There are many ways to get a car, and it can be confusing to work out the best option for you. Our guide will take you through what to consider before making a decision.
How to buy a car
Understand your payment options
There are a few different ways to buy a car. Some are simpler than others. It’s a good idea to understand the options before you jump in.
Follow these steps to work out what you need to do
What are the choices?
You can:
- buy a car with cash – usually a good choice if you have the money to spare
- borrow money – either through a personal loan or using credit
- get a car finance deal – this is what most car dealerships will offer you
- lease or rent a car – an option if you don’t want to commit to buying, or can’t afford to.
How does car finance work?
There are two main types of car finance.
Personal contract purchase (PCP)
This is a popular choice, and what dealers will often offer customers. However, the way it works is quite complicated.
You’ll pay a deposit up front, and monthly payments for an agreed length of time.
At the end of the contract, you’ll have the choice to make a large ‘balloon’ payment if you want to own the car.
Often, people will agree a PCP, and then at the end of the contract they’ll move onto a new PCP rather than make the final payment.
Learn more in our guide Buying a car with Personal Contract Purchase.
Hire Purchase (HP)
Hire Purchase is a simpler model, but not as popular.
You’ll pay a deposit up front, and monthly payments for an agreed length of time. However, there’s no balloon payment at the end – instead, you’ll own the car at the end of your contract.
Because you’re agreeing to buy the car at the end of the deal, the monthly payments are higher with an HP than a PCP. But you’ll definitely have a car at the end of the contract, whereas with a PCP you might not.
Learn more in our guide Buying a car with Hire Purchase.
Which is better?
It depends on what you’re looking for.
A PCP will suit you if you:
- want cheaper monthly payments, and
- want some flexibility on buying the car outright.
An HP is often better value overall, as you’ll usually pay a bit less in interest, and your monthly payments are far more likely to leave you with a car by the end.
What are the options for borrowing money?
If you’re looking to pay the full price upfront, but need to borrow money to do this, there are a few options.
Get a personal loan
You can get a personal loan to cover some or all the car’s cost. You’d then pay a fixed amount back every month, until the debt is cleared.
You’ll pay interest on the amount you borrow at a rate decided at the start of the agreement. Your repayments will last until the end of the loan’s term, usually one to five years.
You can get a loan from a bank or building society, but you’ll need to pass a credit check. Learn more about personal loans.
Get a 0% credit card
Paying with a standard rate credit card will usually be an expensive option, as their interest rates tend to be high.
Some companies offer credit cards with a 0% interest rate for a limited time. You’ll usually need a good credit rating to get these deals.
You could use a 0% card to pay some or all of the car’s cost. You’d then need to clear the debt within the 0% interest period, or shift the balance to another 0% deal (where you would usually pay a balance transfer fee).
You’ll need to work out the monthly payments needed to clear the debt within the 0% period. If you’re able to clear the debt in time, you’ll have paid it off at almost no interest.
However, after the 0% period the interest rate on your debt will be high. So make sure you’ll be able to repay if you’re choosing this option.
Paying any amount with a credit card also gives you an extra layer of consumer protection called Section 75.
Learn more about your options for borrowing money
What are the options for renting or leasing?
If owning the car isn’t important to you, another option is hiring a car. There are a few ways to do this:
Leasing with a Personal Contract Hire (PCH)
PCH is a way to hire a car for a few years. You’ll agree a contract length and make fixed monthly payments. There’s also usually an upfront fee.
You’ll be able to drive the car until the end of your deal, but will have a limit on how many miles you can do.
Leasing can often be cheaper than PCP or HP, but there’s normally no option to buy the car as part of the deal.
Learn more in our guide Leasing a car with Personal Contract Hire.
Car subscriptions
This is more of a short-term option than a PCH. You’ll pay a monthly fee, usually with no upfront cost, and then you can choose a car to drive.
Car subscriptions are usually more flexible, allowing you to change or cancel more easily and letting you trade for a different car more easily. However, they’re usually more expensive than a PCH.
You can compare car subscription dealsOpens in a new window
Renting a car or joining a car club
If you only need a car for a very short amount of time, renting one might be a sensible option.
Joining a car club is another option if you only need to use a car occasionally. You’ll pay a membership fee, and will then be able to hire a car when you need it.
