How does financing a car work?

Car finance is a way of buying a new car in instalments over time rather than in one go. It can help make buying a new car less stressful and more affordable, but it’s important you choose the right type of finance agreement for you.

How does financing a car work?

Car finance is a way of buying a new car in instalments over time rather than in one go. It can help make buying a new car less stressful and more affordable, but it’s important you choose the right type of finance agreement for you.

What is a car finance agreement?

A car finance agreement lets you spread the cost of buying a car over an agreed timeframe, usually 24-60 months. You’ll have full access to the car and make regular monthly payments during this time until the finance is paid off.

What is a car finance agreement?

A car finance agreement lets you spread the cost of buying a car over an agreed timeframe, usually 24-60 months. You’ll have full access to the car and make regular monthly payments during this time until the finance is paid off.

A key benefit of buying a car on finance is that it enables you to get on the road without needing to pay a large sum upfront. When a car finance agreement ends, several things can happen, depending on the type of finance you have.

A key benefit of buying a car on finance is that it enables you to get on the road without needing to pay a large sum upfront. When a car finance agreement ends, several things can happen, depending on the type of finance you have.

You may be able to:

  • Automatically become the car’s legal owner after making the final payment
  • Have the option of paying a one-off fee to become the car’s legal owner
  • Make the balloon payment to own the car outright
  • Return the car to the finance company and, if you want to, start a new finance agreement

What happens at the end of your payment term depends on the type of car finance agreement you have. For example, with a Conditional Sale (CS) car finance deal, you automatically become the car’s legal owner after making the last monthly payment.

How does car finance eligibility work?

Whether you can get approved and the interest rate you’re offered depends on your eligibility, which is based on several factors, such as:

  • Your credit score
  • Your credit history
  • Your income and expenses

You may be able to:

  • Automatically become the car’s legal owner after making the final payment
  • Have the option of paying a one-off fee to become the car’s legal owner
  • Make the balloon payment to own the car outright
  • Return the car to the finance company and, if you want to, start a new finance agreement

What happens at the end of your payment term depends on the type of car finance agreement you have. For example, with a Conditional Sale (CS) car finance deal, you automatically become the car’s legal owner after making the last monthly payment.

How does car finance eligibility work?

Whether you can get approved and the interest rate you’re offered depends on your eligibility, which is based on several factors, such as:

  • Your credit score
  • Your credit history
  • Your income and expenses

If you have a low credit score or limited credit history, you may find it difficult to get approved. Poor credit can make it harder to get car finance because lenders may see you as a higher risk.

If you have a low credit score or limited credit history, you may find it difficult to get approved. Poor credit can make it harder to get car finance because lenders may see you as a higher risk.

While bad credit can make getting approved more difficult, it doesn’t make it impossible. Specialist lenders such as Moneybarn provide bad credit car finance and might be able to help even if you’ve been refused elsewhere.

While bad credit can make getting approved more difficult, it doesn’t make it impossible. Specialist lenders such as Moneybarn provide bad credit car finance and might be able to help even if you’ve been refused elsewhere.

We use a soft credit check at the point of application

When you get a quote from us, we use a soft credit check, which won’t affect your credit score. We only use a hard check when you’ve decided you’d like an agreement with us and contracts are drawn up for you to sign.

We use a soft credit check at the point of application

When you get a quote from us, we use a soft credit check, which won’t affect your credit score. We only use a hard check when you’ve decided you’d like an agreement with us and contracts are drawn up for you to sign.

Other lenders may use a hard credit check

Some lenders, however, use a hard check when you apply, which impacts your credit file and may affect your credit rating. Read more about the two types of credit search in our guide: soft search vs hard search credit check.

Other lenders may use a hard credit check

You might have heard of lenders offering no credit check car finance, but this doesn’t exist. A responsible lender must check eligibility and ensure any finance they offer is affordable. All finance is subject to status and affordability checks.

We offer vehicle finance across the whole of the UK, including Northern Ireland, so we could help you get car finance near you even if you’ve been rejected by other lenders.

How much does car finance cost?

The cost of car finance depends on several factors. These include:

  • The amount you want to borrow to buy your new car
  • The length of your finance agreement
  • The type of finance agreement you have
  • The interest rate (APR) you’re offered

Spreading the payments over a longer term can reduce the monthly payments, making car finance more affordable.

