Loans: £2,000 - £40,000
Rates from: 6.9% APR
Representative: 14.8% APR
Rates from as low as 6.9% APR, representative 14.8% APR. Loans from £2,000 to £40,000. Finance is subject to status and is only available to UK residents aged 21 and over. Carmoola is committed to responsible lending. All information is subject to change and should be checked before completion. We earn a commission if you make a purchase at no additional cost to you.

what is car finance?

if you’ve ever had to finance a car, then you’re probably familiar with how it can be costly. if you’ve been looking to lower the cost of owning your car or at least keep it affordable, you might have encountered car finance.

the concept is simple: instead of paying for your car in cash upfront, you make monthly payments. car finance lets you get a new car without paying for it upfront.

instead, you make smaller payments every month for a fixed period (your loan term). once the loan term ends, so does your obligation.

financial institutions usually offer financing plans tied to an auto lending institution like ally bank to ensure you can keep up with the payments.

how much will car finance cost me?

often, car finance costs less than cash. for example, when you purchase, you’re looking to buy a £10,000 car and have £5000 in your checking account. you can expect to make monthly payments of £200. in addition, you’ll pay the bank an interest rate of around 5 to 10 per cent.

if you were to finance the entire cost of your new car in cash today with a credit card, you’d maybe be paying an apr of around 20 per cent. an auto loan calculator can help you calculate the exact loan amount and monthly payments.

what do i have to consider with car finance?

to get a car finance plan, you usually have to meet a few requirements, like having a stable income and a good credit score. this process can be time-consuming and stressful, so it’s not for everyone. however, car finance arrangements are pretty straightforward.

they use an auto lending institution as the middleman that handles all the paperwork and talks with your bank. the terms of your loan will be determined by your lender.

still, typically you can expect monthly payments to be around £500-1,500 over the loan term. suppose you want to benefit from car finance without going through the hassle of qualifying for it. in that case, you might consider purchasing an already financed used car or buying one funded already to get a lower loan rate or longer term on loan.

what types of car finances are there?

a car finance might be a good choice if you need the money over a more extended period. consider leasing or buying your car instead of financing it outright. these options offer different benefits, so before selecting one, make sure to compare their pros and cons with each other.

car leasing: leasing lets you pay little per month to own a vehicle. you also keep the option of upgrading or selling your car at any time during your lease term. in addition, no money is exchanged upfront because the dealer will pay off the leased vehicle (and return it to you) when the period ends.

car buying: buying is a popular option because it’s less costly for buyers than leasing. however, it still gives them access to the latest features and technology without worrying about replacing their vehicle in three years. in fact, most people who buy cars use financing from their bank or leasing company to cover part of the costs upfront and then use low monthly payments for the rest of their loan term.

what requirements do i have to meet to get car finance?

as with many other financing options, car finance is only for some. you might qualify for a car loan if you have a steady income and can afford the payments. your credit score and overall financial situation also play a role in whether or not you qualify for a loan. a bad credit score could potentially lead to higher interest rates. the higher your score, the better the annual percentage rate (apr) offered to you.

another critical requirement is proof of employment and/or bank statements showing your income. this will help the financial institution determine how much you can spend on your vehicle purchase. be prepared to supply them with your previous year’s tax return or recent pay stubs.

other than these basic requirements, no long-term commitments or obligations come with auto financing plans like different types of auto loans. you don’t need an extensive down payment, although they may require one depending on the terms of the plan you choose from the dealerships or lenders.

how much car finance can i get?

there are different car finance programs, each with varying eligibility requirements. but, in general, if you’re looking to finance a new or used car, it’s possible to get a loan between £2,000 to £20,000. each lending institution will also have its terms and rates available.

car finance can be a powerful tool that helps people avoid high-interest rates and monthly payments. an auto loan provides an affordable way of buying a car without paying for it upfront.

which car finance is the cheapest?

the best car finance option will depend on your needs, but there are a few things that financial institutions should consider:

  • what is the length of the loan term?
  • how much money are you willing to pay each month?
  • what type of car do you want to purchase?
  • which state or country will you be buying the car in?
  • how far do you live from where the car dealership is located?
  • what type of interest rates are offered?

all these factors play a part in determining which car finance plan is most suitable for you. the cheapest car finance is the one that covers all your needs and has the lowest interest rate.

what tips are there to make car finance more favourable?

there are a few tips that you should keep in mind if you’re looking to finance a car:

  • ensure you’ve got a good credit score and can afford the payments.
  • be aware of the interest rates available to you based on your credit score and loan term.
  • be mindful of how loans work; some plans require monthly payments for the entire loan term, and there are plans where only the initial cost is due upfront.

either way, it pays to know what kind of financing plan you’re looking at before purchasing.

how quickly can i get the car finance paid out?

If you are approved for a car finance from a bank or credit union, you can expect to receive the money within one to five days. though some banks are faster than others.

you’ll typically have the car financed for 24-48 months, though it might be shorter depending on the financing plan. at the end of that term, the car will be yours.

plus, you’ll get to keep any remaining balance from your loan term. so car finance can be affordable for acquiring your dream vehicle without paying full price upfront. and if you don’t like it at the end of your loan term, you can trade it in and get something new.

when can i repay or reschedule or increase the car finance?

one of the benefits of car finance is that you can repay, reschedule, or increase the loan term at any time. this means that you could use your car for a few years and then pay it off at a future point in time when you no longer need it.

you could also arrange with your lender to end the loan term early. this flexibility makes car finance attractive to many consumers because they know they can control their own destiny concerning their cars and financing.

in addition, car finance makes it easier for consumers to get into a new vehicle without worrying about the high upfront costs of buying it outright. instead, they take on smaller monthly payments while fully owning their cars and all the associated assets.