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Compare the Best Car Finance Options For You

If you're buying a car with finance, it's understandable that you want the best deal available. There are many factors you should consider during your search for the best car finance options, including the interest rate, length of the loan and, of course, the amount you want to borrow. Below, we've got everything you need to know about securing great finance for your next vehicle. So read on and get the lowdown about finding a top deal.

What are the best rates for car finance?

You'll need to know about APR (annual rate percentage) to understand the best rates. It's the annual rate at which all of the costs for purchasing the car is included. Knowing the APR makes it easier to compare deals, and it's important to remember that the annual percentage rate is not the same as the interest rate. The APR includes all fees and gives you a more accurate amount that needs paying. Typical car finance rates for people with excellent credit scores are between 6% and 11%.

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What is the best car finance for me?

Ultimately, the best car finance for you is the most affordable one. Much depends on factors such as your credit rating and income. The better the rating and the more you earn, the better the car finance deals available. When getting car finance, you should look out for low-interest rates and ensure you understand the terms and conditions. 

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What is the best car finance to get?

The best car finance deals typically have the lowest interest rates and affordable monthly repayments. First, you need to decide on the type of car finance deal you want – hire purchase, personal contract purchase or loan – and then see which offers meet your requirements. You should also aim to get car finance with flexible options, especially as many drivers change their car after three or four years. 

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What is the best option for financing my car purchase?

When you finance a car, you have several options. These include hire purchase, where you pay a deposit for the car and then maintain monthly payments until it's paid off; personal contract purchase, which involves only covering the difference between the value of the car while it's still brand new and its value by the end of your contract; car leasing, where you essentially rent the car for the long term; or a personal loan, which lets you pay for the car in full and make the repayments to the lender.

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Which is best: car finance or loan?

Pros of getting car finance include low deposits and flexible terms, while the cons usually include paying extra if you go over the mileage limit and not actually owning the car. For a loan, pros include it being unsecured, plus it's are easier to access and often a cheaper alternative to car financing methods. However, they can have higher rates, so that's something to keep an eye out for. As for which one is best, that ultimately comes down to what you're looking for with your car finance.

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Car finance vs lease explained

Car leasing and finance both allow you to pay for your vehicle with monthly payments. Getting a lease is like renting a vehicle for the long term and returning it once you've made all the payments. With car financing, you'll borrow the money from a lender, like a bank or financing company, so you can buy the car outright. You then repay the lender through monthly payments. Sometimes there might be a final payment due, especially if you're financing your car with personal car purchase (PCP).

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Is it better to finance or lease a car?

When you finance a car, you're the owner even though you make monthly payments. Think of it like owning a house with a mortgage. Because you own the car, you can also make customisations to it, and there's no mileage limit. When you lease a car, you need to give it back at the end of the agreed period. However, car lease payments are usually lower than finance payments. Car leases often with three-year warranties , meaning you won't incur repair costs. The best options will come down to your own personal preference, but it's important to consider the pros and cons for leasing and finance. 

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Who are the best car finance providers?

Again, the best car finance providers for you are the ones offering affordable finance. But there are some things you should look out for when trying to secure car finance. This includes getting finance from a company that is transparent, provides five-star service and generally gets you excited about getting car finance with a good deal that works for you.

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Car leasing v car subscription: what's the difference?

With a car lease, you'll purchase the car and pay for it with monthly payments – usually between three and five years. Once the lease period is over, you return the car. There's no option to buy at the end of the lease, meaning you hand it back to the dealer. Car subscription also involves a monthly payment that also covers the cost of the car tax, insurance and maintenance. It's essentially an all-in-one approach to having a car similar to other popular subscription models like Netflix and Spotify. 

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The best way to pay for your car: cash vs finance vs subscription

Fortunately, you have plenty of options when it comes to paying for your new car. If you can afford it, cash is probably the best way to go, as it allows you to pay for the car in full without owing any finance. Of course, cars tend to depreciate as soon as they're driven off the dealership, so it might not be the best purchase in terms of your investment increasing in value. Using finance gives you more flexibility, but you'll likely need to pay interest. While a subscription tends to have an all-inclusive package but you don't own the car. 

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Is it better to get car finance or pay with cash?

Paying with cash for your car means you won't owe any lender money and own the vehicle outright. If you have the money to spare, it can be a good way to buy a car. However, it's worth taking into account the long-term value of a car. The majority of vehicles lose a significant amount of their value as soon as they're driven off the dealership, and you may prefer to invest your money in something offering a return. With car finance, you don't own the car outright, but you can make monthly payments against the vehicle and probably enjoy more car options as finance usually offers more flexibility than paying with cash. 

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What's the difference between HP and PCP car finance?

Two of the primary ways to get car finance are hire purchase (HP) and personal car purchase (PCP). HP offers a straightforward set up and sees you buy a car with a deposit and pay it monthly until the balance is cleared or you sell it. It's a lot like a mortgage. PCP, on the other hand, is more common for new cars, or nearly new cars. You'll pay monthly payments to access a new car, and then give it back when those payments stop, or pay the remaining balloon payment and keep the car.

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What's the best loan term for second-hand cars?

When it comes to second-hand cars, a short-term loan is usually a better way to finance the car. You own the car faster, spend less on interest and can benefit from a higher resale value. If, however, you're after lower payments (average second-hand car payments are now £400 per month), it might be worth looking for longer car loan terms. You're tied in for a longer amount of time, but monthly payments will likely be lower.

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Best comparison websites for car finance

A comparison website gathers the best car finance deals and lets you view them in one place. This makes it easier to view all the deals side by side so you can make a decision. The best car comparison websites are Compare the Market, Money Supermarket, Confused.com, GoCompare, Uswitch and Price Runner. These websites specialise in different types of finance comparison deals, including car finance.

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The best car blogs you need to read right now

If you're looking for advice about the best car finance options for you, it's worth checking out car-related blogs. At Carmoola, we offer extensive advice about car finance deals and all things driving, while other popular blogs include Take it to the Road, Daily Car Blog Petrol Blog, Motor-Vision and more. 

Find out more about the best car blogs to read right now

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