There’s more information about car clubsOpens in a new window on Which?
Learn more about leasing with Personal Contract Hire (PCH)
How do the choices compare?
You’ll need to know the basics of each option to understand which is right for you.
Car buying options
| Purchase option | Upfront payments | Monthly payments | Final payments | Do you own the car? | Do you pay interest? | Credit check? |
|---|---|---|---|---|---|---|
|
Buying with cash savings |
The full cost of the car |
None |
None |
Yes |
No |
None |
|
Financing with PCP |
A deposit (usually 10% of the car’s cost) |
For the length of the contract |
A large final balloon payment, which is optional |
At the end of the deal, but only if you make the final balloon payment |
Yes |
Yes |
|
Financing with HP |
A deposit (usually 10% of the car’s cost) |
For the length of the contract |
A small admin fee, usually around £100 |
At the end of the deal, if you’ve kept up with payments |
Yes |
Yes |
|
Buying using a personal loan |
Usually none |
For the length of the agreement |
None |
Yes |
Yes |
Yes |
|
Buying using a 0% credit card |
Usually none |
Yes |
None, unless you can’t keep up with payments |
Yes |
You will if you don’t repay fully within the 0% period |
Yes |
|
Leasing with PCH |
Usually around 3-6 months of payments |
For the length of the agreement |
None |
No |
No |
Yes |
The right option for you depends on your own circumstances, so you’ll need to think about your own money situation.
Find out how to start with your budget
Start with your budget
You’ll need to work out your budget before you start thinking about buying a car. Having a budget means you’ll know exactly what you can afford.
Follow these steps to work out what you need to do
How much can you afford to pay up front?
It’s rare that you’ll be able to get a car without making some sort of large payment up front.
What you’ll need to pay depends on the car, and the type of deal you’re getting:
- Buying with cash – you’ll need to pay the whole cost of the car in one go.
- Borrowing money – you might not need to pay anything up front if you’re looking to borrow enough to cover the whole cost.
- Car finance – you’ll usually need to pay a deposit of 10% of the car’s value.
- Leasing – they’ll ask for three to six months of payments up front.
If you’re not sure you have enough yet, setting a savings goal can help you to meet your target.
Our Savings calculator can help you set your goal and work out what you need to save each month
How much can you afford to pay monthly?
Next, you’ll need to think about what you can afford in monthly payments. You’ll be making monthly payments unless you’re buying the car with cash.
Most agreements usually come with a fixed monthly payment. So there won’t be any unexpected increases in what you’ll need to pay over the course of your deal.
However, if you’ve used a credit card, you’ll need to work out your monthly payments yourself. Otherwise you’ll just be paying the minimum monthly repayment, which won’t clear the debt.
Using our Budget planner to work out what you can afford will give you an idea of which deals will work for you.
Which car-buying options have the cheapest monthly payments?
It depends on the car, the length of contract and what the dealer is willing to offer. Usually:
- Hire Purchase and loan repayments are about the same, depending on the interest rate you’re offered
- PCP payments are a bit lower, but don’t forget about that final balloon payment you’ll need to make if you want to buy the car
- Leasing tends to be cheaper than PCP, but with no option to buy.
But it doesn’t always work out this way. You’ll need to shop around and see what deals are available.
Use our Budget planner to work out what you could afford to pay monthly
Can you afford the running costs?
Purchasing the car isn’t the end of what you’ll spend. You’ll also need to pay running and maintenance costs, including:
- car insurance
- road tax
- fuel
- MOTs
- servicing and maintenance
- any repairs
- tolls and clean air charges.
The car you choose will affect how much you’ll pay for all of these. Make sure you research these costs and factor them into your budget.
A lot of the time, cars with lower running costs will be more expensive to buy. It’s worth researching to work out if this will be a better deal in the long run.
Our guide Costs of running and buying a car goes into more detail on all of these costs, and explains how different cars tend to affect each one.
It’s also sensible to have savings ready for any unexpected costs. There’s more information about how much to save in our guide Emergency savings.
Used or new?
It’s tempting to go for a new car. You won’t have to get an MOT for the first few years, and any issues are normally covered by a warranty.
