Car finance

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Buying a car is a significant investment that can put a strain on your finances. Car finance can be an excellent option for those who want to buy a vehicle but don't have the cash up front. With different types of car finance available, it can be a challenge to understand which option best suits your needs.

Representative 14.7% APR

What is car finance?

Car finance is simply the process of taking out a loan to buy a car. It's a way to spread out the cost of a vehicle over a period of time rather than having to pay for it all up front.


How does car finance work?


Car finance spreads out the cost of a car purchase over a set period of time. When you opt for car finance, you borrow money from a lender to pay for the vehicle. You then repay the car finance in instalments over an agreed-upon timeframe, which is typically a few years.


The amount you can borrow and the interest rate you'll pay will depend on various factors, such as your credit score, income, and the price of the car. If you have a good credit score and a stable income, you're more likely to be approved for a loan with favourable terms, such as a lower APR.

Types of finance


There are different types of car finance, like car loans, hire purchase and personal contract purchase (PCP) and it’s important to research all your options to help you work out which one suits you best. To help find the right finance for you read our guide to car finance

Car finance is simply the process of taking out a loan to buy a car. It's a way to spread out the cost of a vehicle over a period of time rather than having to pay for it all up front.


How does car finance work?


Car finance spreads out the cost of a car purchase over a set period of time. When you opt for car finance, you borrow money from a lender to pay for the vehicle. You then repay the car finance in instalments over an agreed-upon timeframe, which is typically a few years.


The amount you can borrow and the interest rate you'll pay will depend on various factors, such as your credit score, income, and the price of the car. If you have a good credit score and a stable income, you're more likely to be approved for a loan with favourable terms, such as a lower APR.

Types of finance


There are different types of car finance, like car loans, hire purchase and personal contract purchase (PCP) and it’s important to research all your options to help you work out which one suits you best. To help find the right finance for you read our guide to car finance

Car finance is simply the process of taking out a loan to buy a car. It's a way to spread out the cost of a vehicle over a period of time rather than having to pay for it all up front.


How does car finance work?


Car finance spreads out the cost of a car purchase over a set period of time. When you opt for car finance, you borrow money from a lender to pay for the vehicle. You then repay the car finance in instalments over an agreed-upon timeframe, which is typically a few years.


The amount you can borrow and the interest rate you'll pay will depend on various factors, such as your credit score, income, and the price of the car. If you have a good credit score and a stable income, you're more likely to be approved for a loan with favourable terms, such as a lower APR.

Types of finance


There are different types of car finance, like car loans, hire purchase and personal contract purchase (PCP) and it’s important to research all your options to help you work out which one suits you best. To help find the right finance for you read our guide to car finance

Car loans

A car loan is a type of finance arrangement that helps car buyers cover the cost of their purchase. The buyer borrows a lump sum of cash up front and then makes monthly payments over a set amount of time (which can vary depending on the agreement type).

A car loan is a type of finance arrangement that helps car buyers cover the cost of their purchase. The buyer borrows a lump sum of cash up front and then makes monthly payments over a set amount of time (which can vary depending on the agreement type).

Learn more

Hire purchase

Hire purchase is a type of car finance where you make fixed monthly payments over a pre-arranged period of time until you’ve paid off the full cost of the car, plus any interest. During the hire purchase agreement you essentially hire the car from the lender until you’ve paid off the full amount owed. After all payments have been made, including the final ‘option to purchase’ fee, you will own the car outright.

Hire purchase is a type of car finance where you make fixed monthly payments over a pre-arranged period of time until you’ve paid off the full cost of the car, plus any interest. During the hire purchase agreement you essentially hire the car from the lender until you’ve paid off the full amount owed. After all payments have been made, including the final ‘option to purchase’ fee, you will own the car outright.

Learn more

Personal contract purchase

Personal contract purchase (PCP) is a type of car finance that allows you to make lower monthly payments on a vehicle by deferring a significant portion of the cost to the end of the agreement. With PCP, you won’t own the car until you’ve made the final lump sum payment, known as the ’balloon’ payment.

Personal contract purchase (PCP) is a type of car finance that allows you to make lower monthly payments on a vehicle by deferring a significant portion of the cost to the end of the agreement. With PCP, you won’t own the car until you’ve made the final lump sum payment, known as the ’balloon’ payment.

Learn more

Personal contract hire

Personal contract hire (PCH) is a type of car finance that allows you to lease a vehicle for a set timeframe, typically between two to four years. With PCH, you don't own the car, but you have the right to use it for the duration of the contract in exchange for monthly payments. At the end of the agreement, you simply return the car to the leasing company and have the option to start a new lease on a different vehicle.

How to finance a car with Oodle

01

Apply online

Find out if you're pre-approved in minutes

02

Get accepted

You’ll have the money in your account the next working day

03

Shop anywhere

Shop online or in a dealership

Man checking car finance eligibility on mobile phone
Screenshot of Oodle Application, with examples of ways to prove your identity.
Man checking car finance eligibility on mobile phone
Screenshot of Oodle Application, with examples of ways to prove your identity.

