Can I Get Car Finance For 12 Months?

Do you want to get car financing without paying a lot of interest? 😀 You may want to check out short-term arrangements for car finance over just 12 months. The average length of car finance deals varies, but is usually 2 -5 years, depending on the borrower’s needs and the lender’s evaluation of the borrower’s car finance application. 12-month car finance deals are available to car buyers who want to finish their loans fast. 

Some people prefer a longer loan term while others want to pay off the loan as soon as possible and pay less interest overall.  Or maybe would want to lease over just 12 months. Let’s first take a look at some of the options you might consider and why.

Reasons Why a Longer Loan Term Looks Good

The main reason why some people get a longer loan term to buy their car is that the monthly payments are much lower, and therefore, more affordable. But if you think about it, even if the monthly payments are cheaper than a shorter loan period, it’s going to cost you more overall. 

To illustrate, if you’re going to finance a £30,000 brand new car for the next five years at 3% APR without downpayment and without sales tax, the amount you’ll be paying every month would be around £500. However, if you choose to have a longer loan term of seven years, the payment amount every month would be under £400. The £100 difference can impact your budget significantly. 

So, yes, a longer loan term looks good because the monthly repayment amount is more affordable. But keep in mind that you’re going to make more payments, and therefore, you’ll be paying a bigger amount in interest in the long run. 

Why Avoid a Longer Loan Term?

For some people, a longer loan term fits their financial situation better. However, it may not be the best choice for you. When it’s time to decide on the length of your car loan, keep in mind some of the best reasons why you should avoid a longer loan term: negative equity cycle, repair costs as your car gets older, interest costs, and maybe you could end up owing more money than what the car is actually worth. 

You can avoid this scenario by being careful with the car financing deal that you choose. Read and understand the agreement first before signing anything. Also, look for low APR car loans and allow enough cash to make a substantial downpayment if at all possible.

You may also use a car finance calculator so you can anticipate the amount you have to prepare. Additionally, another thing you could do is to try to can boost your credit rating first before applying for car finance, so you can get better interest rates and therefore better monthly payments.  Finally, you may choose to lease a car instead of buying one. There are 12-month car finance deals for that as well.  Let's have a look at this option.

Getting Car Finance for a 12-Month Car Lease

Sometimes, the new car monthly payment deals that you get are just not that practical. If you’re not so sure about buying a car on finance, you can always choose to lease one first. You don’t even have to commit to a really long lease term because there are those that offer car finance for just a 12 months car lease. 

Leasing a vehicle for 12 months means you agree to only use the car for that term and for a specifically restricted mileage. When the contract ends, you have to return the vehicle. Short-term car leasing generally applies to agreements that are less than 24 months. The typical range of most car leasing contracts is from 24 to 60 months. So, a 12-month car lease falls into this category of “short-term” car leasing. 

Benefits of a 12-Month Car Lease

As with any car finance deal, a 12-month car lease may not be suitable for everyone. However, if you only need a car for a short period, then this is actually a good option for you. First of all, if you want to drive a new car or the latest model, you can choose a 12-month car lease. You get to drive a brand new set of wheels, and then when the contract ends, you can lease another new car. 

Second, if you only need a car temporarily, it’s more practical to lease a car short term. If you’re in a new city, or if you’ll relocate soon, or you’re just tired of the commute, then you can lease a car until you’ve decided what to do next. This option is good because it won’t tie you up to a car finance contract where you need to commit to making monthly payments for the next three to five years. 

A Few Drawbacks Though

What you have to understand about a shorter car finance term is that there are, of course,  some drawbacks. It’s crucial that you know what the negatives are so that you can decide in a more informed way whether you’ll buy or lease a car. Here are the potential drawbacks of a 12-month car lease.


Leasing a brand new car means depreciation will cost you quite a lot. The reason for this is that the estimated depreciation of the car is built into the payments you make for the car lease. The car will lose up to 20% of its value during the first year of use. Leasing the car during that time means you’ll be the one paying for the depreciation.

Taxes and Other Fees

You need to be ready for fees and taxes that you may have to pay while you’re leasing a car. Other fees you may need to pay are registration, inspection fees, and sales taxes. Do thorough research on all the costs you need to pay for before you get a short-term car lease.

Mileage Limits

A short-term car lease means you’ll also have fewer miles that you can use. If you end up using the car more than you planned, then you may have to pay extra for the excess mileage penalties. So, before leasing a car, be realistic about how you’re going to use it and whether you can stick to the mileage limits. 


There are so many new car deals with varying amounts for the monthly payments. Sometimes it can be confusing to choose the best car finance deal for you. But there is certainly one out there that will fit your needs and finances. And if you want car finance for 12 months, you can explore car leasing for the short term. 

If you want to know more about your car financing options, be sure to check the Carmoola blog! And if you would like to explore the options, why not download our app? It's a simple and efficient way to help inform you of your available choices!👍