Used car finance

You should be able to pay off a used car finance deal early, but there might be a penalty charge depending on the terms and conditions. Generally, the further into the deal you are, the less you will have to pay if you wish to end it early.

Used car finance is still an option for those who’ve struggled with credit in the past.  Hire purchase may be the best option for someone with bad credit. This is because the finance is secured against the car so there are typically more options available than with a personal loan, which is unsecured. 

However, if you do have a low credit score you’re likely to have less choice of finance deals and face higher interest rates, so be sure you’re comfortable you can meet the repayments.

Typically, you’re more likely to find 0% finance deals available for new cars. They tend to be rare for used cars. That said, you may be able to get 0% car finance at a dealership on a used car, so it could be worth shopping around. If you do see a 0% finance deal, make sure it is as good as it appears. If the car price is higher or there are hidden charges in the contract, you may end up paying as much if not more than on a regular car financing deal.

A used car should be cheaper to finance than a new car because the vehicle is worth less, so you do not need to borrow as much. A used car might also depreciate in value more slowly than a new car, helping reduce the cost of financing. 

Yes, with car financing your monthly payments will usually be fixed for the agreed term. You can reduce your fixed monthly payments by putting down a bigger deposit or opting for a longer contract length.

That depends to some extent on the car and your circumstances. But as you'd expect, you'll pay more to finance a new car than a used one, which is a major consideration during what promises to be the worst cost-of-living crisis for decades.

Choosing a new car limits your choice of models too, for the simple reason that it's more likely that more cars will be out of your price range.

It's also worth noting that new cars depreciate in value very quickly. It's widely acknowledged that new cars lose as much as 30% within two years of purchase. Conversely used cars hold their value much better.

Generally, used car loans range between 12 months and 60 months. Naturally, the shorter the term you choose, the higher the monthly repayments you'll need to make.

However, the advantage of a shorter term is that you'll pay less in interest. And thus pay less overall.

Ultimately, the key thing to consider is what sort of payments you can afford. If you're more comfortable with making lower repayments over a longer period, then that might be the best option for you.

If a fault develops with your used car you might be legally entitled to:

• Repair or cost of repair

• A full or partial refund

This may be because the car is damaged, or the state of the car differs from the advert or description when you bought it.

However, it's important to note that there are some circumstances that mean you won't be covered for any of the above.

This occurs if the fault was outlined in the car description, or if you conducted an inspection of the car and failed to spot the fault.

You're also not covered if you caused the fault or the fault is considered to be the result of fair wear and tear.