How to apply for finance on a car

Applying for car finance doesn’t have to be difficult. Whether you have a strong credit score or are still working to improve it, making a car finance application online can be the simplest way to explore your options, especially if it’s your first time financing a car.

How do I apply for car finance online?

One of the quickest ways to arrange car finance is to apply online, but it’s important to pick the right option for you. Take a look at the information below to get you started:

Check your credit score

Your credit score is important role when applying for car finance, as it affects whether you’ll be accepted and what interest rate you’ll get. Before applying for car finance, it’s a good idea to check your credit score, especially if you think you might have missed a payment on a bill, mortgage, credit card, catalogue payment or other borrowing.

This will help you understand whether you might need to consider lenders who specialise in offering finance to people with poorer credit.

Research finance options

When looking into how to apply for finance on a car, there are a few options to consider:

1. Hire Purchase (HP): With HP, you can either pay a deposit or choose a zero deposit option, depending on the lender. You then make fixed monthly payments. Once all payments, including a final fee, are made, the car is yours. At AutoMoney Motor Finance, we only offer HP car finance.
2. Personal Contract Purchase (PCP): PCP may offer lower monthly payments. You pay a deposit, followed by fixed payments that cover the car's depreciation, not its full value. At the end of the term, you can pay a final ‘balloon payment’ to own the car, return it, or part-exchange it. Be aware that PCP often has mileage limits and condition requirements that could lead to extra charges if you return the car.
3. Leasing: Leasing is like renting a car for 2 to 4 years. You make fixed monthly payments, but you never own the car. At the end of the lease, you return it to the leasing company. Leasing usually has lower payments than financing but comes with mileage limits and requires you to keep the car in good condition to avoid extra charges.

For more information read our guide “Comparing HP car finance and PCP car finance”.

Research and compare lenders

When applying for car finance online, it’s important to research different lenders. Many lenders offer online applications, and comparing their offers can help you find the best option for you.

Look at things like interest rates, loan terms, and application criteria. If you’re self-employed, check whether the lender offers finance for self-employed applicants, as not all do.

Decide who you want to make a car finance application with

There are a number of options for getting car finance. You can apply through a lender, finance broker or directly with the dealership where you’re buying the car from:

• Applying directly with a lender: Applying directly with a lender can make the process simpler and often lads to faster decisions, as you’re dealing with them directly. Most lenders offer same-day approvals and funding if you already have a car in mind.
• Applying through a car finance broker:A broker acts as a middleman between you and several lenders. When you apply through a broker, you may receive several offers from lenders who are willing to finance a car for you. The broker will handle most of the communication and negotiation about your car finance application, discussing the details with the lenders on your behalf.
• Applying through a dealership: Dealerships can offer finance applications on-site. They usually work with finance brokers or have direct relationships with lenders. This option could limit you to the lenders and products the dealership works with, which may not always be the cheapest option overall.

Information you will need to provide

Before starting your online application, it’s helpful to have all the necessary information and documents ready. This will make the process smoother. You’ll typically need:

• Personal details:Your full name, date of birth, address history for the last three years, dependants and contact information.
• Employment information: Details about your current job, including your employer's name, your position, and how long you’ve been employed there.
• Income details:Your monthly or annual income, along with any other sources of income you may have.
• Financial commitments: Information about any existing loans, credit cards, rental or mortgage payments.
• Proof of your identity, your income and your address: A passport, driving licence, recent payslips, bank statements, or tax returns and a utility bill or council tax statement.

Look for lenders offering quotation searches

When searching for car finance, it’s a good idea to look for lenders that offer a quotation search. This type of search gives you an indicative offer—an estimate of the loan amount and interest rate—without affecting your credit score.

A quotation search is different from a full credit application, which can leave a mark on your credit report. By using a quotation search, you can explore your options and get a better idea of what’s available to you, all without any impact on your credit score.

Start your car finance application

Once you’ve decided if you want to apply through a lender, finance broker or dealership visit their website to begin your car finance application.

