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The Most Googled Car Finance Questions

Car finance can look like a complicated process, but we’ve got you covered. Have some car finance related questions? 🤔 We searched the most Googled queries about this topic, and popped them here together in one place,  so that your mind can be at ease as soon as possible! Start your prep now, and let’s begin…

Why Buy a Car on Finance?

Buying a car is a big financial decision. For many people, it makes sense to finance their purchase. There are a few reasons why financing may be the right option for you. First of all, it can help to spread the cost of the car over time, making it more affordable. Additionally, if you finance your purchase, strangely, you may be able to get a better deal than if you were to pay with cash - but be aware, many dealerships get a payout from the finance company if they sell a finance deal. So always shop around before you commit.

You should always bear in mind that using all your available cash to buy your car leaves you with no reserve for emergencies. And buying a cheaper car will mean more repair and maintenance bills to cover. By financing the purchase, you could also be able to buyer a newer, more reliable vehicle too. 

Finally, financing can provide flexibility in terms of how you make your payments. You may be able to choose a shorter loan term and make larger payments, or a longer loan term with smaller payments. Ultimately, the best way to decide whether or not to finance your car purchase is to look through your finances, look at what you can comfortable afford,  or even speak with a financial advisor and compare your options. Our calculator tool can help.

Which Car Finance is Right for Me?

Before signing up for car finance, it’s important that you know what to expect. You need full understanding of how the lender works and your responsibilities as a borrower so there are no surprises later on down the line! And you need to make sure you can comfortably afford the repayments over the entire term of the loan. Failing to make payments on time will adversely affect your credit score. 

Car financing is a way to buy your dream car without using up all your available cash. You'll usually need to put a down a deposit and then make monthly payments across a set period in order to fully own the car. This period can be anything from one to seven years although a typical period would be 3 to 5 years. 

If you buy the car using a Hire Purchase Agreement you will make slightly higher payments and will own the car outright at the end. But with a Personal Contract Payment the payments will be lower, but you will need to pay a balloon payment at the end of the term in order to keep the car. Or you can simply hand back the keys too! Check out our blog about the differences between HP and PCP to have all your PCP car finance questions answered. 

In the long run, it is cheaper to pay off any loan sooner rather than later. That's because as time goes on and you make payments for several years instead of two or three, your overall interest cost will be higher, even though each month’s repayment amount might seem affordable at first glance! It's wise to check out the finance companies' figures and see the overall cost calculated for any given circumstance. You can see our Carmoola Finance Calculator here

How Does Finance Work When Buying a Car?

There are several options available when it comes to car finance, and the best choice for you will depend on your circumstances. 

If you have the cash available, you can pay for the car outright. This is undoubtedly the cheapest option in the long run, as you won't have to pay any interest charges at all. However, not everyone has the savings available to cover the full cost of a car, and you wouldn't really want to empty your account to do so.  In this case, you will need to get car finance.

One type of loan for car purchases is a personal loan, which can be obtained from a bank or other financial institution. The amount you can borrow will depend on your credit score and income, and is usually only available to those with excellent credit scores as the car is not secured against the loan.

Another option is to finance the car through a car financing company. You can get and HP or PCP via the dealership or through a specialist car finance company. These are available for both new and second hand cars. And these can be available either with or without a deposit. Whichever option you choose, make sure to compare interest rates and terms and check over your budget before making a decision. And when looking at your budget, remember that financing a car is just one part of the overall cost of owning a vehicle. You'll also need to factor in insurance, road tax, maintenance, and fuel costs when budgeting for your new car...

There is a final option which is Personal Contract Hire - like a long term rental. This is great for those who do not yet know if they want to keep a car for long, as it goes back to the company at the end of the term. And bear in mind there are restrictions on mileage and potential charges for any damage caused. But it can be a useful option, rather than actually buying the car. 

Am I Eligible for Car Finance?

Most car finance companies require applicants to be at least 18 years old. To give yourself the best chance of getting credit, you may want to ensure that you’re in good financial standing and that you have a reliable job where you can expect regular income to make the monthly payments. 

It can also help if you check your credit score and credit report first before applying for car finance. If you have a low score or don’t have enough history, consider working on these issues first so that the lender will approve of your application more easily.

