Car finance

Car finance explained

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    Easy and transparent car financing
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    Find the right type of car finance for you
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    Get a quote without affecting your credit score

Zuto is a credit broker, not a lender. Our rates start from 9.4% APR. The rate you are offered will depend on your individual circumstances. Representative Example: Borrowing £7,500 over 60 months with a representative APR of 19.9% the amount payable would be £192 a month, with a total cost of credit of £3,997 and a total amount payable of £11,497.

What is financing a car?

Financing is a way for you to buy a car without needing to pay the whole amount upfront. With over 15 years’ experience, financing a car is made simple with Zuto.

We work with a number of lenders to provide deals that are right for you, and our team is always on hand to guide you through the process, from start to finish – they’ll even help you find a car to suit your budget and needs.

There are three main types of car finance – hire purchase (HP), personal contract purchase (PCP) and a personal loan – we also help customers who are self-employed, have no deposit, or need car finance with bad credit.

It’s easy to get started straight away, but if you want to find out more, have a look at our options below or get in touch with our team.

Car finance types

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    Hire purchase (HP)

    The most popular type of car finance, hire purchase finance involves monthly payments and you own the car outright at the end of the agreement.

    Hire purchase car finance

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    Personal contract purchase (PCP)

    Monthly payments based on the depreciation, with the option to pay a balloon fee and buy outright when the term ends.

    PCP car finance

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    Used car finance

    Get a personalised quote on used cars – we can even help find the right vehicle for you. Used car finance can be a convenient option for drivers looking for a second-hand car.

    Used car finance

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    No deposit car finance

    You don’t always need a deposit to get a car loan. Some of our lenders can help get you on the road, with affordable monthly payments spread over an agreed term.

    No deposit car finance

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    Electric car finance

    Thinking of making the move to electric? We work with lenders who offer finance for new and used electric cars, making it more affordable to drive an EV.

    Electric car finance

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    Negative equity car finance

    Some of our lenders may be able to help you finance a car, even if you have negative equity. Find out your options, and how you can transfer your negative equity to a new agreement.  

    Negative equity car finance

Why do people choose car finance

There are many reasons why people choose to use finance for their vehicle. Some of those reasons are:

  • Flexible payments. You can control how long your term agreement is and how much you’re paying each month.
  • Having different car finance options available can make it easier to get the latest car without needing to pay the whole cost up front.
  • Get a model upgrade. With certain finance options, such as PCP, you can hand back the vehicle at the end of the agreement and start the journey all over again with a newer model.
  • Boosting your credit score. Having finance where payments are regularly made and never missed can help boost your credit score.

The main types of car finance

The three main types of car finance are:

Hire purchase (HP)

The most popular of Zuto’s car financing options, hire purchase is easy to understand.

  • You’ll ‘hire’ the vehicle from the finance company, making regular monthly payments.
  • The monthly repayment amount can be reduced by paying an initial deposit and borrowing the remaining balance over a set period.
  • You’ll pay interest on the outstanding balance.

So, how does financing a car work with hire purchase? The repayments will usually last between 12 and 60 months, and at the end of the agreement you will have paid for the whole cost of the vehicle – plus any interest and fees. This means you will own the vehicle at the end.

Hire purchase is good if:

  • You want fixed monthly repayments.
  • You want to own the vehicle once all repayments have been made.

Personal contract purchase (PCP)

With PCP, you pay off the car’s depreciation value, instead of making payments towards the full price of the car. For example, if the car you buy costs £15,000, and is expected to be worth £10,000 when your term ends, your payments will be based on the depreciation of £5,000.

You may need to provide a deposit but you could be borrowing less than you would using hire purchase, because you only pay the value the finance company predicts the car will lose over the term.

You then have the choice to either return the vehicle at the end of the agreement or pay a lump sum (known as a balloon payment) to buy the vehicle. You may also be able trade the car in for a different model at the end of the term.

PCP is good if:

  • You like to change your car frequently.
  • Are not concerned about owning a car outright.

Personal loan

The only car finance type that isn’t secured against the vehicle itself, a personal loan is an amount of money borrowed from a provider used to pay for a car. You will then make regular loan repayments to the finance company plus interest over an agreed term. Bear in mind that even if you sell the vehicle, you will still be responsible for making the loan repayments.

You will typically need a good credit score to be approved for a personal loan, and you don't get the same level of protection as you do with other car finance plans (as the loan is not secured against the vehicle). 

Read more on consumer protection.

A personal loan is good if:

  • You wish to sell on/make modifications to your car.
  • You want to buy an older or high-mileage vehicle.
  • You want to own the car from the start.

The benefits of car finance

Car loan and credit products can help make vehicle payments affordable, allowing you to get on the road. But what other benefits can you take advantage of?


The practicality of car financing options lies in the fact that you can get the car you want now without having to pay for it in one lump sum – allowing you to balance your finances more evenly. This means your bank balance won’t take a large hit straight away and you’ll be able to manage your monthly outgoings more efficiently.


An online application process means that it’s quick and easy for people to apply for car finance and find out if they’re approved, meaning prospective shoppers can apply for their loan in advance of their trip to a dealership. This gives drivers an idea of how much money they have to spend on a new car, so they can budget accordingly.

Car finance calculator

See how much you could borrow

What to do next

It’s easy to get started with Zuto. You can:

  • Apply online now – we’ll carry out a ‘soft search’ credit check so we can match you with our lenders. This won’t affect your credit score, but lets us and you see what car finance options are available. Get your quote now.
  • Talk to us – we’d love to help! We have a team on hand to support you with car financing – from those small questions early on, through finding a deal that suits your needs, and even advising you on cars. Just call 01625 619 944.
  • Sign up – once you’ve applied, you’ll be given a Zuto account. Within My Zuto, you can keep track of any quotes and even search our database of more than 40,000 cars, sold by our trusted dealers. Apply for car finance.