How Do I Finance a Used Car in the UK?

Buying a second-hand car is a great way to save money since it’s a more affordable purchase than a brand new vehicle. 😀 If you’re planning on getting car finance for it, you might be wondering how you finance a used car. This article will cover the different financing options available in the UK and how to find the best car finance deals for used cars.

Should I Buy a Used Car with Cash? 🚘

It's up to you whether you have enough funds to pay for the full price of the car with cash. If you are in a position to do so -- that's a good thing! It’s typically cheaper to buy a used car this way. However, keep in mind that you need to have some cash left for other expenses like tax, insurance, breakdown cover, fuel, and maintenance and repair costs. If you use up all your funds for the purchase, you risk becoming financially vulnerable if there’s ever an emergency. 

Car finance makes the purchase more affordable because you are spreading the cost of the car into monthly instalments. It's important to stick to a realistic budget, when you pay in cash you know exactly how much you can afford with car finance it can be more tricky to determine. Car finance companies have useful car finance calculators to help you find out your budget.

Hire Purchase for Second-hand Cars 🚘 

Hire Purchase car financing is available for brand new as well as used cars. It’s a cost-effective way of purchasing a car because you only need to put down a deposit at the start of your contract. After that would be the monthly payments you’d have to make for the whole duration of your Hire Purchase agreement. As you can see, you don’t need to save up for the full price of the car to enjoy having your own ride. 

The deposit for HP car finance is usually at least 10% of the car’s value. As for the monthly instalments, if you got a fixed-rate interest car finance deal, then you’ll be paying a fixed amount every month without having to worry about fluctuations in interest rates. If you want to decrease the monthly repayment amount, you may choose to pay a larger deposit so, you won’t have to borrow as much money and you’ll also pay less interest. Another option to consider is selecting a longer contract term to make the monthly instalments more affordable.

By the time your Hire Purchase contract ends and you’ve made all payments on the car, the ownership of the vehicle will then be transferred to you. You’ll be free to sell it, keep it or modify it as you wish since you’re already the legal owner of the car. 

Personal Contract Purchase for Used Cars

If you’re looking for an even more affordable low-finance used car deal, you might want to consider Personal Contract Purchase. It’s very similar to a hire purchase agreement because you also have to pay a deposit and then make monthly payments. However, the monthly repayment amount for PCP car finance is much lower than HP. It’s because your payments won’t be covering the full price of the car, only its predicted depreciation or the value it will lose during the time you’re using it. 

Another advantage of PCP car finance is that it provides enough flexibility when it comes to the options given to you on what to do with the car. If you’ve decided that you want to own the vehicle, you only have to pay the optional final balloon payment at the end of your PCP contract. 

If you’d rather decline the offer, you can return the car without having to pay extra and then walk away. Of course, bear in mind that if you’ve exceeded the mileage limit or if there’s any significant damage to the car beyond fair wear and tear, you’d have to pay the penalty charges. 

Lastly, you can use the remaining equity of the car as a deposit for another car if you choose to start a new PCP agreement. This means you may only have to pay part of the required deposit or if the remaining equity can cover the full cost of the deposit, then you won’t have to put down cash at all. You’ll be able to drive a new car in no time. 

Finding Cheap Used Car Finance Deals

Whether you’re getting a Hire Purchase or PCP car finance agreement, it’s best to shop around first so you’ll have the chance to find the best car finance deals on used cars. When looking for cheap finance on used cars, don’t just check the interest rates. Instead, look for the annual percentage rates or APRs. This figure includes the interest rate as well as other fees and charges and will give you a better estimate of the cost of financing a used car. 

Before you apply for car finance, it would also be wise to check your credit score. Your score will be a major factor when the car finance company decides on the APR they will offer you. With a high credit score, you’ll have a better chance of being offered low-APR car finance deals. In case your score is poor, take time to boost it first so you’ll improve the odds of being given credit with better rates. 


Choosing a used car over a brand new model is a great way to save money on a big purchase like this if you're unable to buy a new car. 

If you're interested in car finance, our handy calculator will determine a budget for you!  If you want to apply simply download our app and you will get a decision within 60 seconds! You could be driving away a new car in no time! 👍🚘