On the flip side, if you choose to repay what you borrow over a longer period, the total amount owed will be higher because you will pay more in interest. You can read more about how this works in our guide to car finance interest.

Your interest rate can vary based on your credit score. You might be asked to pay a higher interest rate if you have bad credit as lenders may see you as being higher risk, e.g. due to missing payments or having a CCJ or IVA.

See what your monthly repayments could look like by using our car finance calculator.

Can you reduce monthly car finance payments?

While there are no ways to pay less than what you owe on car finance, you can make your monthly payments more manageable. One way of doing this is borrowing the money over a longer period.

Another thing you could do is put down a deposit on the car. A deposit can make your car finance agreement more affordable and ensure you can get a car that suits your needs. This is because you are paying more upfront, and reducing the amount of money you need to borrow.

By contrast, if you can’t afford a deposit, you may be eligible for no deposit car finance. Whether or not you’ll need to pay a deposit when you buy a car on finance will depend on certain individual factors.

If you’re in a finance agreement with us, you can make a partial early settlement. This means paying off some or all of the finance amount before the agreed end date. It can cut down on the interest you owe or shorten the term of your car finance agreement. This helps you reach the end of the agreement faster or end it altogether if you pay the whole Early Settlement Figure.

What are the different types of car finance?

When it comes to car finance, there are lots of different types available. It’s important to understand your options and how they differ so you can find one suited to you.

Some lenders, however, use a hard check when you apply, which impacts your credit file and may affect your credit rating. Read more about the two types of credit search in our guide: soft search vs hard search credit check.

You might have heard of lenders offering no credit check car finance, but this doesn’t exist. A responsible lender must check eligibility and ensure any finance they offer is affordable. All finance is subject to status and affordability checks.

We offer vehicle finance across the whole of the UK, including Northern Ireland, so we could help you get car finance near you even if you’ve been rejected by other lenders.

How much does car finance cost?

The cost of car finance depends on several factors. These include:

  • The amount you want to borrow to buy your new car
  • The length of your finance agreement
  • The type of finance agreement you have
  • The interest rate (APR) you’re offered

Spreading the payments over a longer term can reduce the monthly payments, making car finance more affordable.

On the flip side, if you choose to repay what you borrow over a longer period, the total amount owed will be higher because you will pay more in interest. You can read more about how this works in our guide to car finance interest.

Your interest rate can vary based on your credit score. You might be asked to pay a higher interest rate if you have bad credit as lenders may see you as being higher risk, e.g. due to missing payments or having a CCJ or IVA.

See what your monthly repayments could look like by using our car finance calculator.

Can you reduce monthly car finance payments?

While there are no ways to pay less than what you owe on car finance, you can make your monthly payments more manageable. One way of doing this is borrowing the money over a longer period.

Another thing you could do is put down a deposit on the car. A deposit can make your car finance agreement more affordable and ensure you can get a car that suits your needs. This is because you are paying more upfront, and reducing the amount of money you need to borrow.

By contrast, if you can’t afford a deposit, you may be eligible for no deposit car finance. Whether or not you’ll need to pay a deposit when you buy a car on finance will depend on certain individual factors.

If you’re in a finance agreement with us, you can make a partial early settlement. This means paying off some or all of the finance amount before the agreed end date. It can cut down on the interest you owe or shorten the term of your car finance agreement. This helps you reach the end of the agreement faster or end it altogether if you pay the whole Early Settlement Figure.

What are the different types of car finance?

When it comes to car finance, there are lots of different types available. It’s important to understand your options and how they differ so you can find one suited to you.

One

Conditional Sale agreements (CS)

This is the type of finance we offer. It helps people to legally own the car at the end of the agreement, with no additional fee or payment needed.

Two

Personal Contract Purchase (PCP)

PCP offers more flexibility at the end of the agreement. You’ll have 3 options, including returning the car or making a balloon payment to legally own the car.

Three

Hire Purchase finance agreements (HP)

HP is often confused with CS. However, there is a key difference between them. With HP, you must pay the option to purchase fee to legally own the car.

