Could you find the cheapest car finance deals UK?

From electric cars to used cars and new cars, every day sees some people begin their search to get a vehicle. It could be their first car or the latest in a line... but in many cases, they'll need a car finance deal to fund that car.

Used cars are often cheaper, of course, but they're far from cheap even then. This makes a car finance option something worth looking at for many people.

Searching for the best deal

Everyone wants the best deal they can find when buying a car, but how realistic is this? Could you find the cheapest finance car deals around today? If so, how could you do it?

We find out more about this topic, to give you a better idea of what you could expect if you're shopping around for a car. The more you know ahead of applying for anything, the more informed your decision could be.

What's the cheapest way to finance a car?

Everyone would love a deal that didn't involve paying any interest when purchasing a car, but that's not going to happen unless you've already got the cash set aside to buy the vehicle outright.

And since you're here reading and researching the subject of looking for competitive car finance deal possibilities, you could be looking to borrow money to fund your car. Most people do need to do this, so it's important to learn more about it and to see what's on offer and how to find a suitable deal.

So, if you're considering approaching a finance company or other financial services to help you, we could have some advice to consider before you do.

Why should I trust Loanza?

Good question. Firstly, we're not a lender, we're a credit broker. We have connections to over 50 lenders, so when you use our free service (yes, we did say free) to search for finance products, you could cover more ground than you would searching alone, even if you spent hours doing so.

And when you need that car, you don't want to spend ages looking for ways to afford it. Our system has been designed to run a search quickly and effectively, using the information you give us to spot a competitive offer from a suitable lender in our network.

As a credit broker, we could compare car finance loan possibilities more quickly than you could. We'll then present you with a competitive car finance deal to consider, and there's never any obligation to go ahead with an official loan application for a car.

If you like to feel and be in control, you'll soon see how the Loanza service helps with this step. That's why we built our system like this.

But first... know what you're looking for

Before you complete our quick form, let's look at some of the questions you ought to think about first. Think of it as putting the handbrake on your car for safety, if only temporarily! You'll soon have a better idea of which direction you're going in.

What sort of car are you looking for?

Are you looking at used cars or brand new cars? Do you need a family car or would something smaller be the perfect car for you?

Before searching for competitive car finance deals, you should consider what you want from a new car. If you need a family car, you'd be better with four or five doors instead of a three-door vehicle. If you have dogs, you might need a generous boot to accommodate them. If you regularly go shopping, you'll need boot space for the bags. You get the idea.

It's not just about size either

Whether you're fine with a small car or you need something much bigger, you should also think about cost. Some makes and models are cheaper than others and easier to insure too. For example, if you've only just got your driving licence, you'll be better off with a cheaper used car than a new car.

How much could you afford to borrow?

It's best to sit down and check your income and your monthly outgoings as they stand. This could help you work out how much you could manage in monthly repayments.

Don't go to the maximum you could afford either. This means you've got no wiggle room if interest rates change or your outgoings increase for some reason.

How does the interest work?

A lot may depend on whether you get fixed or variable rates on your car finance. Fixed monthly repayments are easier to manage as you know the payment will never change. Variable rates can be cheaper, but they also expose you to possible rises. If interest rates go up, so would your monthly payments.

Can you just buy direct from a car dealer?

Yes, you can, but this could prove more expensive. Of all the types of car finance you could get, going via a car dealer means you'll need to go for their car finance loan. Retailers advertising finance offers always promote the deal you could get from the car finance company they've partnered with.

This means you cannot shop around. Therefore, you could end up paying far more in monthly payments than you'd think.

How does a personal loan differ from traditional car finance from the dealer?

If you get a personal loan, you'll receive the money as a lump sum from the lender. You then use that money to pay the dealer for your used car or a new one, whichever applies. They get their cash, you get to buy a car, and you then need to make monthly repayments to the lender.

Loanza could help you find an unsecured personal loan to spend on a new car. Just complete our simple online form, adding the relevant personal details, and we'll take it from there. We think you could find using our service more straightforward than trying to buy travel insurance!

Make sure you check your credit report before applying

All credit agreements typically require a check of your credit score before the lender reaches a decision on whether to lend you the money you're after.

Obviously, if you have a good credit history, you could find it simpler to get consumer credit, including used car finance. All lenders run a credit check once you make a formal application, so you'll need to pass this step.