1. Fill out the application form: Provide your information. Make sure it is correct and true to your circumstances. Ensuring your details are correct will help prevent the risk of being refused car finance due to incorrect information.
2. Choose the amount you wish to borrow and the loan term: When applying for car finance, you'll be asked how much you want to borrow based on the car you're interested in. You'll also choose the length of the agreement, typically between 36 to 60 months. Keep in mind that a shorter term means higher monthly payments, while a longer term reduces the monthly payments, but may mean you pay back a higher overall amount.
3. Submit your application: Be sure to review all of the information before submitting your application. Many lenders offer quick decisions, so you could find out right away if you’ve been approved

Your finance offer

If your application is approved, you’ll receive an offer from the lender or finance broker. This offer will include details such as:

• Interest rate (APR): The rate at which interest will be charged on the loan.
• Agreement term: The length of time over which you’ll repay the loan.
• Monthly payments: The amount you’ll need to pay each month.
• Total repayable amount: The total amount you’ll repay over the entire term of the loan.
• Fees: Any additional fees that might be charged at the start, during and/or end of the agreement.

Review your finance offers

If you've made multiple car finance applications, you might receive several offers. It’s important to compare these offers carefully. Consider the following factors:

• Interest rate (APR):The cost of borrowing, shown as a percentage.
• Loan term:The length of time you’ll take to repay the loan.
• Total cost:The total amount you’ll repay over the term of the loan.

Carefully assess your finances and consider what you can comfortably afford both monthly and over the entire term of the agreement. This is an important part in deciding which finance offer best suits your needs.

Choose the car

Once you've chosen a lender for your car finance application, it's time to focus on finding the right car, if you haven’t already chosen one. For more help and information, click through to read our other guides. This might be your first time financing a car or you might need guidance on how to decide on which car to buy.

Sign the agreement

After choosing the best offer for you, the final step in applying for finance on a car is signing the agreement. This is an important moment, so make sure you to take the time to read through the terms and conditions before signing.

• Understand your payment schedule: Make sure you know when your payments are due, how much you’ll need to pay each month, and the total amount you’ll repay over the term of the loan.
• Check for any fees: Be aware of any additional fees that might be included, such as early repayment fees, late payment charges, or fees at the start or end of the agreement.
• Know what happens if you miss a payment: It’s important to understand the consequences of missing a payment. This could include additional charges, a negative impact on your credit score, or even the repossession of your car in some cases.
• Ask questions: If you have any questions or concerns about the agreement, don’t hesitate to speak with the dealer, lender, or finance broker. They can help clarify anything you’re unsure about and ensure you fully understand your commitments before signing.

By thoroughly reviewing the agreement, asking questions, and understanding all the details, you can sign with confidence, knowing you’ve made an informed decision. Once signed, you’ll be ready to finalise your car purchase and start enjoying your new vehicle.

Collect your car

Once you've successfully signed your agreement and the lender has processed your application, you’ll be ready to collect your new car. This is an exciting moment, but before driving away, it is important to take the time to thoroughly inspect the car both inside and out.

• Thoroughly inspect the car: Take the time to carefully inspect the car both inside and out. Check for any signs of damage, wear, or issues that weren’t mentioned in the description. This includes checking the bodywork, tyres, lights, interior condition, and making sure all features and controls are working properly.
• Verify the car matches the agreement: Ensure that the car matches the details agreed upon in your contract, including the model, colour, mileage, and any additional features or extras.
• Report any issues immediately: If you notice any problems or if the car isn’t as described, it’s crucial to notify the lender or dealer right away. Addressing any issues before driving off the lot can help avoid complications later and ensure that you’re fully satisfied with your purchase.

By taking these precautions, you can drive away with peace of mind, knowing that your new car meets your expectations and is in the condition you were promised.

Apply for car finance today

If you need car finance to buy a used car, we can help. We offer HP car finance on a wide range of vehicles. To see if we can help you, call our friendly team on the free phone number above, or click through to apply for car finance with us.

Representative example

You could borrow £10,000 over 60 months with an initial payment of £490.66 (including £199 Admin Fee) followed by 58 monthly payments of £291.66 with a final payment of £490.66 (including optional £199 Option to Purchase Fee).

Total amount repayable will be £17,897.60.

29.3% APR, annual interest rate (fixed) 24.7%.

This example uses the representative APR. This is the rate at least 51% of customers are expected to get.

Lending is subject to status and additional affordability checks. Rates quoted are subject to change and will depend on lending amount and personal circumstances.

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