
How to Finance a Honda in the UK

Why People Finance a Honda
Honda remains a favourite among UK car buyers, blending reliability, efficiency, and modern styling. From the ever-popular Civic and CR-V to the compact Jazz and the eco-friendly e:HEV range, Honda’s line-up appeals to families, commuters, and first-time buyers alike. New models typically range from £18,000 for a Jazz to over £35,000 for a top-spec CR-V Hybrid. Even used Honda prices hold up well—an indicator of the brand’s robust reputation for longevity.
Yet, with the average cost of a new Honda above £25,000, outright purchase is often out of reach. Instead, many UK drivers turn to car finance. Options like PCP (Personal Contract Purchase) and HP (Hire Purchase) allow buyers to spread costs over two to five years, preserving cash flow and opening doors to newer, higher-spec models. Honda buyers, in particular, often choose PCP for its low monthly payments and flexibility, or HP for straightforward ownership.
Financing a Honda isn’t just about affordability—it’s about flexibility, convenience, and getting more car for your money.
Your Car Finance Options Explained
Navigating car finance can feel daunting, but understanding your main choices helps you make the right decision for your needs and budget. Here’s how the main options stack up for Honda buyers:
1. PCP (Personal Contract Purchase)
PCP is popular for new and nearly-new Hondas. You pay an initial deposit (usually 10% or more), followed by fixed monthly payments over 2–4 years. At the end, you have three choices:
Pay the balloon payment to own the car
Hand the car back (subject to mileage and condition)
Part-exchange for a new Honda
Pros: Lower monthly payments, flexibility at contract end, access to newer models.
Cons: Balloon payment can be substantial. You won’t own the car unless you pay it.
Example: “Honda PCP deals often feature lower monthly payments—e.g., a £25,000 Civic might cost £280/month over 36 months with a £9,000 final payment.”
2. HP (Hire Purchase)
HP is straightforward. After your deposit, you pay fixed monthly instalments over 2–5 years. When the term ends, you own the Honda outright.
Pros: Simple, no large payment at the end, full ownership.
Cons: Monthly payments are higher than PCP, less flexibility.
Example: “A used £18,000 Jazz could be financed for £340/month over 4 years with a 10% deposit.”
3. Lease or PCH (Personal Contract Hire)
With leasing, you pay to use the Honda, not own it. Contracts typically last 2–4 years. At the end, you simply hand the car back.
Pros: No ownership worries, road tax often included, hassle-free.
Cons: Mileage limits, no option to buy.
4. Personal Loans
Some buyers use a personal loan to purchase a Honda outright, then repay the bank over 1–7 years.
Pros: You own the car from day one, no mileage limits.
Cons: Rates depend on your credit score; may not be as competitive as specialist car finance.
How to Get the Best Deal on a Honda
Finding the best Honda car finance deals UK-wide is about more than just monthly payments. Here are practical steps to help you secure the right agreement:
1. Compare Lenders and Online Brokers
Don’t just rely on the dealership’s first offer. Use online car finance brokers like Kandoo to compare Honda PCP offers, HP agreements, and personal loan rates from a panel of lenders. This competition can drive down your costs.
2. Check Your Credit Score First
Before applying, check your credit file with Experian, Equifax, or TransUnion. A better score usually means lower rates. If your score is less than perfect, don’t panic—some lenders specialise in bad credit car finance for Honda buyers.
3. Negotiate Dealer Finance
If you prefer dealer finance, don’t be afraid to negotiate. Ask if they can beat other offers you’ve found. Sometimes, end-of-quarter sales targets or new plate releases (March and September) trigger extra incentives or reduced APR.
4. Consider Your Deposit Size
A larger deposit can lower your monthly payments and improve your eligibility. Aim for at least 10%, but 20% or more gives you extra bargaining power.
5. Time Your Purchase
Look for the best Honda finance deals during new plate months, year-end clearances, or when a new model is due. Dealers may offer additional discounts or 0% APR on outgoing stock.
Quick tips table:
Step | Why it matters |
---|---|
Compare offers | Get the best deal, save money |
Check credit score | Improve eligibility |
Negotiate at dealership | Extra discounts possible |
Increase deposit | Lower monthly payments |
Shop at right time | Special offers available |
Eligibility & Credit Check Tips
When applying for Honda finance, lenders consider several factors:
Income & affordability: Proof of regular income (payslips, bank statements) and sensible outgoings.
Employment status: Permanent employment is preferred, but self-employed applicants are considered with supporting evidence.
Credit file: Clean credit history is helpful, but not essential.
Deposit amount: A higher deposit can offset weaker credit.
Even if you have bad credit, Kandoo can help match you with lenders who may still approve your application. Sub-prime lenders often work with applicants with CCJs or previous missed payments—though you may pay a higher APR.
Top tips for improving eligibility:
Register on the electoral roll
Settle outstanding debts
Avoid multiple hard searches in a short time
Consider a joint application or guarantor if needed
Remember, applying through Kandoo uses a soft search with no impact on your credit score.
Example Finance Scenarios
Let’s put the theory into practice. Imagine you’re buying a 3-year-old Honda Civic, priced at £17,000. Here’s how PCP and HP might compare:
Finance Type | Deposit | Term | Monthly Payment | Final Payment/Ownership |
---|---|---|---|---|
PCP | £1,700 | 36 mo. | £220 | £6,500 (GFV) |
HP | £1,700 | 48 mo. | £340 | Own after final payment |
Scenario breakdown:
PCP: Lower monthly payments, but you’ll need to pay £6,500 (the “balloon payment”) to own the car at the end. Or, simply hand it back if you want a new Honda.
HP: Higher monthly payments, but you’ll automatically own the car after the last instalment—no large final payment required.
Personal loan rates will vary depending on your credit score, but expect similar or slightly higher monthly costs compared to HP.
Common Questions About Honda Finance
Can I get 0% APR on a Honda?
Manufacturers and dealers occasionally offer 0% APR on new Hondas, usually on specific models or during promotional periods. These offers often require a higher deposit and may be limited to shorter terms. Always compare the total cost, as cash discounts can sometimes work out better than 0% APR deals.
Is it cheaper to lease or finance a Honda?
Leasing (PCH) can offer lower monthly payments and less hassle, but you’ll never own the car. PCP and HP finance are better if you want eventual ownership. Calculate the total cost over your intended usage period, factoring in deposit, monthly payments, and any final balloon payment.
Can I get Honda finance with bad credit?
Yes. Many lenders cater to applicants with less-than-perfect credit. Expect to pay a higher rate, and consider increasing your deposit or opting for an older or lower-priced Honda to improve your chances.
Can I refinance my current Honda?
If you already have a Honda on finance, refinancing can help reduce your monthly payments or settle your agreement early. Speak to a specialist broker like Kandoo for tailored advice.
How Kandoo Can Help
At Kandoo, we work with a panel of trusted UK lenders to help you find the best Honda finance deals—whether you’re after a new or used model, have excellent or less-than-ideal credit, or simply want to compare the latest PCP and HP offers. Our process is quick, secure, and uses a soft credit search, so there’s no impact on your credit score.
Ready to make your next Honda more affordable? Compare Honda finance deals now →
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