Can You Get Car Finance on a Second Hand Car?

Many car buyers prefer second-hand cars over brand new ones because they’re much cheaper to buy. If you’re also considering a used car, you might be wondering if you can get car finance for your purchase. Read on to learn the essential points you need to know about second-hand car finance. 

Can I Finance a Used Car?

So, first of all, can you get finance on second-hand cars? Absolutely, you can get second hand car finance in UK. Car finance companies provide financing for both brand new and used cars, plus you can choose between a Hire Purchase or Personal Contract Purchase deal to buy the vehicle you like. What’s great about getting a used car is that you can save more money because they’re much cheaper than their brand new counterparts. Many second-hand cars are in top condition and some already have upgraded features that you won’t get with a brand new vehicle without spending extra for them. 

Interested to know more about second-hand car finance UK? Let’s dive in and learn about HP and PCP car finance for second hand cars!

Hire Purchase Car Finance for Used Cars

How does Hire Purchase work for second-hand cars? Firstly, you need to apply for credit from a reputable car finance company, and once you’ve been approved, you’d usually have to put down a deposit before you can drive home the car. The deposit is typically at least 10% of the car’s value. You may also ask the car finance company if they offer zero-deposit car financing. If you have an excellent credit score, you just might be offered a no-deposit deal, meaning you don’t have to spend your cash even for the deposit. 

After the initial payment, the next payments you’ll make would be the monthly instalments. This is a financial obligation you have to fulfil every month throughout the duration of your HP car finance agreement. Generally, when you pay a substantial deposit, your monthly payment amount will go down and you’ll pay less interest since you’re borrowing less money. You may also choose a longer agreement term to make the monthly repayment amount more affordable. 

Once you’ve made all the payments and your contract is finished, the ownership of the car will be transferred to you. You may then choose to keep, sell, modify or do whatever you want with it because it’s already legally yours. Hire Purchase is quite straightforward and it’s a cost-effective way to buy a car without spending most of your cash on just one purchase. So, if you’re sure about having your own ride, go for an HP car finance deal. 

Second-hand Car PCP Finance

What if I only need a car for a couple of years? No worries because you can choose a Personal Contract Purchase agreement to finance a car. With PCP finance on second-hand cars, you have the option to return the vehicle once your contract ends. As long as the car hasn’t exceeded the agreed mileage limit and there’s no damage beyond fair wear and tear, you don’t have to pay anything else. 

The second option you have is to buy the vehicle if you’ve decided that you want to own it. For this to happen, you need to pay the optional balloon payment first. This final payment is based on the guaranteed minimum future value of the car. It is the value of the vehicle at the end of the agreement and it’s typically stated in the PCP car finance agreement. 

The third option is to use the remaining equity of the vehicle as your deposit for another car when you get another PCP deal with the same car finance company. Many drivers choose this option, especially when they want to upgrade their car every few years. It’s a hassle-free way of getting a new ride, plus the deposit can be partially or fully covered by the remaining equity of the current car so you may not need to put down cash anymore. 

PCP works in much the same way as HP because you also have to pay a deposit and pay monthly payments. However, the monthly repayment amount is lower than HP because it doesn’t cover the full price of the car. Instead, it goes towards the predicted depreciation of the vehicle. What you have to remember with PCP car finance though is that there might be fewer choices when it comes to used cars than Hire Purchase. Also, there’s an annual mileage limit that you need to stick to if you want to avoid paying penalty charges. 

Is Second-hand Car Finance Right for Me?

Financing a used car is a good idea if you want to save money on your car purchase. Since you’re financing the car, you don’t have to spend a big chunk of your cash for it. You only have to think about the deposit and then the next time you pay would be for the monthly instalments. Hire Purchase is a great option if you want to own the car at the end of your contract. PCP is the better choice if you’d rather have flexible options when your agreement ends. 


So, now that we’ve established that you can get car finance for a used car, go ahead and check how much it will cost you by using our car finance calculator! You can play with the different figures like the deposit amount and contract term to see which combination works best for your budget. If you have any questions, be sure to reach out to us here at Carmoola! We’re here to make your car purchase fast, convenient, and simple. 😀🚘