How to Buy a Used Car on Finance

Buying used cars can save you potentially thousands of pounds, especially if you are considering getting one on finance.

However, before you start looking for a used car on finance, there are a few things you’ll want to consider.

Step By Step Guide to Buying a Car on Finance

It’s easier than you might think to buy used cars on finance. While the process will differ between lenders and the different types of car finance, here’s a general step by step guide:

1. Set Your Budget

Before looking for used car finance deals, you need to determine your budget.

Remember, monthly payments can add up. Be realistic about what you can afford without straining your finances.

Discover your budget quickly with Carmoola’s calculator.

2. Do Your Research

Make sure you compare various finance used cars deals.

Different dealerships may offer various financing options. Comparing your options ensures you find the best deal to suit you.

3. Choose the Right Car

Search for used cars that fit within your budget. While it's important to consider aesthetics and features, also keep in mind the car's history, mileage, and overall condition.

4. Understand Financing Terms

Once you know what car you want, understand the financing terms. Some questions to consider include:

  • What's the interest rate?
  • How many months is the financing for?
  • Are there any penalties for paying off the loan early?

5. Negotiate the Price

Even when opting to buy a used car on finance, don’t forget the age-old advice: always negotiate! Whether it's the car's price or the interest rate, a bit of haggling can potentially save you a good amount.

6. Consider Making a Large Deposit

If you have some spare cash to hand, consider using it to pay a large deposit on the car you want. This can lower your monthly payments and potentially get you better financing terms.

7. Complete the Paperwork

Once you're happy with the deal, fill out the necessary paperwork. Make sure to read through all the details before signing.

8. Buy and Drive Away in Your New Car!

Once the paperwork has been completed and you have approval, it’s time to purchase your new car.

This is how traditional car finance works, but there is a simpler way. With Carmoola, you can skip the paperwork and telephone calls.

We offer a fully online process and, in most cases, can give you access to your funds the very same day.

Why Choose Used Car Finance: Benefits and Advantages

When it comes to buying a car, you're often faced with a multitude of choices. One of the biggest decisions is whether to buy new, purchase a used car outright, or look for used car finance deals.

So why do so many people opt to buy used cars on finance? Let's explore the many benefits and advantages:

Affordable Monthly Payments

One of the key reasons to buy a used car on finance is affordability. Instead of a large upfront payment, you get to spread the cost over several months or even years, making it easier on your wallet.

Drive a Better Car for Your Budget

By choosing used car on finance, you often have the flexibility to get a better car than you could if you were paying cash. Those premium features or that higher-end model might suddenly be within your reach.

Preserve Your Savings

Why dip into your savings when you can preserve them for emergencies or other essential purposes? With finance, you can keep your savings intact while still driving off the lot with a fantastic car.


Used car finance deals often come with flexibility. Depending on the deal, you can choose the length of your loan term, the size of your deposit, or even the interest rate.

This can allow for a customised approach to car buying that suits your financial situation.

Improve Your Credit Score

When you opt to buy a used car on finance and make timely payments, you have the potential to boost your credit score.

Regular payments can demonstrate to lenders that you're trustworthy, which can be beneficial for future financial ventures.

Special Promotions

Dealers often have promotions or special financing deals. You might find zero-interest deals, reduced rates, or other incentives that make financing even more attractive.

Peace of Mind

When you choose to finance a used car, many dealerships offer extended warranties or service packages.

This means that not only do you save money, but you can also enjoy added peace of mind knowing you're covered if anything goes wrong.

Finding the Best Used Car Finance Deals: Top Tips

With so many used car finance deals out there it can be difficult knowing which one is right for you.

Here’s a few tips to help you find the best used car finance deals UK to fit your needs and your budget:

1. Understand your Credit Score

Your credit score plays a pivotal role when you're looking to buy a used car on finance. A better score can get you more favourable interest rates.

If your score isn't where you'd like it to be, consider waiting and working on improving it before applying for used car finance.

2. Read the Small Print

Not all used car finance deals are created equal. Beyond the monthly payment and interest rate, look for details like early repayment fees, and terms of loan extension that may impact your decision.

3. Ask About Promotions

Sometimes, dealers offer promotional used car finance deals for a limited time. These can include lower interest rates or cashback offers.

Always ask if there are any ongoing promotions when you visit or call the dealership.

4. Understand the Full Costs

When you're considering a used car on finance, it's crucial to look beyond the monthly payments.

Understand the total cost over the finance period, including interest. This gives a clearer picture of what you're committing to.

5. Seek Recommendations

Word of mouth can be incredibly valuable. Ask friends, family, or colleagues about their experiences.

They might direct you to a great dealership or warn you about potential pitfalls.

6. Use Online Tools and Apps

In today's digital age, there are countless online tools and apps designed to help you compare used car finance deals.

