Should I Finance A Car? 6 Reasons To Love Car Finance

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Ah, Valentine’s Day. A day where we show our love for the people and things in our lives that deserve it. One such thing we want to share our love for is car finance which, for many people, is a great way to drive a new car, for a fraction of the cost.

Read our full guide which covers 6 reasons to choose car finance as your one true love this Valentine’s.


1. Flexibility at the end of your contract

Signpost for directions

Car finance, in particular Personal Contract Purchase (PCP) agreements, are a great option if you want flexibility. Namely because, at the end of your contract, you’ll be able to choose from three options when it comes to your car.

  1. Trade in your car for a new one. This is the most common option, and lets you use any positive equity you have in your car towards the deposit on a new one. In many cases. this is enough to knock a great deal off of the monthly payments of a better-spec model.
  2. Return your car and walk away. You may get to the end of your car finance contract and find that you don’t want to finance a new one. In this case, you can simply hand the keys back to the dealership or broker you originally got it from. You may even get some money for it’s worth more than what they said it would be at the start of the agreement.
  3. Buy your car. If you really like the car you financed, then you can buy it for a lump sum, known as the ‘balloon payment‘. Once you do this, you’ll own the car and won’t be responsible for monthly finance payments to car finance company.

2. Early termination an option after 50% of the payments have been made


Most finance product comes with the option of early termination, which is available if you come across hard times, or just have a change of heart and need to end your agreement early.

The same goes for car finance, but the process is made even easier for car finance. That’s because, as per the Consumer Credit Act 1974, you can end your PCP agreement early if you’ve paid at least half of the total amount of finance for the car.

Importantly, this includes the final balloon payment. For this reason, it’s unlikely that you will have paid 50% of the finance by the halfway point of your contract. However, it does mean that you have the option to return a car on finance without having to worry about paying large fees.


3. Affordable monthly payments for a brand-new car

Toy car resting on coins

Unlike when you buy a car, a finance option means you don’t have to pay a large upfront payment to buy the newest models.

Your payments will be split into fixed instalments, which will last for the duration of your agreement, usually between 2-4 years.


Moneyshake helps you find the best PCP deal on new and nearly-new Nissan models from manufacturer-approved dealers.


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4. Flexible deposit


The beauty of choosing to finance your next car is that you can be flexible with how much deposit you want to put towards the vehicle.

As a general rule of thumb, finance providers often recommend putting at least 10% of the purchase price of a car down as a deposit. So, for example, if you’re looking at a car that’s worth £15,000, a deposit of at least £1,500 is generally considered standard.

You are allowed to put more money down if you want to lower the monthly payments further. Just be aware that this is a non-refundable amount which is used to offset the cost of borrowing.


5. Manufacturer discounts available

Honda dealership UK

If you’re looking for bargains on your next new car, PCP finance is a good place to start looking. Most official dealerships tend to be manufacturer-approved and can therefore benefit from special discounts applied throughout the year by manufacturers.

Most manufacturers apply discounts to certain models sporadically throughout the year in order to increase sales. There’s no telling exactly when you’ll be able to make use of these discounts, but we advise that you keep on the lookout for special offers so that you don’t miss out on price drops.


6. Warranty included


All Moneyshake PCP finance deals are on new and nearly-new cars, meaning you’ll always benefit from the manufacturer warranty as standard.

This makes maintenance costs much more manageable, especially for unexpected faults. You won’t have to worry about paying for these issues to be fixed if you aren’t at fault – a garage will fix any mechanical or electrical issues free of charge as part of the warranty.


Want the best price on MOT, servicing or repairs? We’ve partnered with BookMyGarage to bring you instant deals in your area.


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Want to read more car finance guides for everything you need to know before comitting to a deal? Then head over to our guides page.