Car Finance

If you are looking to buy a car on finance there are a number of different options to consider. Choose Wisely is here to help you compare these options and find the best option as quickly as possible.


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Representative 49.7% APR. Representative Example: Amount of credit: £1,200. Interest rate: 0.34% per day for up to 75 days (25.5% (variable) per annum). Representative 49.7% APR (variable). For example, if you borrow £150 for four days, the interest per day would be £0.51 and the total interest would be £2.04 representing four days at £0.51 per day.
Choose Wisely is a trading style of Choose Wisely Limited and is a free to use price comparison website. Choose Wisely Limited is authorised and regulated by the Financial Conduct Authority as a credit broker not a lender, firm reference number 730574 and is registered with the Information Commissioner’s Office number Z3106681.

Table of contents

Written by Mark Grimley
Read time: ~5 mins
Published: 16th November 2020 Updated: 17th November 2020

Car finance options compared:

Hire Purchase
Personal Contract Purchase
Personal Loan
Car Subscription
Is a deposit required?
Do you own the car?
Not until final payment is made
Not unless you make the final balloon payment
Are there mileage restrictions?
What is the typical length of agreement?
1-5 years
1-5 years
Monthly - but there may be an intial minimum period

What is the best option for me to buy a car?

Cash savings

If you have the money then buying a car with your savings means you won’t have any debt and you’ll own the car outright. The thing to beware of here is that if you are buying a brand car its value will depreciate rapidly and so it may not be a sound investment, especially if you plan to switch in a few years.

Personal loan

If you are set on owning the car outright then a personal loan is an option and may allow you to borrow more than if you opted to use a credit card. Things to remember with a personal loan is that acceptance isn’t guaranteed and if you are approved you will be paying interest, which depending on your personal circumstances and credit history may be expensive.

Personal Contract Purchase (PCP)

If you are someone who likes the idea of having a new car every few years then PCP is a good option. Also, because you are only financing part of the car’s value you can often obtain a more expensive car than you could with other financing options. But remember, with PCP you won’t own the car unless you pay off the hefty balloon payment at the end of your agreement. You also will have mileage restrictions and could be charged extra for any damages that occur.

Hire purchase (HP)

A HP agreement works similarly to a personal loan, as you are borrowing and paying off the full cost of the car. However for the duration of the agreement you won’t own the car. A hire purchase agreement can be a good option if you are struggling to get a low rate personal loan, as with HP the loan is secured against the car. Because of this the risk of lending to you is reduced which may mean your chances of acceptance are improved.

Car leasing

Car leasing is a way to access a new car through paying a monthly payment. Through a car lease you are effectively just renting the car and will never own it. You will have a mileage limit and will be responsible for its upkeep. As part of the agreement you will have to pay a deposit.

Car subscription

Car subscriptions are a relatively new product and much like subscribing to a tv streaming service you subscribe to car membership. You pay a monthly subscription and in return receive a car. Monthly payments can be high but that is because they often include the majority of other car related costs such as maintenance, breakdown cover, tax, and some include insurance. What’s included within your monthly payment will differ between providers so check the small print before agreeing to anything.

Car finance options for bad credit

If you have bad credit and are looking to finance a car you have options. If you’d like to buy the car outright with a personal loan your greatest chance of acceptance is most likely to be if you can find a guarantor to support your application or opt to secure the loan against an asset, such as your house. In either case, think carefully and compare your options. Finance options for those with bad credit are often expensive.

How can Choose Wisely help me find car finance?

We partner with the UK’s top lenders and specialist car finance brokers to ensure that whatever your circumstances we can get you to the right option. You can compare loan options by clicking the “Get Accepted” button at the top of the page and completing a Choose Wisely loan search.

Car finance FAQs

Will I be approved for car finance?

Approval for car finance isn’t guaranteed and is dependent on a number of factors such as your personal circumstances and credit history.

Will applying for car finance impact my credit file?

Yes. When applying for car finance lenders will check your credit history to ensure you can comfortably afford the repayments and to determine that lending to you is a safe and responsible thing to do.

Can my car finance be paid early?

This will be dependent on the provider. Be sure to check the small print as even though a provider may allow you to settle your car finance early, there may be charges to do so.

Can I apply for car finance in joint names?

No. If you are applying for car finance it must be in your name only.

Can you buy used cars on finance?

Yes. There are a number of brokers and dealerships that offer car finance on second hand vehicles.

Written by
Mark Grimley
Head of Partnerships & Take Control Author at Choose Wisely

Mark joined Choose Wisely in 2015. He continues to work in close contact with the providers, brokers and journalists operating in the world of consumer credit.

The quickest way to find the best car finance for you.

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Important Information.

All of the information in this guide is correct at the time of writing.

Rates shown are quotes based on your personal circumstances, are subject to status and are available to those aged 18 and over. Rates available range from a minimum of 3.9%APR to a maximum of 1575%APR Representative and loan repayment periods range from 3 to 60 months.

[*][†] Once accepted, your loan can be transferred to you in as little as 15 minutes. The time that it takes for the loan to show in your bank account will depend on your lender and your bank.

If you need financial advice you can visit stepchange, speak to citizens advice, call the national debtline or speak to

If you've been declined, please refer to your credit report to gain an understanding of why before making further applications.
Your score can be accessed for free via any of the main credit reference agencies such as Credit Karma, Clearscore or Experian.