However, be aware of ‘depreciation’, which is the name for how the value of a car gets lower over time. A new car depreciates very quickly, and can be half of its original value within a few years.
Used cars depreciate a lot less as they’ll be at a lower value to begin with. But they might cost you a bit more in running costs.
Learn more about the costs of running a buying a car
Work out your mileage
One more thing you’ll probably need to think about is how many miles you’re likely to drive the car every year.
You’ll usually have a mileage limit if you:
- finance a car with a PCP, or
- lease a car.
Going over the limit is a bad idea, as you’ll be given a penalty that can be quite expensive.
The limit is usually set at 10,000 miles, but you can negotiate a higher limit if you need it.
Try to add up all of your:
- regular trips, such as commuting and school runs
- long distance drives, like going on holiday or visiting friends
- other day-to-day needs, such as going to the gym or shopping.
It’ll give you a rough idea of how many miles you’ll drive, and this should help you decide if 10,000 will be enough.
Work out how long your regular journeys areOpens in a new window using the AA’s mileage calculator
Find out how to speak to the seller
Speak to the seller
When you have an idea of what car you want and how much you’d like to pay for it, the next step is making sure you get the deal you want.
Follow these steps to work out what you need to do
Buying from a dealer
Depending on the type of car you want, there should be a few dealerships to choose from. You’ll see their prices on the cars they’re selling – but they’re expecting you to negotiate.
Getting the best deal will usually take some haggling. You might be able to get lower monthly payments or pay less up front. Dealers might also throw in extras, like insurance or maintenance packages.
Most of the time, dealers will offer you a PCP. When they do, make sure they explain:
- the deposit
- the monthly payments
- the balloon payment at the end
- the amount of interest you’ll be paying
- the length of the contract
- your mileage allowance
- any rules about wear and tear
- whether servicing and maintenance are included.
If the deal they’re offering isn’t going to work for you, don’t be afraid to walk away.
Negotiating a good deal
You should always haggle when buying a car to make sure you’re getting the best price. Dealers will be expecting it, and are usually prepared to drop the price or add extras to your deal.
Here’re a few tips for haggling:
- Go in prepared – a bit of research on the car’s price online can be a good tool to use when negotiating.
- Start low – offer an amount lower than what you’re actually prepared to pay. This gives you some room to negotiate.
- Don’t give away your price – keep your top limit a secret, as you’re hoping for a better deal than this.
- Walk away – if you aren’t getting enough movement from your dealer, be ready to leave. The salesperson won’t want you to do this, and this might force a better offer.
Get further advice on haggling for a carOpens in a new window on MoneySavingExpert
Buying from a private seller
You might find that the car you need is being sold at a cheaper price by a private seller. However, buying privately comes with fewer options and added risk.
Your options for payment
You won’t be able to get PCP or HP when buying privately, so you’re limited to:
- buying with cash
- taking out a loan or credit to pay the seller in full.
Beware of any sellers who will offer you any other kinds of deals. They may be luring you into illegal lending.
You should also be careful of any sellers asking for money upfront, or for you to pay in advance by bank transfer.
Risks of buying privately
Unfortunately, it’s possible to be scammed when buying a car privately. You’ll need to check the car’s registration and documents to make sure it’s owned legally.
If something goes wrong when you buy a car privately, it’s harder to get a refund.
Private sellers must give an accurate description of the car they’re selling, but after that everything else is your responsibility.
MoneySavingExpert has a checklist for buying a used carOpens in a new window, which gives you an idea of the things you need to ask before making a deal with a private seller.
You can also check a vehicle’s statusOpens in a new window on GOV.UK. This will show you when its last MOT and Tax was, as well as if the licence plate matches the details the DVLA has.
Car history checks
There are services available that can perform a car history check. All you’ll need is the car’s number plate.
Companies offering a car history check include:
They usually cost around £15. They’ll find out if a car has been stolen or if there are any signs of mileage fraud, which is where a seller falsely lowers the car’s mileage to get a higher price.
Avoiding scams
Some scammers will target people buying cars, as it’s a quick way to get a large amount of money.
Here are a few tips to avoid being scammed:
- Avoid putting down a deposit before seeing the car. This is something scammers will do before disappearing.
- Ask to see the car at the seller’s property. Some scammers will want to meet you in a car park or similar, so you won’t know where they live if something goes wrong.
