Getting vehicle finance: a step-by-step guide

Getting finance for a car, van, pickup, motorbike or motorhome follows the same basic steps, whoever you borrow from. Knowing them before you start helps you get a fair deal, avoid unnecessary credit searches and spot the costs that aren’t in the headline monthly payment. This guide takes you through the process from setting a budget to signing.

Step by step

1. Work out what you can afford. Start with your monthly budget, but also look at the total cost: deposit, monthly payments, any final payment, insurance, tax, fuel or charging, servicing and tyres.
2. Check your credit files. Look at all three credit reference agencies and fix any mistakes before you apply. See what credit score you need for car finance.
3. Choose the type of finance. The main options are hire purchase, PCP, leasing and personal loans. See PCP vs HP for the most common choice.
4. Get your documents ready. Usually your driving licence, proof of address, proof of income and bank details. See what documents you need.
5. Compare quotes with soft searches. Eligibility checkers and quote tools that use a soft search don’t affect your credit score.
6. Apply. A full application leaves a hard search on your credit file. Try not to make several in a short time.
7. Read the agreement before you sign. Check the APR, the total amount payable, any final payment, the mileage limit and the fees.

What lenders look at

Each lender has its own criteria, but most look at:

• Your credit history: how you’ve managed credit before, and any missed payments, defaults or CCJs
• Affordability: your income against your regular spending and other debts
• Stability: how long you’ve lived at your address and been in your job
• The vehicle and the deal: its age, value and mileage, and the size of your deposit

No lender can promise you’ll be accepted. If you’ve been turned down, see refused car finance.

Who you can get finance from

• The dealer. Most dealers arrange finance through one or more lenders. They’re acting as a credit broker and may earn commission, which they should tell you about.
• A broker. A broker compares several lenders for you. Check whether there’s a fee and how they’re paid.
• A lender directly. Some lenders deal with customers directly, and banks and building societies offer personal loans.

Whoever arranges it, the agreement is with the lender, and the lender is responsible for the agreement. Dealers and brokers that arrange finance must be authorised by the Financial Conduct Authority. You can check the FCA register.

Before you sign

You should receive pre-contract information explaining the key features of the agreement. Read it, ask about anything you don’t understand, and don’t feel rushed. With most regulated agreements, you also have 14 days after signing to withdraw from the credit, but you’d need to repay what you borrowed.

Guides in this section

• What documents do you need for car finance?
• What credit score do you need for car finance?
• Refused car finance? What to do next
• PCP vs HP: which is right for you?
• Car leasing explained

If your situation is less straightforward, see bad credit car finance, self-employed vehicle finance or car finance on benefits.

Getting finance FAQs