Four

Personal Contract Hire (PCH)

PCH is also known as leasing. It lets you drive a new car with the latest tech. However, there is no option to legally own the car when the lease ends.

One

Conditional Sale agreements (CS)

This is the type of finance we offer. It helps people to legally own the car at the end of the agreement, with no additional fee or payment needed.

Two

Personal Contract Purchase (PCP)

PCP offers more flexibility at the end of the agreement. You’ll have 3 options, including returning the car or making a balloon payment to legally own the car.

Three

Hire Purchase finance agreements (HP)

HP is often confused with CS. However, there is a key difference between them. With HP, you must pay the option to purchase fee to legally own the car.

Four

Personal Contract Hire (PCH)

PCH is also known as leasing. It lets you drive a new car with the latest tech. However, there is no option to legally own the car when the lease ends.

Conditional Sale (CS)

Conditional Sale (CS)

We offer Conditional Sale car finance agreements. With CS finance, you are the car’s registered keeper for the duration of the agreement, and you’ll become the legal owner after making the final payment.

For more information, read our guide on ‘Who is the registered keeper of a car on finance?’.

With a CS agreement, you will make fixed monthly payments over an agreed period. Our agreement terms are between 36 and 60 months.

A deposit is often required. However, it is possible to get an agreement with no deposit, depending on your circumstances and affordability.

CS is designed to help people who know they want to own the car once the finance agreement ends. Unlike other types of finance like PCP, there is no additional payment required. Once you make your final monthly payment, you’ll legally own the car.

Conditional Sale car finance diagram

We offer Conditional Sale car finance agreements. With CS finance, you are the car’s registered keeper for the duration of the agreement, and you’ll become the legal owner after making the final payment.

For more information, read our guide on ‘Who is the registered keeper of a car on finance?’.

Conditional Sale car finance diagram

With a CS agreement, you will make fixed monthly payments over an agreed period. Our agreement terms are between 36 and 60 months.

A deposit is often required. However, it is possible to get an agreement with no deposit, depending on your circumstances and affordability.

CS is designed to help people who know they want to own the car once the finance agreement ends. Unlike other types of finance like PCP, there is no additional payment required. Once you make your final monthly payment, you’ll legally own the car.

Advantages and disadvantages of Conditional Sale

Advantages and disadvantages of Conditional Sale

There are no mileage restrictions like other car finance types like PCP.

Monthly payments for CS may be higher than other car finance types.

You’ll legally own the car at the end of the agreement with no extra fee.

You won’t legally own the car until the final payment is made.

You may be able to get a CS agreement with little or no deposit.

The car could be repossessed if you can’t make the monthly payments.

Your interest rate is fixed, so your payments are the same each month.

You can’t sell or modify the car without the lender’s permission.

There are no mileage restrictions like other car finance types like PCP.

You’ll legally own the car at the end of the agreement with no extra fee.

You may be able to get a CS agreement with little or no deposit.

Your interest rate is fixed, so your payments are the same each month.

Monthly payments for CS may be higher than other car finance types.

You won’t legally own the car until the final payment is made.

The car could be repossessed if you can’t make the monthly payments.

You can’t sell or modify the car without the lender’s permission.

Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) allows you to pay an initial deposit and take out a loan to cover the vehicle’s depreciation. Depreciation is the reduction in a car’s market value over time, mostly because of wear and tear.

The lender calculates the Guaranteed Minimum Future Value (GMFV) at the start of the agreement. This means that you won’t need to make up any shortfall if the car falls in value quicker than anticipated, for example if the vehicle market changes suddenly.

You then make monthly payments over the agreed term.

At the end of the agreed term, you have 3 options. You can take ownership of the car with a final balloon payment, return the car and end the agreement, or trade it in and start a new deal.

PCP gives you flexibility at the end of agreement. This can be helpful if you don’t know if you want to legally own the car at the end of the agreement. It also gives you the option if you might want to trade it in and take out finance for a new car.

PCP car finance diagram

Personal Contract Purchase (PCP) allows you to pay an initial deposit and take out a loan to cover the vehicle’s depreciation. Depreciation is the reduction in a car’s market value over time, mostly because of wear and tear.

