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Car Loans are a cheaper form of vehicle finance

Personal loans of up to £25,000 for your next car

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Loans for a Car

  • Borrow up to £25,000
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Car Loans - Personal Loan to Buy a Car

If you need to change your car you might be considering car finance - most cars, especially new ones, are now bought this way.

But the more traditional personal loan should not be ignored if you are thinking about other ways to pay for your car. It has a number of advantages (see right) of which being the cheapest way of borrowing being the most important.

Why use a Car Loan?

  • Likely to be the cheapest way overall of borrowing
  • Can be combined with cash to pay for your car
  • You own the car immediately
  • You can buy your car from anywhere

Best Personal Loan for a Car

The best loan for you will be one that:

  • meets your requirements in terms of loan amount and preferred repayment period
  • is affordable given your monthly income and your other monthly bills and expenses
  • is the cheapest APR% given your particular credit history
  • doesn't have onerous "small print" - which means you'll need to read the lender's terms and conditions.
If you want to get a sense of how much your loan could cost and what varying the loan amount and repayment term could mean for your repayments try our loan calculator.
When taking on any new finance it is always sensible to consider what you would do if you were suddenly made unemployed. How would you meet the monthly repayments? Could you get yourself out of the loan agreement or repay the balance early (e.g. by selling the car)?
A personal loan is almost certainly more flexible than PCP car finance when it comes to getting into financial difficulties - but read the terms and conditions before you sign the agreement just to make sure.

personal loan for your next car 

PCP or a Personal Loan to buy a Car?

PCP (Personal Contract Purchase) has, along with Hire Purchase, rapidly become the predominant method of financing a new or replacement car. In fact around 80% of cars are bought this way! But this popularity doesn't mean it's the best way to get your next vehicle! PCP is "pushed" hard by both car manufacturers and car dealers for two major reasons:

  1. You can drive a new car every few years - and everyone likes the idea of a new car!
  2. Paying a fixed amount each month is an easy message to get across in an advert - and it makes it sound cheap.

So you might be surprised to hear that the Government's Money Advice Service says:

"Personal Loans are usually the cheapest way to borrow over the long term."

And there are other reasons why a personal loan as your car loan could be better than car finance:

  • You own the vehicle from the start - PCP leasing is effectively long-term rental and you only get the opportunity to own the vehicle if you make a final large payment at the end
  • You can buy any car from anywhere - including from private sellers
  • If you get into financial difficulty you can always sell the vehicle - it's yours after all
  • There are no limits on your annual mileage - and no penalties if the limit is exceeded
  • You can modify the car in any way without getting permission
  • You don't have to keep the vehicle in good condition (though obviously that will lessen its value)
  • You don't have to get permission to take your car abroad on holiday

Here's a simple table that compares contract hire, PCP, HP and unsecured car loans.

All About Personal Loans

Representative Example

Loan Amount


Monthly Repayment


Loan Term

48 mnths

Total Repayment


Rate of Interest p.a.


Representative APR


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