What is car finance?

Buying a car outright isn’t the best option for everyone, which is where car finance can help by spreading the cost of a vehicle over a set period of time instead of in one lump sum.

Each type type of finance works slightly differently, below we’ve outlined how they all work to help you decide which is the best option for you.

How does car finance work?

All types of car finance involve borrowing money from a lender to cover the cost of the car you’re purchasing. You’ll pay an initial deposit and then regular installments throughout your agreed contract length. When the contract comes to an end, depending on the type of finance you’ve chosen, you may have the option to buy it or return it to the dealership.