PCP car finance diagram

The lender calculates the Guaranteed Minimum Future Value (GMFV) at the start of the agreement. This means that you won’t need to make up any shortfall if the car falls in value quicker than anticipated, for example if the vehicle market changes suddenly.

You then make monthly payments over the agreed term.

At the end of the agreed term, you have 3 options. You can take ownership of the car with a final balloon payment, return the car and end the agreement, or trade it in and start a new deal.

PCP gives you flexibility at the end of agreement. This can be helpful if you don’t know if you want to legally own the car at the end of the agreement. It also gives you the option if you might want to trade it in and take out finance for a new car.

Advantages and disadvantages of Personal Contract Purchase

Advantages and disadvantages of Personal Contract Purchase

You can keep, swap, or return the car at the end of the agreement.

You only legally own the car if you make the final balloon payment.

Monthly payments are often lower than other car finance options.

There is a pre-agreed mileage limit, with charges if you exceed it.

As the lender calculates the GMFV, you won’t worry about depreciation.

Returning the car with damage will incur additional charges.

Some lenders may be able to refinance the balloon payment later on.

If you want to end your agreement early, there may be extra fees incurred.

You can keep, swap, or return the car at the end of the agreement.

Monthly payments are often lower than other car finance options.

As the lender calculates the GMFV, you won’t worry about depreciation.

Some lenders may be able to refinance the balloon payment later on.

You only legally own the car if you make the final balloon payment.

There is a pre-agreed mileage limit, with charges if you exceed it.

Returning the car with damage will incur additional charges.

If you want to end your agreement early, there may be extra fees incurred.

Hire Purchase (HP)

Hire Purchase (HP)

With a Hire Purchase (HP) agreement, you’ll borrow the car’s total value and repay it in fixed monthly payments, usually over 12 to 60 months.

You may need to put a deposit down, but this is subject to affordability checks.

Unlike PCP, there isn’t a balloon payment at the end of a term if you want to own the vehicle outright.

HP is very similar to CS, and the two are often confused as being the same thing. Both types of finance are designed to help people spread the cost of a new car over a longer period of time, so they can legally own it at the end of the agreement.

The main difference is whether there is an extra fee to legally own the car at the end of the agreement. With a HP agreement, there is an ‘option to purchase’ fee which is often a small amount of money.

Hire Purchase car finance diagram

With a Hire Purchase (HP) agreement, you’ll borrow the car’s total value and repay it in fixed monthly payments, usually over 12 to 60 months.

Hire Purchase car finance diagram

You may need to put a deposit down, but this is subject to affordability checks.

Unlike PCP, there isn’t a balloon payment at the end of a term if you want to own the vehicle outright.

HP is very similar to CS, and the two are often confused as being the same thing. Both types of finance are designed to help people spread the cost of a new car over a longer period of time, so they can legally own it at the end of the agreement.

The main difference is whether there is an extra fee to legally own the car at the end of the agreement. With a HP agreement, there is an ‘option to purchase’ fee which is often a small amount of money.

Advantages and disadvantages of Hire Purchase

Advantages and disadvantages of Hire Purchase

There isn’t a mileage limit on most HP car finance agreements.

You must pay the option to purchase fee before you legally own the car.

Once you’ve paid the option to purchase fee, you’ll legally own the car.

Monthly payments on HP finance are often more than PCP.

Unlike PCP, there is no balloon payment at the end of your agreement.

The car could be repossessed if you can’t make the monthly payments.

HP deals have a fixed interest rate so your monthly payments are the same.

HP agreements don’t usually include servicing or maintenance plans.

There isn’t a mileage limit on most HP car finance agreements.

Once you’ve paid the option to purchase fee, you’ll legally own the car.

Unlike PCP, there is no balloon payment at the end of your agreement.

HP deals have a fixed interest rate so your monthly payments are the same.

You must pay the option to purchase fee before you legally own the car.

Monthly payments on HP finance are often more than PCP.

The car could be repossessed if you can’t make the monthly payments.

HP agreements don’t usually include servicing or maintenance plans.

Personal Contract Hire (PCH)

Personal Contract Hire (PCH)

Personal Contract Hire (PCH) is also known as car leasing. It allows you to get a brand-new or nearly new car, but you’ll never legally own it.

