When purchasing a car, there are several ways to fund it, each with its own benefits. Below is a fair comparison of four common methods: Car Finance, Unsecured Loans, Credit Cards, and Savings.
Car Finance (HP, PCP, Leasing, etc.)
✅ Spreads cost over time, making it more affordable.
✅ Available to people with poor or no credit history.
✅ Fixed monthly payments help with budgeting.
✅ Some deals require no deposit.
✅ Options like PCP allow for a new car every few years.
❌ You don’t own the car until final payment is made.
❌ May cost more than outright purchase due to interest.
❌ Mileage or condition restrictions may apply in leasing/PCP.
Unsecured Personal Loan
✅ Can be cheaper than car finance if you have a good credit score.
✅ You own the car outright from the start.
✅ No restrictions on mileage or modifications.
✅ Fixed monthly payments for budgeting.
❌ Higher interest rates than secured car finance.
❌ Requires a good credit score for competitive rates.
❌ Missing payments can affect your credit score.
Credit Card
✅ 0% interest credit cards (if available) can be the cheapest option.
✅ Some cards offer cashback or rewards on purchases.
✅ No need for a loan application or credit check (if already owned).
✅ You own the car immediately.
❌ High-interest rates (often 20%+) if not paid off quickly.
❌ Credit limit may not be high enough to cover the car cost.
❌ Using too much credit can negatively impact your credit score.
Savings (Cash Purchase)
✅ No interest or extra fees—cheapest option overall.
✅ No monthly repayments—financial freedom.
✅ You own the car outright immediately.
✅ No credit checks or impact on your credit score.
❌ Uses up savings, which could be needed for emergencies.
❌ Can take a long time to save up.
❌ Might miss out on better investment opportunities for your cash.
Yes. There are 15 fair and bad credit car finance specialist lenders that are currently active in the UK so it is possible to get car finance approved if you have a bad credit rating. Each finance company use their own credit scoring system to determine whether you pass their credit check and generally are looking for customers who aren’t currently struggling with finances, they are happy to lend to customers with issues in the past (generally outside the last 12 months).
Affordability is also assessed by every bad credit lender which takes all of your income into consideration and then deducts your fixed outgoings like rent and bills, as well as taking into account any active credit and old debt that you are still liable for.
If you apply for bad credit car finance and get declined, it is very unlikely you’d be able to get approved in the next 30 days so it is usually best to wait at least 30 days.
Bad Credit Car Finance is a facility that finance companies offer to customers that don’t have good credit, the APR they charge will always be higher than that of a Good Credit Car Finance lender due to the additional risk they are taking.
The risk is associated to lending money to customers that have a history of missing payments, defaulting on credit, or county court judgements, and statistics show that customers in this position have a higher chance of defaulting on car finance agreements.
The rate you are charged for car finance is reflective of how severe your credit issues were, if you have missed a few payments and caught them up, or if your defaults are all for small amounts and/or several years ago, you may be classed as having fair credit and receive an interest rate of around 19.9% APR.
If your defaults are larger or more recent, or if you have missed payments and not caught them up, it is likely that your credit will be classed as being on the bad or very bad credit car finance tiers and you are likely to be charged an APR between 29.9% and 39.9% APR.
Although finance companies can offer to customers with a Very Bad Credit Car Finance rating, there is no guarantee that anyone will be approved for car finance.
This is a possibility. Although, to most finance companies, repossession is a last resort because of how little they usually get back for the car. Fair and bad credit car finance lenders are set up to help customers get back on track with their finance agreement so they will be able to keep the car and avoid receiving a default.
There is no such thing as Guaranteed Car Finance, and anyone that advertises it is misleading you with their advert. All finance companies must complete credit checks and affordability assessment as required by the Financial Conduct Authority.
The APR of a finance agreement takes into account:
This gives consumers the opportunity to compare products that do not have fees with products that do have fees and make an equal comparison based on the total they will be paying for their loan.
Below, is a good article from Cinch that covers this in more detail.
https://www.cinch.co.uk/guides/car-finance/what-is-apr-on-car-finance
No. Finance companies can offer finance with no deposit and a deposit is only usually needed when the finance company offers a lower loan to the value of the car.
For example, a finance company might approve someone for finance but only allow 90% of their valuation of the car (valuation guides differ from one finance company to another).
However, in our experience, around 85% of bad credit car finance approvals are possible to purchase a car without a deposit.
If you have taken your car out on Hire Purchase there is usually a final (optional) fee (that doesn’t attract any interest) that ranges from £1 to £200 which is effectively an administration fee for the finance company to remove their financial interest from the car and transfer legal ownership to you. If you choose not to pay the fee, the vehicle can be returned to the finance company.
If you have taken your car out on a Conditional Sale agreement then there is no final fee and once you have made your final payment, the finance company will remove their financial interest and transfer legal ownership to you.
For agreements taken out on Personal Contract Purchase or Lease Purchase, their is a final optional balloon payment that was calculated at the beginning of the contract. You have the choice to either pay the balloon payment and keep the car, or return the car to the finance company (not the dealer).
Yes you can. People often assume that there will be penalties to paying a loan off early, but these penalties tend to be exclusive to mortgage agreements. You can settle a car finance agreement at any time and will pay less interest for doing this. You are also able to make overpayments which also serve to reduce the total interest.
https://www.moneyexpert.com/car-finance/paying-off-car-finance-early/
You could get declined. All the finance companies we deal with take into account several factors when someone applies for finance;
All of the above factors make up your creditworthiness and if you fail to meet the criteria of all of our fair and bad credit car finance providers you will get declined for;
Most finance companies won’t give us or you a specific breakdown, so it’s very difficult to know exactly why you were declined by any lender in particular.
I’m afraid that there is no such financial product as Pay as you Go Car Finance so it’s not possible to just take a car until you decide to stop paying for it.
No. We deal with every fair and bad credit car finance provider that offer finance to unemployed people. It is harder to get approved when you are unemployed as there are fewer lenders that consider this, but it is still possible and Get A Better Car offers the best chance of this in the U.K.
All finance companies must do a credit check in order for you to get approved for car finance, however, all the finance companies that Get A Better Car use do a Soft Search
A soft search means that your credit is being checked but the finance company aren’t going to leave a footprint on your credit file until you sign their finance agreement. Once you actually take out finance, the finance company needs to mark an application on your credit file so that other finance companies are aware that you are looking to take out finance at the moment as that is a material fact that will affect your affordability.
Yes. Our approval rate for under 21s is fairly consistent with that of any other age range. However, when you are under 21, any bad credit you have is more significant than if you are older. Most of the approvals we are able to get are for young drivers with limited credit history and tend to be at a good credit or fair credit interest rate. If you have bad credit and are under 21 it is very unlikely you would get approved, even for bad credit car finance.
This is a question that has many possible solutions;
I’m sure there are also more options but the right thing for you to do will depend on your personal circumstances.
If you are in need of car finance then we can help but the options need careful thought and consideration.
Yes you can. We have written a comprehensive guide that you can read here
Find out all the information you need to know about your consumer rights to hand your car back here