- Avoid deals that look too good to be true.
- Ask to see vehicle documents, such as the V5C logbook and MOT certificates.
- Be especially careful about buying cars listed on social media sites. Scammers will often upload pictures of cars they don’t own.
Find out more about how to avoid scams
Buying a car online
There are a few ways you can look at buying a car online.
Using an online broker
You could look at an online broker – they'll search a wide range of dealers to find you the best price on the car you’re interested in.
Use an online car retailer
There are plenty of online car retailers where you can purchase a car outright, or agree car financing. This can be a quick and convenient way to get a car, but you’ll usually have no option to negotiate price.
Find a private deal online
Sites like eBay, Gumtree and Facebook Marketplace will list cars from private sellers. It can seem like a convenient way to find a car from a private seller – but be very cautious. You’ll have a lot less protection if something goes wrong with your car, and you’ll need to be very wary of scams.
There’s some useful guidance about where to buy a carOpens in a new window on Which?
Learn more about what to watch out for in our guides on Scams.
Your rights when buying online
If you buy the car fully online, without going to the dealer to sign a contract or finalise payment, you’ll usually have the right to change your mind within 14 days and get a full refund. This is because it counts as a ‘distance sale’.
Most of the time you’ll need to speak to the seller to finalise the deal and pick up the car, so there’s a good chance your purchase won’t count as a ‘distance sale’, and you won’t get this 14-day cooling off period.
It’s best to check how the online dealer works and what you’re expected to do before finalising your purchase.
Learn more about what to watch out for when buying onlineOpens in a new window on Which?
Find out how to finish the deal
Finishing the deal
Once you’ve agreed a price and contract, there’s still a few steps left before you’re driving away in your new car.
Follow these steps to work out what you need to do
Pass a credit check
If you’re getting a car on finance or using credit, you’ll have to pass a credit check.
These credit checks are usually ‘hard searches’, meaning they’ll be on your credit file for six years. Sometimes they’re ‘soft searches’, but check with your dealer to be sure.
If you’re worried about your credit rating, view our guide How to improve your credit score.
If your credit application is rejected
If you’re turned down for credit, the dealer won’t go through with the deal.
The rejection will show up on your credit file, so it might be harder to get accepted for car finance if this happens.
You may need to wait before applying again or look at ways to improve your credit score.
The dealer might also offer you a guarantor loan, which is where someone else agrees to pay back the loan if you can’t. Learn more in our guide Guarantor loans explained.
If you’ve been refused credit, use our tool to get an action plan on what to do next
Pay with a credit card for extra protection
Once you’ve passed the credit check, you’ll just need to sign the contract and make your first payment. This will usually be your deposit.
No matter how you purchase your car, putting any amount of the cost on a credit card will give you an added protection. This is called Section 75.
It means that your credit card company will help you out if there’s a problem with your car, such as if something is wrong with it or it’s not as you expected.
Even if you just pay 1p on a credit card, you’ll get this protection as long as the car costs less than £30,000. However, some dealers won’t accept credit cards, so you’ll have to check with the company you’re buying from.
A debit card can also offer some protection
Paying by debit card also means you can ask your bank to reverse a transaction with ‘chargeback’ if a dealer is refusing your refund request.
Learn more about Section 75 and chargeback
If something goes wrong
If you think you’ve been charged too much or treated unfairly, you can complain to your provider and ask for a refund.
Our guide How to complain if you’ve been mis-sold gives you the steps to take if you want to use this option.
If you took out car finance before January 2021
If you agreed a PCP or Hire Purchase before 28 January 2021, you might have been mis-sold car finance.
The Financial Conduct Authority is investigating whether dealers have done anything wrong, and if complaints are being handled fairly.
You might be entitled to compensation. Read more in our post How to complain about mis-sold car finance.
If there are problems with your car
If something goes wrong with your car, you might have a legal right to compensation. This will depend on:
- when and where you bought it
- what the exact problem is
- whether you knew there was a problem when you bought it.
You might be able to get the cost of a repair covered, or a refund.
Citizens Advice have guidance to help you if you have problems with your car, if you’re in:
If you’re in Northern Ireland, you can find guidance on buying a new or used carOpens in a new window on nidirect