Car Finance Loans

How car finance loans work...

A car loan is a type of personal loan designed for those wishing to finance a new, or used, car purchase.

These loans are available for people from a large range of financial situations and are unsecured (i.e. you don't have to be a home owner to get one!).

Types of car loan available

Car loans are offered in a variety of different formats, which can be confusing if you haven't looked into this type of financing before.

Hire Purchase
This type of loan requires you to make monthly repayments for an agreed length of time. Although you will be in possession of the car, you won't effectively own it until all the loan payments are made.

Personal Contract Purchase
As with Hire purchase, you must make monthly repayments of the car loan, however, you can defer a chunk of your payment until the end of the agreed loan term, at which point you will have the option of either paying this sum 'balloon payment', swap the car for another, or simply return it to the dealer.

Lease Hire
This is almost a mix of Hire purchase and Personal Contract Purchase. You will make set payments as with a hire purchase, but at the end of the term there will be a 'balloon payment'. This enables you to make lower monthly repayments, but you need to budget for the big final payment

Standard Car Loan
Similar to an unsecured loan, but designed with car purchase in mind. They are often offered by car loan specialists.

Compare car finance loans