Car Finance Deals in the UK 2025

Your clearest route to a smarter car deal

Buying a car on finance should feel straightforward, not stressful. Yet the choice is vast and the small print can bite. As a UK-based retail finance broker, Kandoo helps you compare options calmly and choose with confidence. This guide brings together the essentials of PCP, HP, personal loans and leasing, plus what to know about headline 0% APR offers that appear on select new models.

Understanding APR is not just about a percentage. It is about what you will pay in pounds each month and in total over the term. Sites like MoneySavingExpert outline how different products stack up on flexibility, ownership and costs. Price comparison services such as MoneySuperMarket and Compare the Market show representative car finance APRs starting from competitive levels for eligible applicants, though what you are offered depends on your credit profile and circumstances. Meanwhile, new-car marketplaces periodically feature 0% APR promotions on specific models, often with larger deposits, shorter terms or stock limits. These deals can be excellent value, but only if the total package suits how you plan to use the car.

PCP remains popular because it keeps monthly payments low and gives a choice at the end: pay the optional final payment to own the car, hand it back within mileage and condition limits, or part-exchange. HP spreads the entire price into fixed instalments and ends with straightforward ownership. A personal loan can be even simpler if you secure a low rate, since you pay the dealer in cash and own the car from day one. Leasing sidesteps ownership altogether in favour of predictable payments and returning the car at term end.

The right choice rarely hinges on APR alone. Consider deposit size, mileage, early settlement rules, wear-and-tear charges, and the car’s likely depreciation. Factor in insurance, servicing, tyres and road tax. Build a total cost view that fits your budget today and gives room for life’s what-ifs tomorrow.

A great deal is not just the lowest rate. It is the right structure for how you drive, keep and fund your car.

If you want a measured, informed way to compare, Kandoo can help you explore finance options from multiple lenders, then apply without pressure. Below, we set out the key terms, choices and checks that experienced buyers use to secure value without surprises.

Who will benefit from this guide

If you are in the UK and planning to finance a car within the next 12 months, this guide is for you. It is designed for first-time buyers navigating PCP and HP for the first time, as well as experienced drivers weighing up a switch to leasing or a personal loan. It is also useful if you are eyeing a 0% APR new car promotion and want to understand the trade-offs, from deposit size to optional extras. Whether your credit file is thin, average or strong, you will find practical steps to improve eligibility and reduce overall cost without cutting corners on consumer protections.

Jargon, decoded quickly

• APR: The annual percentage rate covering interest and most compulsory charges. Compare deals on APR to judge cost.

• Representative APR: The rate at least 51% of accepted customers receive. Your personal APR may differ.

• PCP: Personal Contract Purchase with lower monthly payments and an optional final payment to own.

• Optional final payment: The balloon amount due to buy the car at the end of PCP.

• GMFV: Guaranteed Minimum Future Value used to set the PCP final payment and protect against market dips.

• HP: Hire Purchase. Fixed monthly payments that lead to ownership after the last instalment.

• Lease (PCH): Personal Contract Hire. You rent the car and return it at term end.

• Deposit: Upfront amount reducing monthly payments. Sometimes called advance rental on leases.

• Term: Length of the agreement in months, typically 24 to 60.

• Early settlement: Paying off finance before the term ends. Check fees and interest calculations.

• Excess mileage: Charge per mile if you exceed your agreed limit on PCP or leases.

Your main routes to the driver’s seat

1. PCP - flexible end choice

   • Lower monthly payments than HP on the same car. At term end, pay the optional final payment to own, hand back within limits, or part-exchange. Good for people who change cars regularly.

2. HP - simple path to ownership

   • You finance the full price across the term. Payments are higher than PCP, but you own the car outright after the last instalment. Suited to keepers and higher-mileage drivers.

3. Personal loan - own from day one

   • Borrow from a bank or lender, pay the dealer in cash and own the car immediately. Strong credit may secure a competitive rate. No mileage limits, but discipline is required to avoid over-borrowing.