If you decide to look for an affordable car finance quote via Loanza, you might find that lenders do a soft search first. This doesn't harm your credit score, but it does allow lenders to assess your suitability for a loan. This applies in all cases, whether for car finance deals or other loan options.

What if I have bad credit?

This doesn't automatically exclude you from finding finance for a used car (or even a new one), but it could potentially make things more challenging.

If you don't know your credit history, it's an idea to find out what your credit score is first. You should be able to do this online for free.

You'll then know what lenders might discover when they run a credit check on you. When you want to buy a car at an affordable price, you may well need to search for finance deals via various finance companies.

You may be able to find a deal via a specific financial group. Limited information is available here, since everyone has a specific credit score and history, but you get the idea, we're sure. Some lenders consider those with past credit issues, although they're likely to charge more interest.

While you don't need a perfect credit score to obtain car finance, there could be things you could do to improve bad credit, if that's what you have just now.

Could you improve your score to get a better deal?

You could, and there are various ways to do this. Reducing existing debts and making sure you're not late with any monthly payment requirements are two examples. This could put you in a better position to raise your score and move further up from your existing bad credit situation.

It's also worth double-checking that you are listed on the electoral roll. It's surprisingly easy not to be, and it could cause no end of issues! You need to be to vote, so if you've voted recently, you should be fine, but it's still worth confirming your details.

It could well take time to sort out a poor score, but improving your score is always worth it.

If you're wondering about your financial situation, it's always best to know more about it before you look for that perfect car to buy.

One final note...

Incidentally, if you wish to dispute any information in your credit report, you could do this directly with the business concerned. You could also seek advice from the Financial Ombudsman Service.

Are there different ways to get a new car?

Yes, and we'll go through those with you here. It's important to understand the various car deals you might come across, as they do vary.

While used car finance gives you a loan to buy a vehicle, there are other possibilities. These include car leasing, personal contract hire, personal contract purchase, and so on. If terms such as PCP finance confuse you, don't worry - we'll guide you through them all here.

Personal contract hire

Remember the 'hire' part of that phrase. There is no deposit contribution to make in this instance (something you do need to do with the hire purchase alternative we'll come to shortly).

You'll have to make a payment per month, but it's cheaper than the hire purchase option. However, you've got no ability to buy the vehicle when the agreement ends, even if it does turn out to be the perfect car.

Personal contract purchase

A personal contract purchase sounds the same as the personal contract hire version but it isn't. A personal contract purchase agreement means you'll get an opportunity to buy the car once the final payment is made. It's a hire purchase format because you hire the car throughout and you get the chance to buy it at the end.

You'd typically make an initial deposit followed by lower monthly repayments than you'd get on the personal contract hire option. That's another difference between hire purchase and contract hire.

This payment is known as a balloon payment. When you make the balloon payment, you'll then own the car outright. You don't need to do this, but you've got the chance to make that final payment to finish the finance plan and own the car.

You've therefore got more options with personal contract purchase than you'd have with the other option. Hire purchase does mean you'll need to find the money to buy the car at the end, but only if you choose to buy the vehicle.

Points to note with both options

Chances are you'll need to complete the duration of the contract in both cases. The provider could charge fees if you want to finish it early for some reason.

You'll also be likely to agree on a maximum mileage limit, and if you go over this, it could affect your deal and your repayments.

Could car finance suit you?

You can see that if you want to own your perfect car and pay it off each month, car finance could be the better option. It's simpler to understand than hire purchase or contracts with companies. You could look for the car you'd like - the cheapest car to get on finance, maybe - and apply for a loan to pay for it.

You'll have monthly repayments to make, of course, but you'll own your car, providing you keep up those repayments. You've got no need to worry about sticking to a mileage limit either.

More about Loanza and car finance

Loanza is not a lender, but we're here to see if we could help you spot the cheapest new car finance deals around. Whether you want a new car or a chance to find the cheapest used car finance deals, you're just minutes away from receiving a possible quote.

We're experienced in introducing customers to professional lenders who could offer finance for the car you need. Could we match you with the best deals? Try filling in our convenient form today to find out. You can check our credentials first too - we have a registered office and a firm reference number that allows you to find out more.

With your address history, income details, and other information, you're ready to go. You could have a finance quote for a car in minutes. There's no obligation to go for the suggested finance deal, and you could save your details with us to check again more quickly in the future too.

Others have already used Loanza to look for finance on their next car. Could you join them? Remember, we run a free service with no obligation, so explore the possible finance deals around today. You might soon drive your next car home.