Make use of these platforms to get an overview of the market and find the best deals available.

Applying for Car Finance: Documents and Eligibility

When applying for car finance, there are various documents and eligibility requirements you’ll need to meet. These will vary between lenders, but here’s a general breakdown of what you’ll need:

Eligibility Criteria

Before diving into the paperwork, let’s clear up who is eligible to buy a used car on finance in the UK:

  • Age: Typically, you must be 18 years or older.
  • Residency: You should be a UK resident, usually for at least 3 years.
  • Income: You need to prove you have a regular income to show you can meet the monthly repayments.

Documents You Will Need:

The documents you need will vary between lenders. For example, at Carmoola, the only document you need is photo ID.

We use the latest biometric technology to confirm your identify – cool huh?

Unfortunately, most lenders still follow the traditional route, meaning you’ll need various documents to support your applications. Here’s some of the documents you might need:

Proof of Identity

For any finance application, the lender needs to know you are who you claim to be. You can typically use:

  • A valid UK driving licence.
  • A valid passport.
Proof of Address

To confirm your UK residency, you'll be asked to provide recent documents, such as:

  • Utility bills (e.g., gas, electricity, or water bill) dated within the last 3 months.
  • A recent council tax bill.
  • Bank or credit card statements from the last 3 months.
Proof of Income

To ensure you can afford the used car finance deals on offer, lenders might require:

  • Last 3 months' payslips.
  • Recent bank statements showing your income.
  • If self-employed: Last 2 years' worth of audited accounts or tax returns.
Details of Employment

Some finance providers might want more details about your employment, such as:

  • Your current role and employer.
  • Length of employment.
  • Contact details of your employer (though they usually won’t contact them without your permission).
Details of the Car

If you’ve already chosen your dream Used Car, the lender will want details such as:

  • The car's make, model, and age.
  • Price of the car.
Personal References

Although rare, some lenders might ask for personal references. These references vouch for your reliability, especially if your credit history is limited.

Carmoola’s Easy Car Financing Process for Used Cars

Getting used cars on finance has never been easier with Carmoola. With technology and customer convenience at the forefront, we are revolutionising the way we think about financing used cars in the UK.

Here’s how our quick and easy used car finance works:

1. Download the Carmoola App

Begin by downloading Carmoola's dedicated app, your gateway to a hassle-free financing journey. With a design focused on user experience, we guarantee a smooth, easy application.

2. Swift Identity Verification

Say goodbye to tedious documentation. With Carmoola, all you need is your driver's license.

Simply use it within the app for instant identity confirmation, making the start of the process efficient and secure.

3. Input Key Details

At Carmoola, we know your time is precious. By filling in a few essential details on the app, you're already on the fast track to securing finance for your next vehicle.

4. Get a 60-Second Decision

Submit your details, and within just 60 seconds you’ll get a decision about your finance application.

5. Same-Day Virtual Card Funding

Approved? Congratulations! You will receive your funds, usually on the very same day, in the form of a convenient virtual card.

This quick turnaround ensures you can proceed with your car purchase without delay.

6. Choose Your Car

With your virtual card in hand (or rather, on your app), you're all set to pick you’re the car you want from any approved dealership.

Carmoola isn't merely another used car finance provided. From instant decisions to same-day virtual card funding, we guarantee a swift, secure, and streamlined car financing journey. 🚘 🌟

Learn more about buying a used car on finance:

FAQs About Buying a Used Car on Finance:

Should I Buy a Used Car on Finance or Pay Cash?

Buying a used car on finance can help you manage your budget by spreading the cost over time, making more expensive cars more accessible. It can also help build your credit if you make timely payments.

Paying in cash, on the other hand, means you won't have any monthly obligations or interest rates to worry about. You will also own the car outright immediately.

What Documents Do I Need to Apply for Used Car Finance?

When applying for used car finance in the UK, typically you'll need:

  • Proof of Identity (like a valid UK driving licence or passport).
  • Proof of Address (recent utility bills or bank statements).
  • Proof of Income (recent payslips or, for the self-employed, tax returns).
  • Details about the car you intend to buy (make, model, price).
  • Some lenders may also request details of employment or personal references.

How Do I Determine My Budget and Affordability?

To determine your budget and affordability for a used car on finance:

  • List your monthly income and deduct all known expenses.
  • Consider unforeseen expenses and set aside an emergency fund.
  • Remember to account for other car-related costs like insurance, maintenance, and fuel.

It's also wise to consider future financial changes, like potential raises or unforeseen expenses.

Where Can I Buy a Used Car on Finance in the UK?

In the UK, you can buy a used car on finance from traditional car dealerships, online platforms like Carmoola, banks, and specialist lenders.