Car Finance & Car Loans

Car finance


What do you need to know about car finance?


What do the numbers really mean? Total cost and APR explained.


  • The total amount that you pay back will include the cost of interest and any fees as well as the cost of the vehicle. It is important to make sure that you understand the total cost of your car finance/car loan.
  • The cost of interest and fees is given in what’s called the APR (Annual Percentage Rate).
  • APR is the only figure that includes all the costs involved, comparing APR will show you who is offering the best deal.
  • APR is like golf, you want that number as low as possible.
  • To make a deal more affordable, a lender may increase the repayment period.
  • This means that you will pay more in total, but each payment will be smaller.
  • To reduce you monthly and total payments, you can pay a larger deposit, this reduces the risk for the lender.
  • Finally, the better your credit rating, the lower the interest rates you’ll be offered.
  • You can check your credit rating at Experian Credit Expert.

CAR FINANCE AND CAR LOANS - Very low rates available.


What is a hire purchase agreement (HP)

Hire purchase is the most popular form of car finance. You find a vehicle you would like to buy and the finance company pay for it. You then pay the finance company the money back over the period you agreed

How you pay for hire purchase

Hire purchase agreements work on fixed weekly or monthly re-payment plans over 1–5 years.

Who owns the car?

You do not own the vehicle until you have made your last repayment to the finance company, only then is the car legally yours.

Agreement termination

You can cancel your contract with the finance company at any time, but you will have to pay the remainder of the agreement. You may have to pay a cancellation fee but you will save on interest and the car will be yours.
If you cancel your agreement after the half way point, you will not incur any charges or penalties. You simply hand the vehicle back to the finance company.

Falling behind with payments

They will generally give you the opportunity to catch up with your repayments, given you let them know your situation. If you persist to be late with payments the finance company can take the car back.


Personal Contract Purchase (PCP)

PCP is a similar type of car finance to hire purchase you still pay monthly instalments. The difference is that your monthly payments are only paying off the depreciation of the car, rather than the entire value of the car.

Returning the vehicle at the end of the agreement can get tricky. You have to make sure the vehicle is is good condition otherwise you will be charged for damages, this can become very costly.
Also at the beginning of your agreement you will state how many miles you will drive a year, be careful how many you choose because if you go over the allowance you will be charged for it.

How you pay for a PCP agreement

Personal contract purchase agreements work on monthly re-payment plans over 1–5 years.

Who owns the car?

The finance company own the car during the repayment period. If you choose to buy the car at the end of the period rather than giving it back, it becomes yours once you’ve made the final balloon payment.

Falling behind with your payments

If you fall behind with your payments the finance company may take the car off you. They will sell it and use the money to repay your debt. If money they get is not enough you’ll have to pay the difference plus any court costs. If you have paid half of the amount owed, you can hand the vehicle back. You will have to pay any monies owed up to the time you end the agreement.


What are Car Loans

A car loan is the same as a personal loan, it is classed as unsecured debt. Which means you do not have to put an asset against the car loan such as a car or a house. So if you do not pay the loan on time the lender cannot take your car away. Although your credit score will be effected, and you will struggle the next time you try to purchase anything on credit. If you buy a car with a personal loan, you own it outright.

Lenders for personal loans usually only borrow to people with a good credit score. They examine your credit profile and financial background, including your current situation. They will only offer you what they believe you are able to pay back. As cars loans are unsecured, lenders tend to be a little more vigilante. Personal loans or car loans generally range between £1,000 and £25,000 and have fixed repayment plan taken out over one to several years.


Getting a Car Loan/Personal Loan

Getting a car/personal loan would be the recommended first point of call for anybody seeking to pay for a vehicle with monthly instalments. Simply because a personal loan from a bank, building society or private lender generally offer lower rates of interest.

We look to provide the best possible car finance deals for our customers.

We have lenders that offer car loan options spread over 2 to 5 years. Giving you better control over your finance and the ability to manage repayments the are right for you.

Interest rates are based on your personal circumstances (this is usually called ‘subject to status’).

At Socialmotors we make it our mission to obtain the lowest interest rates in the market. All repayments are at a fixed rate, so you will never have any unexpected outgoings.

Simply call us today, or fill in the online finance application and let us help you get you the vehicle you really want!

Car Finance

More information about car finance and car loans

Helpful links:

Get a copy of your Equifax credit report. Something you should definitely consider getting, just so you know how good or bad your score actually is.