Our Pick Of The Best Car Loans In The UK
In the market for a new car? There are several options when it comes to finance, including a personal loan. You can borrow between £1,000 and £25,000 (sometimes more) with a personal loan at a fixed rate of interest over the agreed term.
We’ve rounded up some of the best car loan deals available (August 2024) on borrowing ranging from £3,000 up to £20,000. Bear in mind you’ll only be matched with these deals if you have a top credit score. However, applying through an eligibility checker won’t leave a trace on your credit report.
Car loans between £3,000 and £4,999
Car loans between £5,000 and £7,499
Car loans between £7,500 and £14,999
Car loans between £15,000 and £20,000
* Based on a settlement figure as set out under the Consumer Credit (Early Settlement) Regulations 2004. This states that if you have less than 12 months remaining of your loan, providers can charge up to 28 days’ interest. An extra 30 days’ interest can be added on if there is more than one year of the loan term remaining, taking the total maximum penalty to 58 days’ interest.
What's our methodology?
We looked at some of the best loan deals based on borrowing of between £3,000 and £20,000 with interest rate (measured by representative APR), as the primary factor. We also considered any perks, early repayment charges, borrowing terms and any late payment fees.
While loan deals are correct at the time of publication, rates and deals can change. The best deal for you will also depend on your credit score and personal circumstances.
What is a car loan?
Many providers list specific ‘car loans’ – but these work in the same way as other personal loans, just with the stated purpose of buying a car. You can find more on this with our FAQ section, below.
When you take out a personal loan, you’ll borrow a sum of money from a bank or other finance provider. You’ll then pay it back, with interest, over an agreed number of months. Most personal loans come with terms of one to seven years.
Why might you opt for a personal loan?
Buying a car using a personal loan can be advantageous compared to other kinds of borrowing (although always compare different finance options before going ahead).
Among the benefits of a personal loan is that you’ll receive cash into your account which gives you the freedom to buy the car from anywhere – privately, from a dealer, or direct from the manufacturer. In contrast with dealer finance you’re tied to buying a car from the range on offer.
If you buy a car outright with a personal loan you’ll also own the car from day one, as the loan will be completely separate to your car purchase. This means you can modify the car or sell it whenever you want (although you’ll still need to repay the loan, of course).
As the loan is unsecured, the lender can’t take possession of your car in the event you default on a payment. However, you should always make your loan repayments in full and on time. Failing to do so will damage your credit score, which lowers your chances of being accepted for credit in the future.
What other options are there?
It is important to consider some of the benefits of hire purchase or contract purchase plans on offer from car dealers. You can weigh up the pros and cons, as well as the relative cost of borrowing before making a decision.
Dealer finance can sometimes come with free annual servicing and the option to trade in for a new model every few years, for example, which won’t be possible if you pay for your car outright with a personal loan.
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