Can I get a used car on finance?

There are several personal finance packages available if you’ve found the perfect used car but can’t afford the whole asking price. These used car finance deals could help you spread the cost over a series of monthly payments but how exactly do they work? Read on to find out…

As with all finance agreements, you’ll have to carefully consider whether you can afford the repayments before you sign a contract. Cash purchases will always be an option and could suit your individual circumstances better than a finance offer. For more information, read our complete car finance guide.

The most common forms of finance you’ll see advertised are Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements. Many dealers will be happy to offer these packages on both new cars and used cars. Both finance types will require you to pay an initial deposit followed by a series of monthly payments.

Used car Hire Purchase finance (HP)

The total cost of a used car HP agreement will cover the whole purchase price of the car. Your monthly payment amount will depend on the cost of the car, the size of the deposit and the length of your finance term. A large deposit will reduce the size of your monthly payments and vice versa. When your contract ends, the car is yours to keep or sell on. You’ll not be abe to sell the car before your agreement ends without the dealer’s permission, however.

Used car Personal Contract Purchase (PCP) finance

A used car PCP agreement is similar but you’ll be required to return the car to the dealer after a set period. Your deposit and the amount you’ll pay monthly will depend on the car’s current value and the amount the dealer expects to be able to sell the car for when it’s returned. A PCP contract will include a mileage cap, too – exceed this, or return the car in poor condition, and you’ll be liable for penalty charges.

PCP deals will include the option to buy the car outright at the end of your agreement in return for an optional final payment – sometimes called a balloon payment.

What about used car leasing?

Leasing, although popular among new car buyers, makes up only a small segment of the used car market. The same rules apply to leasing a used car as a brand new model – you’ll agree a contract with your dealer that’ll determine how much you’ll pay each month and for how long. As with PCP deals, your mileage will be capped and you’ll have to return the car in saleable condition at the end of your agreement.

The amount you pay monthly will be determined by, in part, how steeply the dealer expects the car to depreciate over your finance term. Used car residual values are often more difficult to predict than new cars and, as a result, dealers may offer more expensive leasing deals on used cars to cover the cost of unexpectedly severe depreciation.

Buying a used car with a bank loan

Bank loans can be used to finance used cars in the same way as a brand new model. The interest rate and the amount you’ll have to repay each month will be set by the bank. This type of personal finance could suit you better if you don’t have enough set aside for a large HP or PCP deposit. Unlike the other finance types mentioned here, you’ll be free to sell the car on at any point.

Bank loans may be the most suitable option if your preferred dealer doesn’t offer alternative HP or PCP finance packages on their used cars.

Used car finance available through carwow

All carwow dealers are manufacturer backed and can offer finance deals on both new and approved used cars. Use our car deals page to view these offers or sign up with carwow to browse the latest used cars in stock.

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