It’s essentially renting or hiring a car for a longer period of time, usually 24 to 48 months.

At the end of the lease, you’ll return the car to the dealer or leasing company at the end of your contract.

There is no option to purchase the car once the lease agreement comes to an end.

With PCH deals, you are required to pay an initial rental payment. This is like a deposit for car finance, as it is non-refundable and secures your agreement.

Car leasing PCH diagram

Personal Contract Hire (PCH) is also known as car leasing. It allows you to get a brand-new or nearly new car, but you’ll never legally own it.

Car leasing PCH diagram

It’s essentially renting or hiring a car for a longer period of time, usually 24 to 48 months.

At the end of the lease, you’ll return the car to the dealer or leasing company at the end of your contract.

There is no option to purchase the car once the lease agreement comes to an end.

With PCH deals, you are required to pay an initial rental payment. This is like a deposit for car finance, as it is non-refundable and secures your agreement.

Advantages and disadvantages of Personal Contract Hire

Advantages and disadvantages of Personal Contract Hire

Leasing allows you to own a brand new car with the latest tech.

You will never be able to legally own the car at the end of the lease period.

Many leasing options also include servicing and maintenance plans.

The initial rental payment is often higher than a deposit for car finance.

You won’t have to worry about car depreciation as you do not own it.

There is usually a mileage limit with additional charges for exceeding it.

PCH gives the flexibility to change your car as often as you like.

There may be extra charges if damage beyond fair wear and tear is caused.

Leasing allows you to own a brand new car with the latest tech.

Many leasing options also include servicing and maintenance plans.

You won’t have to worry about car depreciation as you do not own it.

PCH gives the flexibility to change your car as often as you like.

You will never be able to legally own the car at the end of the lease period.

The initial rental payment is often higher than a deposit for car finance.

There is usually a mileage limit with additional charges for exceeding it.

There may be extra charges if damage beyond fair wear and tear is caused.

Other ways of buying a car

A car finance agreement isn’t the only way of paying for a new car. There are several other ways, which we’ll explore.

Other ways of buying a car

A car finance agreement isn’t the only way of paying for a new car. There are several other ways, which we’ll explore.

One

Paying cash

Paying for a vehicle with cash involves paying the total amount upfront and in full, either to a dealership or private seller.

In the long run, this would be cheaper than buying a car on finance because you don’t have to pay any interest or other fees. You’ll also become the car’s legal owner straight away, meaning you’re free to modify and sell if, should you wish.

However, not everyone has the cash ready to pay for the entire cost of their new car upfront. This is why some people think car finance is worth it, as it allows them to spread the car’s cost over several years.

Two

Personal loan

A personal loan (also called a car loan) is a lump sum of money that you can use to buy a car, and if you have any money spare, you could use it to cover any other costs.

You’ll make monthly payments over an agreed period between 1 and 7 years until the loan and interest are paid.

You can use a personal loan to buy a car from a private seller, whereas you typically can’t get car finance for a private sale. However, a key difference between car finance and personal loans is that you won’t get expert help to find the right car from a list of approved dealerships.

One

Paying cash

Paying for a vehicle with cash involves paying the total amount upfront and in full, either to a dealership or private seller.

In the long run, this would be cheaper than buying a car on finance because you don’t have to pay any interest or other fees. You’ll also become the car’s legal owner straight away, meaning you’re free to modify and sell if, should you wish.

However, not everyone has the cash ready to pay for the entire cost of their new car upfront. This is why some people think car finance is worth it, as it allows them to spread the car’s cost over several years.

Two

Personal loan

A personal loan (also called a car loan) is a lump sum of money that you can use to buy a car, and if you have any money spare, you could use it to cover any other costs.

You’ll make monthly payments over an agreed period between 1 and 7 years until the loan and interest are paid.

You can use a personal loan to buy a car from a private seller, whereas you typically can’t get car finance for a private sale. However, a key difference between car finance and personal loans is that you won’t get expert help to find the right car from a list of approved dealerships.

Three

Guarantor and joint finance

Guarantor car finance is when a friend or family member ‘guarantees’ to pay if you can’t.

