Are you on the lookout for the right financing option to fund the purchase of a new or used car? If so, you may have come across the terms “car finance broker” and “car finance lender”. It’s understandable that there could be some confusion around the differences between the two and why one is preferred than the other.

Simply put, car finance lenders are ultimately those responsible for lending you the money necessary to purchase your vehicle. After your agreement is signed, it’s to them you’ll owe money and to them you’ll make your repayments.

Car finance brokers, on the other hand, are like middlemen who specialise in finding the very best deal for you. Often furnished with an extensive network of lender options, they can trawl the market to find several different products that meet your specific needs.
Regulation means car finance brokers have a duty to explain these to you fully, provide you clear and transparent information and ensure you receive the very best possible outcome to meet your needs. Their role is to assist you in sourcing your car finance, although they do not actually provide the finance themselves.

No deposit? No problem! Yes, you could get car finance with no deposit.

If you’ve found the car of your dreams, or yours has just reached the end of its life, you don’t need to dip into your savings or wait until you’ve built up a nice nest egg to buy a used car.

We work with numerous lenders that can offer £0 deposit car loans for new or used cars.

With the latest data from YouGov revealing 41% of British adults have missed debt repayments at some point in their lives, poor credit history is more common than many may think. There’s a shared belief that poor credit history can have a negative impact on your ability to secure car finance. While there is an element of truth to this, as it may reduce your options, lesson the maximum amount you are allowed to borrow and increase the % APR on the interest you pay, it doesn’t mean you won’t be accepted for a car finance loan.

So don’t lose heart – with the right broker such as Connect Me Car Finance working for you it can often still be done.

Whether you’ve made the decision to retire, leave work to focus on childcare, or found yourself temporarily out of work, being unemployed can make it more difficult to find car finance. But that doesn’t mean it’s the end of the road.

Connect Me Car Finance recognise that a car can be an essential when you’re unemployed. It may be to get the kids to school, essential hospital appointments or attend interviews if you are trying to get back into employment.

The good news is that Connect Me Car Finance work with a panel of lenders, which means we can source finance for people with a wide variety of circumstances, often including those who are unemployed, receiving a pension or solely dependent on benefits.

‘Yes you could’ is the short and simple answer if you’re self-employed and looking to secure car finance. In the same way had you been an employed applicant, if you can prove your income and the lender is satisfied with your ability to repay the loan, your credit history and validates your personal details, residential status, driving licence, etc then being self employed should not disadvantage your application.

For a traditional HP or PCP Regulated Agreement, Connect Me Car Finance require Full UK, Provisional UK, EU or International driving licence. Alternatively in some instances where the applicant has no licence it is possible to fund your purchase with a Personal Loan Agreement.

In addition to your driving licence signature, dependant on the most suitable lenders criteria you may be required to provide proof of income, often by way of open banking permission, wage slips or bank statement and proof of residency by way of utility bills, rental agreement or similar. Your dedicated Connect Me Car Finance agent will gladly be on hand to assist with exact requirements.

The Annual Percentage Rate (APR) is the cost you pay each year to borrow money, including any fees, expressed as percentage. This will vary from agreement-to-agreement dependant on the strength of your credit rating and your chosen length (term) of agreement.

Having completed their due diligence on your application Finance companies apply a rate that reflects the level of risk they see when advancing you the amount required towards your purchase. It could range between 9.9% APR (Excellent credit) to 49.9% APR (Bad credit) but will always be clearly highlighted and explained to you in your pre contract agreement, prior to you choosing to enter into any agreement. Connect Me Car Finance representative APR is 21.9% which means 51% of our customers receive a rate that equal to or lower than this.

Connect Me Car Finance Ltd work with a number of carefully selected credit providers who may be able to offer you finance for your purchase. We do not charge you a fee for these services. Whichever lender we connect you to, we will receive a commission from them (either a fixed fee or a percentage of the amount you borrow). These lenders will commission at different rates. However, the amount of commission we receive from the lender does not affect the amount that you pay under your credit agreement. For further policy details on privacy, complaints and distance selling please see our ‘Policies’ section.

Connect Me Car Finance Ltd is authorised and regulated by The Financial Conduct Authority, FRN 985297. Our ICO number is ZB510582. For further policy details on privacy, complaints and distance selling please see our ‘Policies’ section.

