Compare Car Finance in United Kingdom
Live offers across tracked providers in United Kingdom — updated daily from the Giraffy database.
Live offers
- Ford Credit UK
- Mercedes Finance
- Toyota Finance
- BMW Financial Services
- Audi Finance
What is car finance in the UK?
Car finance lets you spread the cost of a vehicle rather than paying cash upfront. The two dominant products in the UK are Personal Contract Purchase (PCP) and Hire Purchase (HP). With HP you pay off the full value in instalments and own the car at the end. With PCP you pay lower monthly amounts, then choose to hand the car back, pay a final balloon payment to keep it, or part-exchange.
Personal loans are a third route, letting you own the car outright from day one. Each suits different priorities around monthly cost, ownership and mileage.
How the UK car finance market works
Finance is arranged through dealers, manufacturers' finance arms and independent lenders. PCP payments are lower because you are only financing the car's depreciation over the term, plus a large optional final payment based on the guaranteed future value. Mileage limits apply to PCP, with charges for exceeding them or for damage beyond fair wear and tear.
Rates depend on your credit profile, the deposit and the term, and are quoted as a representative APR.
Types of car finance
PCP — low monthly payments and flexibility, with a balloon payment to own the car.
HP — higher payments but you own the car at the end, with no mileage limits.
Personal loan — own the car immediately and avoid mileage restrictions.
GAP insurance — covers the shortfall if the car is written off and you owe more than its value.
Leading UK car finance providers
Manufacturer finance arms lead point-of-sale lending: Ford Credit UK and Volkswagen Financial Services UK are major players. Black Horse (part of Lloyds) and Santander Consumer UK are large motor lenders, Close Brothers Motor Finance and Mann Island Finance work through dealers, Moneybarn specialises in non-prime borrowers, and Zuto is a broker matching customers to lenders.
What it costs
Representative APRs typically range from around 4.9% for strong-credit borrowers on prime deals up to roughly 24.9% or higher for used-car and non-prime finance. The total cost depends on the deposit, term and any balloon payment, so compare the total amount payable, not just the monthly figure, and factor in mileage limits on PCP.
Protections and regulation
Car finance is regulated by the Financial Conduct Authority (FCA) under the Consumer Credit Act, giving you a cooling-off period and the right to settle early. Under the Act's voluntary termination right, once you have paid half the total amount, you can usually hand the car back. A major FCA review into historic discretionary commission arrangements may entitle some past borrowers to redress. Complaints can go free to the Financial Ombudsman Service (FOS).
Common questions
PCP or HP? PCP offers lower payments and flexibility; HP costs more monthly but you own the car outright.
What is a balloon payment? The optional final lump sum on PCP to keep the car rather than hand it back.
Should I buy GAP insurance? Worth considering, but shop around, as dealer GAP is often overpriced.
Can I settle car finance early? Yes, you can request an early settlement figure at any time, and the Consumer Credit Act limits the interest you owe on early repayment.
Car Finance in United Kingdom — FAQ
What is the best car finance rate in United Kingdom right now?
Giraffy tracks 5 car finance products across Ford Credit UK,Mercedes-Benz Financial Services,Toyota Financial Services,BMW Financial Services,Audi Financial Services lenders in United Kingdom. Compare by APR to find the most cost-effective way to finance your vehicle.
What is the difference between PCP, HP, and a personal loan for buying a car?
PCP (Personal Contract Purchase) has lower monthly payments but a large 'balloon payment' at the end to keep the car. HP (Hire Purchase) spreads the full cost in equal instalments — you own the car at the end. A personal loan gives you the cash to buy outright, often at a lower rate. PCP suits those who upgrade regularly; HP and loans suit those who want outright ownership.
What credit score do I need for car finance?
Most mainstream lenders require a fair to good credit score. Specialist lenders offer car finance to those with poor or limited credit history, but typically at higher APRs. Check your eligibility using a soft-search tool before applying to avoid unnecessary hard searches on your credit file.
Can I get car finance with bad credit?
Yes — specialist lenders offer car finance to borrowers with a poor credit history, but at higher interest rates. A larger deposit reduces risk for the lender and may secure you a better rate. Improving your credit score before applying is the most cost-effective long-term approach.
What is a balloon payment on a car finance deal?
A balloon payment (also called a Guaranteed Minimum Future Value / GMFV on PCP) is a large lump sum due at the end of the finance term if you want to keep the car. If you don't pay it, you return the vehicle. It's set based on the car's expected residual value at the end of the deal.
Is it cheaper to get car finance through a dealer or directly with a lender?
Dealer car finance is convenient but not always the cheapest — dealers often earn commission on the finance package. Comparing independent lenders via Giraffy before visiting a showroom gives you a benchmark rate. Arriving with pre-approved car finance puts you in a stronger negotiating position.
What happens if I want to settle a car finance deal early?
Early settlement typically involves paying the outstanding capital plus a settlement fee (usually 1–2 months' interest). On PCP and HP, you may also have the right to voluntarily terminate the agreement once you've paid 50% of the total amount payable — returning the car with no further obligation.