Guide
Compare Car Finance
Every type of car finance, side by side. Same car. Same borrower. Different structures. Different costs.
On a £15,000 car over 4 years, the difference between cheapest (bank loan at 4.1%) and most expensive (broker at 19.8%) is £9,420 in interest. Same car. Same term. The finance product you choose is one of the most expensive decisions in the process.
PCP vs HP vs Personal Loan
Three fundamentally different products. Each has a legitimate use case. Here's the full comparison on a £15,000 car, 48-month term, no deposit.
| Feature | PCP (6.9%) | HP (6.9%) | Bank Loan (4.1%) |
|---|---|---|---|
| Monthly payment | ~£195 | ~£354 | ~£340 |
| Balloon / final payment | ~£6,000 | None | None |
| Total amount payable | ~£15,360 + £6,000 | ~£16,992 | ~£16,320 |
| Total interest cost | ~£2,760 | ~£1,992 | ~£1,320 |
| Own the car? | Only if you pay the balloon | After final payment | From day one |
| Mileage limits | Yes (typically 8-10K/yr) | No | No |
| VT rights (Section 99) | Yes | Yes | No |
| Section 75A protection | Yes | Yes | No |
The bank loan wins on total cost. PCP wins on monthly cash flow. HP splits the difference — you own the car at the end without a balloon, but the monthly payment is the highest of the three because you're repaying the full balance without deferring.
PCP's low monthly payment is engineered, not earned. The balloon payment means you're either (a) paying £6,000 at the end to keep the car, (b) handing the car back and starting again, or (c) rolling into a new PCP deal — which is how dealers keep you in the finance cycle permanently.
Broker vs Direct
"Direct" means going straight to the lender: your bank for a personal loan, or the manufacturer's finance arm for PCP/HP. "Broker" means an intermediary like CarFinance247, Zuto, or Moneybarn who shops your application across a panel of lenders.
| Factor | Direct (Bank / Manufacturer) | Broker |
|---|---|---|
| Typical APR | 4.1% (bank) / 0-6.9% (mfr) | 10.9% - 30.7% |
| Credit requirements | Good to excellent (700+) | Accepts poor credit |
| Application process | Separate application | One form, multiple lenders |
| Speed | 1-3 days (bank), same-day (dealer) | Minutes to hours |
| Commission model | No intermediary commission | Broker takes margin from lender |
| Interest on £12K / 5yr | £2,460 (bank at 4.1%) | £6,540 - £18,420 |
The broker adds convenience and credit access. The cost of that convenience is thousands of pounds in additional interest. If you can get a bank loan, always check the direct route first.
New vs Used car finance
New cars get preferential finance because manufacturers subsidise the rates to drive sales. Used cars don't have this subsidy, so rates are almost always higher.
- New car PCP: 0% to 6.9% APR from manufacturer finance, on specific models. Mileage typically capped at 8,000-10,000/yr.
- Used car PCP/HP: 7.9% to 14.9% from dealer groups. Higher APR because no manufacturer subsidy and higher residual value risk for the lender.
- New car bank loan: 3.2% to 5.8% APR. The bank doesn't care if the car is new or used — the rate depends on your credit profile, not the vehicle.
- Used car bank loan: Same rates as new — 3.2% to 5.8%. This is the bank loan advantage: the rate doesn't change with the car's age.
This is why a bank loan on a used car can be significantly cheaper than dealer PCP on a used car. The dealer adds margin. The bank charges based on your credit risk alone.
The comparison most people skip
Everyone compares PCP vs HP. Almost nobody compares the total cost of dealer finance against a bank loan on the same car. Dealers don't volunteer this comparison because they earn commission on finance. The comparison is: total amount payable on dealer finance vs cash price + bank loan interest. Do the maths before signing.
Run your own comparison
Put in your numbers. The calculator shows total cost for any combination of price, APR, term, and deposit. Run it twice — once at the dealer's rate, once at the bank loan rate. See the difference.
Your details
PCP result
Total Amount Payable
£29,386.98
This is the total that leaves your account — deposit + all payments + balloon
Representative Example
Lender comparison
Here's how the major UK car finance companies compare on representative APR. These are the rates at least 51% of accepted applicants receive — not the advertised "from" rates.
Bank loan avg
4.1%
BoE benchmark
My Car Credit
10.9%
Broker
Zuto
18.8%
Broker
CarFinance247
19.8%
Broker
CreditPlus
23.9%
Broker
Moneybarn
30.7%
Subprime specialist
Related
Sources
- Bank of England IADB series IUMBV48: 4.1% avg personal loan rate, March 2026
- Consumer Credit Act 1974, Sections 99 and 75A
- Broker representative APRs accessed from lender websites, April 2026
- Finance & Leasing Association: motor finance new business data