New or used car are often purchased using finance agreements. Of which Hire Purchase (HP) or Personal Contract Purchase (PCP) are the two most commonly forms. Both these types of agreement allow you to purchase a car by making monthly repayments over an agreed period rather than one up front lump sum.

Below, we explain the difference between HP and PCP, including how finance is structured for each and offer guidance on which type of agreement may better suit your circumstances.

Structure of Agreements

A fundamental consideration when you purchase a new or used car on finance is whether you wish to own the vehicle outright at the end of the agreement as this is a key difference between the 2 products as explained below.

• Hire Purchase: when you take out HP finance, you agree to repay the total value of the car, plus interest, over a fixed term. This means, once your finance period has ended, you have covered the complete cost of your vehicle and it’s yours to keep.
• Personal Contract Purchase: when you take out PCP finance, you agree to pay the depreciation of the car, plus interest over a fixed term. This means, once your finance period has ended, you can either choose to return the car or pay a final ‘balloon payment’ to cover the remaining value and then keep the car.

HP repayments cover the complete cost of the car over an agreed period, meaning the monthly amount payable will be a portion of the vehicle’s value (plus interest). On the other hand, PCP repayments only cover the depreciated value of the car, potentially making monthly repayments lower over the same period.

Length (term) of Agreements

HP repayments are made over 36-60 months; PCP repayments are made over 24-48 months; however, the term of the agreement is dependent on your own individual requirements and circumstances.

Ending a HP or PCP finance agreement early

When entering either type of car finance, it’s important to clearly understand whether you’re able to end your agreement early. This may be required for a range of reasons, from changes in personal circumstances, to your job no longer requiring you to have a car.

Fortunately, both types of agreement allow you to settle your finance early – some lenders may require you to have paid at least 50% of the loan amount. You’ll need to get in touch with your lender directly, and they’ll provide you a current settlement figure and advise of the next steps.

Two factors to consider include:

• If you are coming towards the end of your HP finance agreement, it may be worthwhile to settle the remaining value rather than end the agreement early. This way, the car is yours outright and you can either sell it or trade it in for a new vehicle.
• If your vehicle is currently worth more than you owe in repayments, it might be worth trading it in (rather than terminating the contract) and putting the positive equity towards a new car deposit.

HP vs PCP: which is right for me?

Now you know the core differences between HP vs PCP, including how each finance plan is structured and whether you own the car outright at the end of the agreement term, it’s time to consider which is best suited to your circumstances:

Conditional Sale (CS)

At Moneybarn, we use a Conditional Sale agreement for car finance. This means that you are the registered keeper of the vehicle for the term of the agreement. Once you’ve made your final repayment, the lender will transfer the vehicle into your name. This means that you will legally own the vehicle at the end of the CS agreement.

With CS, you will make fixed monthly repayments over an agreed period. CS agreements usually last between 12 and 60 months. Our agreement terms are between 36 and 60 months.

A deposit is often required, but it depends on your personal circumstances such as affordability.

Advantages of Conditional Sale:

• There may be a low or no deposit at the start of the agreement
• The interest rate is fixed, meaning you know exactly what you can expect to pay back every month
• At the end of the agreement, you will own the vehicle – there is no balloon payment
• CS finance is secured against the car. If you are unable to make the monthly repayments, you can give the car back to contribute to the money owed to the lender.

Disadvantages of Conditional Sale:

• Monthly repayments can be higher than other car finance types, such as PCP. However, you won’t automatically own the vehicle at the end of other types of agreements
• You have less flexibility with what you do with the car at the end, as you are automatically the vehicle owner – there is no option to switch to another car, for example
• The agreement is secured against the car, so your car could be repossessed if you don’t meet your monthly repayments
• You can’t sell or modify the car without the lender’s permission.

What are the next steps?

Whether you’re considering HP or PCP, see how much you can borrow by inputting your details into our quick and simple finance calculator, which takes your monthly budget, repayment period, and credit score into account.

At Connect Me Car Finance, once your finance has been approved, you’re free to choose a vehicle from any reputable dealership.

To simplify your search we have our own online used car search, where you can browse over 50,000 vehicles from trusted dealers across the UK. Once you’ve applied online and been approved you can use our car search in your personalised members area to view the vehicles that match your approval, including accurate repayments and % APR.

What’s a reputable dealership?