4. Leasing (PCH) - use, not own

   • Fixed monthly rentals for a set term and mileage. You return the car at the end. Often includes road tax and can bundle maintenance. No equity, but low hassle.

5. 0% APR manufacturer offers - headline savings with conditions

   • Seen on select new cars. Often require larger deposits, shorter terms or specific stock. Total value can be excellent if the car and deal fit your needs.

What it could cost, and what it means

Who can qualify and when

Lenders assess affordability, credit history and stability. A clean repayment record, registered electoral roll entry and consistent address history usually help. Proof of income is standard, with more scrutiny for variable or self-employed earnings. Deposits reduce risk and can open better rates, especially on PCP and HP.

New-car 0% APR offers often come via manufacturer finance on specific models and trims, sometimes tied to stock and set mileages. These can be attractive if you are comfortable with the deposit, term and any bundled extras. If your credit file is developing or recently impacted, approvals may still be possible at higher APRs or with a larger deposit. Always check how early settlement works, particularly if you anticipate a job change or moving house.

From browse to drive in easy steps

1. Set a monthly budget including insurance and running costs.

2. Check your credit file and correct any obvious errors.

3. Decide ownership goals: keep, swap, or simply use.

4. Compare PCP, HP, loans and leasing side by side.

5. Get indicative quotes and confirm total payable costs.

6. Review mileage limits and early settlement terms carefully.

7. Apply through Kandoo for lender-matched finance options.

8. Sign, collect the car, and keep documents safe.

Weighing it up at a glance

The checks smart buyers never skip

Take time to compare total payable amounts, not just monthly figures. Confirm fees, including documentation, option-to-purchase and early settlement charges. If you choose PCP or leasing, set a realistic mileage to avoid excess charges and keep maintenance up to date to protect the car’s return condition. Evaluate any 0% APR offer in the round: the deposit, term, included services and the value of any part-exchange. If you are tempted by a longer term to cut monthly costs, be sure the car’s age and warranty cover remain aligned with your ownership plan. Small details today prevent big costs tomorrow.

If this path is not the perfect fit

1. Delay the purchase and build a larger deposit to improve offers.

2. Consider a slightly older car to reduce depreciation and monthly cost.

3. Improve your credit score, then re-quote for potentially better APRs.

4. Explore salary sacrifice schemes for eligible electric vehicles.

5. Look at car sharing, short-term hire or subscription services.

Common questions, clearly answered

Q: Are PCP and HP cheaper than a personal loan? A: It depends on your credit profile and the rates available. Comparison sites show competitive car finance and personal loan rates. Always compare total payable and flexibility.

Q: What is a representative APR and why does it matter? A: It is the rate at least 51% of accepted applicants receive. Your personal rate can be higher or lower based on your circumstances.

Q: Are 0% APR new car deals truly free? A: The finance cost can be near zero, but terms may require a larger deposit, specific models, shorter terms or limited stock. Check total cost, not just the rate.

Q: Can I settle my finance early? A: Usually yes, though fees and interest calculations vary by product. Ask for an early settlement figure before deciding.

Q: Will mileage limits affect me? A: On PCP and leases, yes. Exceeding limits triggers per-mile charges. Choose a realistic allowance that fits your driving.

Q: How do Kandoo help? A: We are a UK retail finance broker. We help you compare options from multiple lenders, matching your needs with suitable finance products.

Ready to compare like a pro

Gather your budget, mileage expectations and credit report, then line up real quotes for PCP, HP, personal loans and leasing. Use trusted resources: MoneySavingExpert for guidance, MoneySuperMarket and Compare the Market for representative rates, and manufacturer sites for current 0% offers. Kandoo can help you compare lenders and structure a plan that suits how you drive and how you budget.

A quick note on fairness and sources

This guide references widely used UK resources for context: MoneySavingExpert on car finance guidance, MoneySuperMarket and Compare the Market for comparing representative APRs, and new-car marketplaces that list time-limited 0% APR promotions on specific models. Offers change frequently. Always check current terms before you commit.