What’s the Car Finance Application Process?

With the new online application processes there are available, you can actually apply for car finance in just a few clicks. The lender will review your information you can sometimes get a decision very quickly. 

The traditional way of applying will take longer and the lender may need to receive certain documentation from you, or call if they need more clarification or may even want to set up an appointment with you! It can take up to 2 weeks to get a final decision. 

However, with an online finance company like Carmoola, you only need to download the app on your smartphone to begin the application process. Within the app, you will enter your personal details such as your name, address and other personal details,  as well as verify your identity using your driver’s licence. Within a few minutes, the result of your application will be available. And you will know how much you are able to borrow and at what cost. 

The whole application process with Carmoola is done online and through the app. You can even apply at 2 AM on a Sunday if you want since we offer automated car finance processing 24/7. It’s designed to be convenient, fast, and simple. Gone are the days of long lines and long waiting periods. 

Do I Need to Pay a Deposit?

The amount you pay up front for your car will depend on the lender and also how much you want to put down. A bigger deposit will save you interest payments down the line, so is a prudent option if you can afford it. Some financing companies offer zero deposit loans though - which can be an option worth considering! It's important to think about how much money is required before financing; especially because there are efficient ways at reducing the amount of money spent on interest rates as well. As always, do your research!

With a deposit, your monthly repayment amount will be more affordable. If you can afford to pay a substantial amount for the deposit, then the better it will be for you, because you’ll save more money in the long run. It also increases your chance of getting credit because the lender will see you as a lower-risk borrower who is more likely to keep up with the payments. 

Can I Have Multiple Car Finance Applications?

There’s no rule against applying for car finance from a number of lenders but the real question here is should you? It’s not advisable to make several applications because it’s going to make you look desperate for credit. Lenders would assume that you’ve been declined by other lenders and that you might be a high-risk borrower. 

The best way to ensure that you get car finance approval is by doing your research, not spamming car financing companies with your applications. Get quotes rather than making full applications - it's great to shop around. For every hard application you make, the lender will conduct a hard check on your credit report and that will affect your credit score by a few points every time. So if you make a number of applications, your score could go down significantly, making it even more difficult for you to get approved for car finance. It's a lose-lose situation. 

Is My Credit Score Important?

Yes, but it's not the be all and end all. Lenders will look at your credit score because it reflects your credit history. If you’ve been a good payer and you have sufficient credit history, then you would have a high score. However, if you’ve been late in paying bills or you’ve defaulted on previous loans or you don’t have enough credit history yet, then your score would be on the lower end. 

If your credit score is not that great, don’t be discouraged because there are steps you can take to improve it. However, it's not an overnight process and you might have to be patient. It’s important that you show the lenders that you are responsible when it comes to handling your finances and paying your bills on time, every time. Avoid missing payments and make sure you check your credit report for errors and even fraudulent activities.

What Happens if I Sell a Car With Outstanding Finance?

If you have outstanding finance on your car, you will need to pay off the remaining loan balance before you can sell the vehicle. You may be able to do this by including the payoff amount in the sale price of the car and having the new owner assume responsibility for the loan. Alternatively, you could pay off the loan yourself and then sell the car free and clear. If you're not sure how to proceed, it's best to consult with your car finance company to find out what options are available to you. Keep in mind that it is illegal to sell a car with outstanding finance secured against it, and  if you don't pay off the outstanding finance on your car, the lender may repossess the vehicle. As such, it's important to take care of this before attempting to sell your car!

How to Get Car Finance With a CCJ?

Getting car finance with a CCJ (county court judgement for debt) on your record can be challenging, but it is not impossible. There are a few things you can do to improve your chances of approval. First, make sure you have a steady income and a good down payment. Then, look for lenders who specialise in bad credit loans. Finally, be prepared to pay a higher interest rate than you would with a clean credit history. With some time and effort, you can find the right lender and get the financing you need to purchase a new car.


With these common questions answered, hopefully, you have a better understanding of car finance, the types of arrangements available, eligibility, and the application process. Be sure to check other articles on our blog to know more about it! 👍

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