including the major banks, you might be eligible for before you apply. This cuts down the risk you will be rejected for a loan.
What is a good APR for a car loan?
The APR or interest rate you’ll be offered on your loan will depend on your personal financial situation and your credit score. The better your credit rating, usually the lower the loan rate you’ll be able to get. The best rates are usually also available on larger loans – typically those wanting to borrow around £5,000 or more.
Are car loans secured or unsecured?
You can use a secured or an unsecured loan to pay for a car. With a secured loan you must put up an asset – usually the vehicle you are buying – as collateral, so the loan provider would repossess it in the event you were unable to repay. This does not happen with a personal or unsecured loan.
You can take out an unsecured personal loan or a secured loan through MoneySuperMarket and use it to pay for your new car.
Can I pay off my car loan early?
You can usually pay off your loan early, but you may have to pay an early repayment charge. Ask your lender to send you an early repayment settlement amount so you can see how much the charges will be.
Can you add to an existing car loan?
It isn’t usually possible to increase the amount of your personal loan once it has been agreed and paid out to you. If you need to borrow more you will usually need to apply again for another loan – and the rates and terms and conditions may be different to your first loan.
Can I refinance my car loan?
You’re able to apply to refinance your car loan at any time. But with the proviso that some lenders stipulate that you must have had your existing car loan for a set period of time before you’ll be considered for refinancing.
Can I use my car loan for something else?
Yes, you can generally use a car loan for other purposes, especially if it’s a personal loan not secured against other collateral. However, lenders may prohibit certain uses such as gambling, investing, or illegal activities, so always check the terms and conditions first.
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So how do we make our money? In a nutshell, when you use us to buy something, we get a reward from the company you’re buying from.
You might be wondering if we work with all the companies in the market, or if our commercial relationships with our partners might make us feature one company above another. We’ve got nothing to hide, and we want to give you clear answers when it comes to questions like these, so we’ve pulled together everything you need to know on this page.
Reviewed on 24 Dec 2025 by
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Based on the average loan amount from enquirys made on MoneySuperMarket in November 2025 where the purpose of the loan was Car.
Based on MoneySuperMarket data from February 2025
Based on MoneySuperMarket data from February 2025
Based on MoneySuperMarket data from February 2025
Based on MoneySuperMarket data from February 2025
Based on the loan enquirys made on MoneySuperMarket between September 2025 and November 2025.
Lowest representative APR for loans between £7.5k and £15k. Accurate as of December 8th 2025. Subject to credit status.
Based on the loan enquirys made on MoneySuperMarket between September 2025 and November 2025.