Car Buying

A Full Guide to Buying a Used Car on Finance

When it comes to buying a used car, especially a used one, there are a lot of things you need to think about. One of the biggest of all is how you’re buying it, or more specifically, whether you should be buying your used car on finance. There are a lot of different ways you can pay for them, but finance deals are one of the most controversial. It all comes down to the options available to you.

To help make your car financing situation easier, the best thing you can possibly do is to learn about the facts involved in the process. We’re running through each step of the car financing technicalities so that you have the facts to make an informed condition. We’re also weighing up the benefits and the disadvantages of what car financing provides, all to give you the clearest picture possible.

The Basics of Car Financing

Buying a used car on finance basically means that you’re paying for the preowned car on a monthly basis from the seller. The seller is essentially loaning you the car while you pay for it most of the time. You can pay gradually month on month, pay it off early, and for some of the schemes out like personal contract purchase, you’ll have a balloon payment at the end of it. They all do similar things, but the pricing is what really differs.

To understand which of these different finance methods is the best or if you should use them at all, you need to know what goes into how they work.

Personal Contract Hire

Personal contract hire is one of the biggest plans. That means you hire the car for the duration you use it, and then have the chance to buy it at the end of the scheme for a discounted price. The price will still be a bigger lump sum however as a result of the lower payments.

Hire Purchase

The next used car financing scheme is hire purchase, where there’s no balloon payment at the end of your finance deal. Instead, you’ll be looking at higher monthly payments instead, but that can be much easier for some people to keep the vehicle.

There are other options out there like getting a bank loan or buying outright, but they’re a different case altogether.

The Problems With Buying a Used Car With Finance

Buying a used car on finance sounds like a great thing then. It’s a way to purchase a vehicle in manageable instalments and you can tailor your package too. That’s true, but that doesn’t mean that it’s without issue. In fact, there’s a lot more to it.


One of the biggest drawbacks is the interest rates that go into them. When you buy a used car on finance, the interest rates can be pretty astronomical. This varies too, so there’s no one set rule guide out there you can follow to find the best deal. It could be worth shopping around to find the best rates on the plan to want to ensure you’re getting more for your money. It all has a big impact on the final figure the vehicle is costing you, and it’s always more than the value of the car.


When you’re using a finance scheme for your car from a dealer, one of the biggest problems is the lack of security that you pose to yourself. The car isn’t actually your property until the end of the contract. That means if things get tough, not only are you paying the high interest that comes with finance, but you can’t sell your car either. Any issues you missed or any damage that crept up even those that were there before you purchased it (without an inspection of course) will mean you still pay no matter what unless stated otherwise. You can give the car back to the dealer in a lot of cases, but all of the money you’ve already put into the vehicle is essentially lost.


Not only is the money situation harsh and you don’t own your car, but you also have limitations in place through your contract in some cases. It’s not uncommon for these kinds of contracts to cap your mileage or general usage of your car. If you missed these, you could be in serious trouble, and even if you didn’t miss them, they can be a huge issue. It can take a lot of the freedom away from you and your car even when you’re paying for it. That all goes towards costing you more money than you thought.

The Benefits

It’s not all doom and gloom when you’re buying a used car on finance, and it’s important to remember that too. There are some upsides which you don’t really get anywhere else. There’s a massive reason why they are so popular after lal, and they cna really open you up to a new world of driving if you make the most of them.

Protecting your savings

One of the biggest winners about financing any car, used or not, is that you can save your savings. If you take chunks out of them or even use them completely, it may take years if ever to put it back. If you need them again in the future, you’ll be high and dry and missing the interest too. It’s always better to protect your money where you can just in case the worst happens. Just remember it can cost you a little more for the convenience.

Part ex value

As we said, for some of the schemes, you can end them early or not pay the final sum. When that happens, you have some options to take. One of them is using the value of the vehicle or some of what you’ve paid to put towards a newer car from them, even on the same deal. That can be a great way to save you some money or get you started on a similar car without finance if need be. (Take a look here for more on part exchange)

A new car for less

Last but not least, one of the biggest attractions to buying a used car on finance is that you can get a car you otherwise couldn’t afford as easily. You can get a better car since you’re managing your payments, and that means things like cheaper insurance, less tax and better features too. There are upsides.

Finance Package Options

Lastly, you need to remember there are finance package options as well which can add more benefits to help your money go further. you have things like warranty extensions, service discounts, breakdown cover, gap insurance, paintwork protection… The list is pretty endless. It can be a huge list of things that you may well be purchasing separately anyway. IF you manage to find the right deal, you can actually save a little bit of money on here as well, and eliminate a lot of the risks that come with finance for just a small amount extra each month.

The Key Takeaway

So should you do buy a used car on finance? Well, it’s probably more expensive, but it may be safer to do. It has ups and downs, and it has to be your choice depending on you and your situation. You can usually get a much higher spec car than you could otherwise afford, but you do pay for the privilege as well.

No matter how you choose to buy a new car, used or not, you need to take care of your investment. Whether you’re just starting a new finance deal or you’re finishing one, make sure the car is performing as it should be. Protect your money, your car and yourself.

For more information, take a look at this guide from which

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