UK Car Finance: Everything You Need to Know

Thinking about buying your next set of wheels with finance? Then you've come to the right place because we're anything and everything you need to know about getting car finance in the UK. Read on, and become a pro with finance facts, buying if you've just moved to the UK and much more. 

5 Facts About the UK Car Finance Market

Twenty-twenty-one was a good year for the car finance market, with a 9.1% increase in cars bought through finance and 28% purchased with car leasing. But those aren't the only facts you need to know about buying a vehicle with finance. Over 90% of car finance providers said they expected growth over the next 12 months, much of which will be concentrated on second-hand cars. Indeed, used cars saw growth of 11.5% over the past year, and it's a trend that looks set to continue. More people than ever are buying or switching cars (perhaps brought on by the pandemic and a reluctance to travel on public transport). Forty-nine per cent of motorists plan on buying a new car this year, with drivers primarily aged between 25 and 34.

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Can I Get Car Finance if I've Just Moved to the UK?

Having a good credit score can improve your chances of getting car finance, but what if you've just moved to the UK and don't have a credit report yet? This can cause issues for many who have moved from a country where they had good credit and access to a car. All of a sudden, they're starting with a clean slate and find it tricky to buy a new set of wheels. While it's more difficult to get car finance without a good credit score, it's not impossible. To get car finance in the UK, you'll need a UK address and previous address history; proof of ID, either a passport, identity card or driving licence; proof of income, either payslips, bank statements or a tax return if you're self-employed. Assuming you have that, it might be possible to get car finance from a lender who doesn't place as much of an emphasis on credit scores. However, you may find yourself paying higher interest rates, so you might decide to wait a while and build up your credit score before applying.

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How Can I Find Car Finance in the UK

How can you find the best car finance deals in the UK? With so many options, it can be tricky to know where to start. Before applying, you should decide on the type of car finance you want. The primary options are hire purchase (HP), personal contract purchase (PCP) and a direct loan. The first two involve you paying a deposit and then monthly payments throughout the term. PCP also has a final balloon payment. A direct loan is more straightforward snd sees you borrowing the amount for the car and paying it back monthly to the lender. Start by comparing different interest rates, using comparison websites to see which lender has the best deals. It's also helpful if you have a good credit score as this will give you access to more favourable rates. Once you've settled on a lender, you can apply for the amount you'd like to borrow. Carmoola, for example, offers you a seamless, fully online application for car finance. 

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Is Car Finance Halal in the UK?

Under Sharia law, charging interest or riba is not allowed. Yet, most car finance deals charge interest, meaning they're not halal. Yet, there is still an option for anyone who wants to respect and follow Sharia law. Car finance can be halal and is often called Islamic car financing. With this arrangement, you can buy a car of your choice without having to spend most of your savings on that one big purchase. If you want to get a Hire Purchase or a Personal Contract Purchase agreement, you should see to it that you get one with an interest-free credit arrangement. These options are mostly found on new cars, and it's halal as long as it's interest-free.

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Can You Get Online Car Finance in the UK?

Yes, it's possible to obtain car financing through online platforms and lenders. Online options typically offer a more convenient and streamlined application process compared to traditional banks and offline lenders. Additionally, online lenders may have a wider range of loan products available and potentially offer more competitive rates, meaning you can secure your new car for less. However, it's worth researching and comparing the different options available to ensure that you find the best loan for your needs and budget. You can use online car comparison websites or go straight to a lender, like Carmoola

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What Are the Best Car Finance Deals Can You Get in the UK?

You have a variety of options available for financing a car and getting the right deal. Some popular choices include taking out a loan from a bank or specialist lender, leasing a vehicle, borrowing from the dealer or even using a personal loan. Each of these options comes with its own set of advantages and disadvantages, and it's important to carefully consider which one is the best fit for your needs. There are also various types of car finance deals available, such as hire purchase, personal contract purchase and leasing. Regardless of the option you go for, there's never been so much choice out there for car buyers. And using an online option like Carmoola means you can cruise through the lending process and borrow what you need to buy a car faster than traditional methods. 

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What Is the Right Car Finance Deal for Me in the UK?

When it comes to purchasing a car, there are plenty of finance options available to suit different needs and budgets. A personal loan is one option, where you borrow a lump sum of money from a lender to pay for your car. Hire purchase and personal contract purchase agreements involve making regular payments to the lender, with the option to own the car at the end of the agreement. Leasing is also becoming increasingly popular and involves making regular payments to the lender before returning the car at the end of the agreement. The right car finance deal ultimately depends on your individual circumstances and what you're looking for in a vehicle. Fortunately, there's so much choice out there – including Carmoola – for drivers. 

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What Are the Best Car Finance Deals for New Drivers in the Uk?

As a new driver, it's unlikely you'll be looking for super-expensive cars that are hard to get an insurance policy for. With that in mind, most new motorists go for entry-level cars and often second-hand options. Therefore, getting a loan from a specialised lender like Carmoola can be beneficial, as you'll see how much you can afford before applying and then get a virtual card to purchase your new set of wheels if accepted. Ultimately, you want a loan that's affordable and has a low as possible interest rate. Other finance options include personal contract hire, hire purchase and leasing, but a direct loan can often be a better choice for first-time buyers as it's less complicated than other options. 

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Is There an Age Limit for Getting a Car Finance Deal in the UK?

Yes, the legal lower age limit for getting any type of credit limit in the UK is 18. That means no one under the age of 18 can apply for car finance. Generally speaking, it's easier to get finance as you get older due to having time to build your credit score. And there is no upper limit. That doesn't mean you can't secure finance to buy a car if you're younger, however. It all comes down to your affordability and personal circumstances. So, as long as you're at least 18 years of age, there's every chance you can get car finance to purchase your next set of wheels. 

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