Car Finance Explained

This website is designed to answer all of the car finance related questions you might have.

As well as explaining the different types of finance packages available, this website also provides help and advice on how to get the best deal if you plan to finance your car.

These are five main methods of purchasing a car:


If you have the cash to purchase your car outright, this is one of the simplest options to own your vehicle outright from day one. However, this doesn’t necessarily mean you get the best deal.

Read more about the benefits and drawbacks of buying a car with cash.

Hire Purchase (HP)

You can get a personal loan from a bank or finance provider, spreading the total cost of the car over a fixed term. Some dealerships also offer incentives when using them to finance the car.

Read more about hire purchase agreements and the benefits and drawbacks of buying a car using a HP loan.

Personal Loan

Similar to a Hire Purchase loan, the main difference being that the loan is not secured against your car. Loans from banks, building societies or other finance providers might have more competitive interest rates compared to those offered by the car dealership.

Read more about personal loans and the benefits and drawbacks of buying a car using one.

Personal Contract Purchase (PCP)

This is similar to a Higher Purchase agreement, but usually offers lower monthly payments. Instead of getting a loan for the full value of the car, you get a loan for the difference between the sale price and the predicted value at the end of the finance agreement.

Read more about PCP agreements and the benefits and drawbacks of buying a car using PCP.

Leasing or Personal Contract Hire (PCH)

You pay the car dealership a fixed monthly amount over a specified term for the use of the car. Some plans will also be inclusive of servicing and maintenance during that period. At the end of the term, you give the car back; it never belongs to you.

Read more about leasing and the benefits and drawbacks of leasing a car.

There is also a Car Finance Calculator which can be used to see what each method will cost in terms monthly payments, size of deposit and the interest charged.

View a glossary of car finance related terms.

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