Am I eligible for car finance?

When you apply for used car finance, most lenders will carry out credit and eligibility checks to determine if they can offer you a finance agreement. You may need documents to prove to the lender that the information you provided in your application was accurate - although lenders can complete these checks automatically in many cases.


The information required may include:

Proof of age (all applicants must be aged 18 years or over to be considered for car finance)

Proof of address (typically you’ll have to show where you’ve lived for the past three years)

Proof of earnings (personal, and household if you have dependents such as children)

Employment status

A full or provisional, valid UK driving licence

Although not everyone will get a finance deal with Oodle, there are other options out there; even if you have a lower credit score, it is worth checking to see what might be available.

Calculate monthly car finance payments

Calculate monthly car finance payments

The world of car finance can be a confusing one – but we’re here to help simplify things. Use our car finance calculator to help you decide whether car finance could be a good option for you, without affecting your credit rating. The calculator will give you a good idea of what your monthly payments could look like based on how much you’re looking to borrow.


Don’t worry, you’re not committing to anything; this tool is simply a useful guide to help you figure out a budget that suits you best before you complete a full application for car finance.

The world of car finance can be a confusing one – but we’re here to help simplify things. Use our car finance calculator to help you decide whether car finance could be a good option for you, without affecting your credit rating. The calculator will give you a good idea of what your monthly payments could look like based on how much you’re looking to borrow.


Don’t worry, you’re not committing to anything; this tool is simply a useful guide to help you figure out a budget that suits you best before you complete a full application for car finance.

The world of car finance can be a confusing one – but we’re here to help simplify things. Use our car finance calculator to help you decide whether car finance could be a good option for you, without affecting your credit rating. The calculator will give you a good idea of what your monthly payments could look like based on how much you’re looking to borrow.


Don’t worry, you’re not committing to anything; this tool is simply a useful guide to help you figure out a budget that suits you best before you complete a full application for car finance.

FAQs about car finance

Will applying for finance affect my credit score?

Applying for car finance can affect your credit score, depending on the type of credit check the lender carries out.

Most lenders, including Oodle, start with a soft credit check. This gives an overview of your creditworthiness and won’t impact your credit score. Soft checks are only visible to you and not to other lenders.

However, if you’re approved and choose to go ahead with a finance agreement, we’ll carry out a hard credit check. This happens after you’ve signed your agreement. Hard checks are recorded on your credit report but usually only for around 12 months.

Want to check your credit score before applying? You can do it for free on:

●      MoneySavingExpert Credit Club

●      Credit Karma

●      ClearScore

We’ll always let you know when a hard credit check is going to happen, so there are no surprises.

Can you part exchange a car on finance?

Yes, it’s possible to part exchange your car if there’s still some finance left to pay on it – although this should always be discussed with your lender before you do.

The process would involve repaying the amounts outstanding under the existing car finance agreement. If the amount remaining on your finance agreement is more that your current car is worth, then you are in negative equity.

What checks are done for car finance?

When applying for car finance, lenders will typically carry out several checks to assess your creditworthiness and determine whether you're a suitable candidate for a loan. These checks may include:

  1. Credit check: Lenders will check your credit history and credit score to determine your creditworthiness. This includes looking at your payment history, outstanding debts, and any defaults or missed payments.

  2. Affordability check: Lenders will assess your income and outgoings to determine whether you can afford the monthly payments on the loan. This includes looking at your employment status, salary, and any other sources of income.

  3. Identity check: Lenders will verify your identity to ensure that you are who you say you are. This includes checking your name, address, and date of birth against public records.

How much car finance can I get?

The amount of car finance you'll be offered can depend on a number of factors, including your credit history, income, and expenses. Generally, lenders need to be sure that you’ll be able to repay the loan when deciding how much to lend you.

To get an idea of how much car finance you can get, you can use Oodle's car finance calculator. Keep in mind that this is just an estimate, and the actual amount you're offered may be different depending on the lender's criteria.

Can I get car finance if I have a bad credit score?

You don’t necessarily have to have a good credit score to be approved for car finance – but it helps! Some lenders are willing to help borrowers with a poor credit score, and a few even specialise in poor credit history finance.

So, if your credit score isn’t great, it doesn’t necessarily mean that you won’t be able to finance your car. It just means that you might have to shop around to find the right lender for you. Keep in mind that borrowing with bad credit may come with higher interest rates and monthly payments, so the overall cost of finance could be more.

Be careful though: if you’re struggling to pay off your existing debts it’s always best to get on top of these first before borrowing more. Talk to your lenders to make a plan to get your finances back on track. This will help to improve your credit score.

There are charities and organisations who can offer advice, help and support if you're in difficult circumstances. Find out more here.