Buying a car on finance: the seven things to consider before you purchase

With car finance being so flexible and customisable, it can often be difficult understanding what you need most.

Buying a car is a decision that should never be taken lightly. Not only are they a large expense but you should expect to own it for at least two years.

It's easy to forget about all the extras too. Once you have bought it, you have to think about the running costs and just how you and your family will need to use it now and in the future.

The likelihood is this will be your second most expensive purchase after your home, so it's critical you get it right and don't rue any decisions you make.

Car finance is definitely the most popular and valuable method of buying a car, with over 90% of new cars being bought on finance. 

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Obviously, there are even more important things to be considered when buying this way due to the implications missing payments can have on your credit score, but it certainly makes the most sense as the pros typically outweigh the cons as you can see in this article we previously wrote on the pros and cons of car finance.

Overall, buying a car can be a little daunting, especially if you are not 100% certain what it is you are after, so that's why we have created these considerations to ensure you know exactly what to look out for when you do come around to buying the next car of your dreams.

Make sure you can afford the monthly payments

This is one of the most important things about planning and budgeting for a car on finance. Circumstances can change in an instant, so you need to be certain that you'll be able to make the payments now and for the duration of the term. 

If you can't for whatever reason, the finance company will take back the car and your credit score and overall finances will take a big hit.

Our Affordability Calculator can help you plan for the future so you know exactly what you can afford before going ahead with a purchase.

Ask what happens if you struggle to make a monthly payment

Although missing a payment would be the absolute last resort, it's always good to ask in advance just so you know exactly what to expect if the worst was to happen.

The dealer may be able to give you some insight into what to expect and alternative solutions to save you the worry.

Compare the total cost of borrowing, including all charges over the full term of the loan

There will be plenty of deals available to you and car financing can be tailored to suit your needs and budget, so make sure you always compare what is out there before committing to a deal.

Beware of early repayment or other charges

It's very easy to get hung up on the car of your dreams at what appears to be a good monthly price. But it's also easy to forget that there could be hidden charges or excess fees to pay should you go over the mileage allowance in personal contract purchase plans and personal leasing.

Compare interest rates by looking at the APR

Compare the cost of credit between products and providers, especially the Annual Percentage Rate (APR). Typically, putting down a larger deposit will mean paying less APR, so certainly something to think about, especially if you have the money available to you upfront.

Think carefully before buying extra insurance

Dealers will typically offer you additional insurance to keep you and your car protected, but even if the offer sounds good, take a moment to consider whether you actually need it. 

Payment Protection Insurance (PPI) and GAP cover can be expensive and offer limited cover anyway. The idea of GAP is that if your car was completely written off, you would be protected if your car was in a negative equity position, but you may already have the required insurance through your personal insurance provider.

Will you be able to afford the car’s running costs?

The cost of running particular cars can be a lot more than anticipated, so you'll be in for a shock if you don't budget ahead of time. It's all well and good being able to afford the monthly payments, but if that leaves you too tight to be able to pay to actually drive it around, then that budgeting needs to be high on your priority list.


You are in control of your car finance and how much you borrow and pay each month. Ensure to shop around before getting yourself into an agreement as it is incredibly difficult to get yourself out of until you have paid off a certain percentage of the finance.

However, it is possible to get yourself out of a deal or refinance your car if need be. Use our Deal Checker to check your current car finance deal and the equity position your car is in.

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