When you apply with a guarantor, the lender assesses both you and them. This can make it easier to get approved if you have bad credit..

Being a car finance guarantor are financially links you to that person. If they have bad credit, or aren’t able to keep up with the payments, this can affect your own credit file and you’ll have to make the payments for them.

We don’t offer guarantor finance, but we do offer joint car finance and car finance with no guarantor and bad credit.

With joint finance, we consider both your circumstances and the person you apply with.

Four

Credit card

One of the key benefits of doing this is that purchases between £100 and £30,000 are protected under Section 75 of the Consumer Credit Act. This protection can make credit card purchases safer than paying with cash.

It’s important to note that some car dealers may add a credit card handling fee to the price of the car, and many do not accept credit card payments at all.

Interest rates on credit cards are often higher than those offered on other types of car loan agreements. If you decide to use a credit card, it may impact your credit file if you miss any payments.

Using a credit card to buy a car can also mean you have a high credit utilisation, which can also cause your credit score to drop.

Three

Guarantor and joint finance

Guarantor car finance is when a friend or family member ‘guarantees’ to pay if you can’t.

When you apply with a guarantor, the lender assesses both you and them. This can make it easier to get approved if you have bad credit..

Being a car finance guarantor are financially links you to that person. If they have bad credit, or aren’t able to keep up with the payments, this can affect your own credit file and you’ll have to make the payments for them.

We don’t offer guarantor finance, but we do offer joint car finance and car finance with no guarantor and bad credit.

With joint finance, we consider both your circumstances and the person you apply with.

Four

Credit card

One of the key benefits of doing this is that purchases between £100 and £30,000 are protected under Section 75 of the Consumer Credit Act. This protection can make credit card purchases safer than paying with cash.

It’s important to note that some car dealers may add a credit card handling fee to the price of the car, and many do not accept credit card payments at all.

Interest rates on credit cards are often higher than those offered on other types of car loan agreements. If you decide to use a credit card, it may impact your credit file if you miss any payments.

Using a credit card to buy a car can also mean you have a high credit utilisation, which can also cause your credit score to drop.

If you would like to learn more about credit ratings, read our guides:

What is the best way to buy a car?

The best way to buy a car depends on several factors, including:

  • Your current financial situation and whether it’s likely to change
  • The vehicle you hope to purchase (its age, condition, features, and price)
  • How you want to use the car and whether you wish to legally own it

For example, car finance deals enable you to access a car you otherwise may not be able to afford, while spreading the cost over monthly instalments for several years.

Paying in cash means you won’t be tied to monthly payments, but you may need to look for cheaper cars as you’ll be paying it all in one upfront sum.

If you would like to learn more about credit ratings, read our guides:

What is the best way to buy a car?

The best way to buy a car depends on several factors, including:

  • Your current financial situation and whether it’s likely to change
  • The vehicle you hope to purchase (its age, condition, features, and price)
  • How you want to use the car and whether you wish to legally own it

For example, car finance deals enable you to access a car you otherwise may not be able to afford, while spreading the cost over monthly instalments for several years.

Paying in cash means you won’t be tied to monthly payments, but you may need to look for cheaper cars as you’ll be paying it all in one upfront sum.

What to consider before financing a car

When comparing different car financing options, consider the following factors before deciding on the best choice for you:

  • Be sure you understand all the involved terms in your potential agreement. You’ll likely come across terms including balloon payments and mileage limits. We have a range of guides explaining common jargon in car finance and answering frequently asked questions
  • Whether you choose to take out a personal loan or apply for car finance, make sure it is affordable for your circumstances.
  • Don’t forget about the other costs involved in owning a car, such as fuel, tax, maintenance, and insurance. Using a car finance calculator can help you understand the monthly payments for car finance, but remember that this doesn’t include day-to-day running costs.
Car

What to consider before financing a car

Car

When comparing different car financing options, consider the following factors before deciding on the best choice for you:

  • Be sure you understand all the involved terms in your potential agreement. You’ll likely come across terms including balloon payments and mileage limits. We have a range of guides explaining common jargon in car finance and answering frequently asked questions
  • Whether you choose to take out a personal loan or apply for car finance, make sure it is affordable for your circumstances.
  • Don’t forget about the other costs involved in owning a car, such as fuel, tax, maintenance, and insurance. Using a car finance calculator can help you understand the monthly payments for car finance, but remember that this doesn’t include day-to-day running costs.

