Buying a used car on finance

New car finance deals are everywhere, but what if your sights are set on a second-hand one? The good news: you don’t need a new model to take advantage of affordable finance options – used cars are very much on the table too.

Buying a used car doesn’t mean missing out on finance options. Whether you’re exploring how to finance a used car, comparing deals for financing a used car, or simply asking, “Can I get finance on a used car?” – the answer is yes. Here’s what you need to know about how to buy a used car on finance with confidence.

Did you know you can buy a used car right here on Carwow? We’re here to help you through every step of your car-changing journey.

Can I get finance on a used car?

Yes, you can get finance on a used car – in fact, it’s one of the most popular ways to buy. Instead of paying the full price upfront, you usually put down a deposit and then spread the cost through monthly payments over your finance agreement.

How does financing a used car work?

Financing a used car works much like buying new: you pay a deposit, borrow the rest from a finance provider, then repay in monthly instalments. Depending on your finance type, you either keep the car at the end or hand it back and upgrade to something new.

How to finance a used car

There’s more than one way to finance a used car, and the right choice depends on what works for you. Here are the most common options.

Buying a used car on Hire Purchase (HP)

If you buy a used car using Hire Purchase (HP) finance, you’ll pay an initial deposit followed by a set number of monthly payments over an agreed period. Once you make the final payment, the car becomes yours, and you can choose to keep it, sell it, or trade it in.

Here are some advantages of taking out a HP:

• You own the car outright at the end of the agreement, with no large final ‘balloon payment’ required.
• Unlike some other finance options, HP has no mileage limits.
• Fixed monthly payments make budgeting easier.

HP isn’t without its drawbacks, however. For example:

• Monthly payments may be higher than with Personal Contract Purchase (PCP) due to the lack of a balloon payment at the end.
• HP is less suitable if you plan to change cars frequently, as you’re committed to the full term.
• Interest rates can be higher compared to PCP deals, potentially increasing the total cost of the car.

Buying a used car on Personal Contract Purchase (PCP)

With Personal Contract Purchase (PCP), you pay a deposit and monthly instalments like HP, but at the end of the term you usually return the car. If you want to keep it, you can pay an optional final ‘balloon payment,’ based on the car’s predicted value (GMFV).

Your agreed mileage affects this value, as higher mileage means higher monthly payments, and you may pay extra if you go over.

If you’re swapping cars every few years, PCP is handy: payments are typically lower than HP, and you don’t have to worry about selling the car.

There are also some things to watch out for: PCP is usually only on newer cars, they come with mileage limits, and the balloon payment can make it less ideal if you want to keep the car long term.

Is used car finance right for me?

Whether used car finance is right for you depends on your budget, credit score, and how you use your car. It’s a good option if you don’t want to spend all your savings upfront, want to swap cars every few years, or prefer to avoid the steep depreciation of a new car.

If finance isn’t your thing, you could pay cash, take out a personal loan, or consider leasing a new car. Leasing usually has lower monthly payments but comes with mileage limits and fees for damage, and you won’t own the car in the end.

What is the best way to finance a used car?

The best way to finance a used car depends on your personal circumstances, so it pays to do your research. Here’s a breakdown of the main options to help you choose the right one:

• PCP is handy if you might want to hand the car back at the end.
• HP is better if you plan to keep the car and avoid a final balloon payment.
• A personal loan can work if you’d rather skip a deposit and borrow the full amount.

Weight the pros and cons of each before deciding.

Financing a used car FAQs

Does anyone do 0% finance on used cars?

0% APR financing is typically not available for used cars, as it’s usually offered by car manufacturers or dealerships as an incentive for customers to buy new cars.

Do used car dealers prefer cash or financing?

Dealers usually prefer you finance a used car rather than pay cash as finance deals bring them extra profit from interest and commission. It also encourages you to spend more or come back for future services.

Is it cheaper to finance a used or new car?

Financing a used car usually works out cheaper overall. The lower price means smaller loans and monthly payments. And even with higher interest, it’s often more affordable long-term than a new car, which loses value fast.

Car change? Carwow!

Looking for a new set of wheels? With Carwow you can sell your car quickly and for a fair price – as well as find great offers on your next one. Whether you’re looking to buy a car brand new, are after something used or you want to explore car leasing options, Carwow is your one stop shop for new car deals.

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Remember, you can buy a brand new or used car right here on Carwow. And you can sell your car, too. We’re here to help you through every step of your car-changing journey.