What is car finance?
Car finance is a term that covers the different ways you can buy a car without paying the full price upfront. It makes owning a car more affordable by spreading the cost of your car across several years.
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Learn moreCar finance is a term that covers the different ways you can buy a car without paying the full price upfront. It makes owning a car more affordable by spreading the cost of your car across several years.
Search carsWhatever type of car finance you choose, you'll borrow money from a lender to eventually own a new or used car. You can also take out a lease agreement on a car for a given period of time.
You’ll usually pay an initial deposit, and then fixed monthly repayments for the duration of your agreement.
As part of your car finance contract, you’ll need to stick to certain rules. These may involve, for example, servicing the car according to its manufacturer's schedule, or not going above a set number of miles each year. Once you’ve paid what you owe, depending on the terms of your contract you’ll either own the car outright, pay a final lump sum to buy it, or return the car.
Hire Purchase (HP)
HP finance allows you to spread the cost of the car by making monthly payments over an agreed term. It could be right for you if you want to buy the car at the end of the agreement, without making a large final payment.
Personal Contract Purchase (PCP)
With PCP finance, you make equal monthly payments over an agreed term. At the end of the agreement, you can decide to hand the car back to the lender, change it for another one or buy the car with an 'optional final payment'.
Yes, we do. If you're looking to purchase a car with HP finance, you can use our HP finance calculator before you get started.
Applying for finance may affect your credit score. This is because the lender will run a hard credit check on your credit profile. Too many hard credit checks over a short period can affect your credit score for six months, which could reduce your ability to get approved for credit.
If you have a low credit score, you may not be accepted for car finance. The good news is that there are a number of things you can do to help to improve your score and likelihood of being accepted in the future:
Make sure you don’t have any missed regular payments, such as your mobile phone bill.
Avoid going over or close to your credit card limit.
Leave some time between applying for credit applications. Too many hard credit searches can affect your score.
Register on the electoral roll at your current address.
The better your credit score is, the more likely you are to be approved for car finance and to pay less interest overall.
If you’d like to learn more about improving your credit rating, visit Experian for more useful tips and information.