Finance your next car with Moneybarn

Financing a car with Moneybarn means you are getting the support you need to live your life to the fullest. If you want to finance your next car but have been rejected by other lenders, we want to help.

We have over 30 years of experience helping people up and down the UK, including people looking for car finance with bad credit. We accept applications when other lenders might not. This includes people who:

  • Have fair, poor, or very poor credit scores
  • Have little or no credit history
  • Are in an IVA (Individual Voluntary Agreement)
  • Have had a CCJ in the past
  • Are self-employed and looking for finanace

Finance your next car with Moneybarn

Financing a car with Moneybarn means you are getting the support you need to live your life to the fullest. If you want to finance your next car but have been rejected by other lenders, we want to help.

We have over 30 years of experience helping people up and down the UK, including people looking for car finance with bad credit. We accept applications when other lenders might not. This includes people who:

  • Have fair, poor, or very poor credit scores
  • Have little or no credit history
  • Are in an IVA (Individual Voluntary Agreement)
  • Have had a CCJ in the past
  • Are self-employed and looking for finanace

To get car finance, you’ll need:

  • Monthly earnings over £1,000 (after tax)
  • To be aged between 20 and 75
  • A full valid UK driving licence
  • 2 consecutive months of payslips

We can finance cars that meet our lending criteria:

  • Priced between £4,000 and £35,000
  • Up to 120,000 miles on the clock
  • No older than 15 years by the end of the agreement

Use our car finance calculator to find out what your Conditional Sale agreement could look like. Then, when you’re ready, get a personalised quote in less than 5 minutes.

We use a soft search at the point of application, which doesn’t affect your credit score. We only run a hard search once you’ve decided you’d like an agreement with us.

To get car finance, you’ll need:

  • Monthly earnings over £1,000 (after tax)
  • To be aged between 20 and 75
  • A full valid UK driving licence
  • 2 consecutive months of payslips

We can finance cars that meet our lending criteria:

  • Priced between £4,000 and £35,000
  • Up to 120,000 miles on the clock
  • No older than 15 years by the end of the agreement

Use our car finance calculator to find out what your Conditional Sale agreement could look like. Then, when you’re ready, get a personalised quote in less than 5 minutes.

We use a soft search at the point of application, which doesn’t affect your credit score. We only run a hard search once you’ve decided you’d like an agreement with us.

FAQs about financing a car

It’s always cheaper to pay cash for your new car than finance. However, car financing helps many people buy a car without having the full amount ready to pay upfront.

Whether it is ‘better’ to finance a car or buy it outright depends on your personal circumstances.

This depends on the finance you use to pay for your car. If you decide to buy your car with a personal loan, you will legally own the car as soon as you buy it.

With HP and CS, once you’ve made your final payment (and paid the option to purchase fee in the case of HP), you will fully own the car.

PCP works differently in that once you’ve made the final payment, you can make the balloon payment to legally own the car. PCH is where you lease the car, meaning you don’t have the option to own it at the end of your agreement.

FAQs about financing a car

It’s always cheaper to pay cash for your new car than finance. However, car financing helps many people buy a car without having the full amount ready to pay upfront.

Whether it is ‘better’ to finance a car or buy it outright depends on your personal circumstances.

This depends on the finance you use to pay for your car. If you decide to buy your car with a personal loan, you will legally own the car as soon as you buy it.

With HP and CS, once you’ve made your final payment (and paid the option to purchase fee in the case of HP), you will fully own the car.

PCP works differently in that once you’ve made the final payment, you can make the balloon payment to legally own the car. PCH is where you lease the car, meaning you don’t have the option to own it at the end of your agreement.

Improve your credit score

We’ve written a guide that explains how long it takes to improve your credit score, as well as a number of handy tips that might boost your score.

Increase your chances of getting finance

Applying for car finance can feel daunting. But there are some things you can do that might help your chances. Find out in our guide.

Our application process

It is important to completely understand the car finance agreement that you may be entering – find out more about how a conditional sale agreement works.