While cars of all ages can develop faults, we prefer to mitigate the chances of this by working closely with AA Approved, RAC Approved, 5 star reviewed, well established dealerships with good vehicle preparation standards and aftersales reputations, where in the then less likely event of encountering any problems, they are efficiently remedied.

Advanced technology and integrations with lenders ensure we can generally get a decision on your finance application with 60 seconds. Applicants that can quickly provide any necessary proofs and choose their vehicle are often able to collect the purchase or have it delivered within 48 – 72 hours from initial application.

If you want a new car but don’t want the hassle that comes with selling your current car privately, a part-exchange could be a favourable option. Part-exchange allows you to trade in your current car and put the proceeds towards the purchase of a new one. It’s generally a more convenient process than selling privately. Often less time consuming, avoids time wasters, haggling and the risk of scammers not fulfilling the agreed payment terms.

Yes, this is a common practice and Connect Me Car Finance can arrange this on your behalf. It is always useful to get the settlement figure of your existing agreement prior to choosing your new vehicle. Your existing lender should be able to provide this on their Customer Services telephone number and confirm in writing by email.

Generally, the finance company will take your first payment via direct debit 30 days after the date you sign the agreement, which is often the day you collect your new car. On some occasion this period can be extended to 45/60 days before first repayment.

Whatever form of finance you may have taken out, you would have agreed to make repayments generally over a 2 to 5 year period, but a lot may change in that time. Here’s what to do if your circumstances change and you can’t afford to pay your car finance.

What can I do if I have a car on finance and can’t afford it?

If you can no longer afford the repayments on any credit agreement, the first thing you need to do is get in touch with your lender and explain your situation. Although solutions will vary between lenders, you might be able to reach an agreement that allows you to keep the car.

Once your lender knows more about your current situation, they will be able to advise you of your options, which will depend on the length of time left on your contract, the amount owed, and the type of finance you took out.

What if I can’t afford my HP or PCP finance?

If you’ve taken out either a Hire Purchase or PCP Car finance agreement, you may be able to activate your voluntary termination rights of your contract if you’ve paid off half the total amount payable. This means you can hand back the vehicle with nothing more to pay. If you’ve paid off less than 50%, you can still return the car but will remain liable for the amount owed to make up the shortfall.

What if I can’t afford repayments on a personal loan?

With a personal loan, an option might be to sell the vehicle and use the funds to pay off the loan amount. If you’re not in a position to sell your car due to work commitments as an example, then you’d need to speak to your lender about what options are available to you.

What happens if I can’t pay my car finance?

If none of the above options are available to you, your lender may take the following steps:

• Send a payment reminder – If you miss one payment, your lender will send a reminder to let you know your payments have fallen behind.
• Send an arrears notice – If you miss two or three payments, your account will then be in arrears and your lender will send an arrears notice. This notice will outline how much you owe and how to make repayments. Your lender will continue to send arrears notices at intervals of at least six months until you have paid off the arrears or they have obtained a court order.
• Send a default notice – If you don’t respond to arrear’s notices, your lender can send you a default notice. This will give you up to 14 days to clear the arrears before the agreement is terminated and any further action is taken. This could include recovery of the car and/or an application by the lender for a County Court Judgement against you.

Within the terms of finance agreement, the finance company can repossess your car without a court order if you’ve paid less than a third of the total amount payable, including interest and any deposit.

Connect Me Car Finance guidance would be speak to your lender as soon and as honestly as you can outlining your change of circumstances. As responsible lenders they will work with you to try and find a mutually acceptable solution.

Also if you are experiencing financial difficulties other sources of free impartial advice include MoneyHelper (formerly the Money Advice Service), Stepchange, or Citizens Advice – for free, impartial advice.

We partner with a large panel of lenders who finance cars and vans. We can also provide finance for more specialist vehicles, so whatever you have got in mind, apply online or give us a call on 01384 212144 and we’ll gladly assist.

We understand that some customers have already found their vehicle and just require the finance to purchase it – this is fine and Connect Me Car Finance can help if the vehicle and selling dealer meet our lender and dealer criterias. However, most customers come to us without a specific vehicle in mind. This is also no problem and something Connect Me’s car buying specialists can help with once you’ve been pre-approved for car finance. Once you apply with Connect Me, you will have access to your personalised online members area, where you’ll find thousands of vehicles across the UK. These will be from reputable Connect Me Approved dealerships. When you find your perfect choice and are happy with the repayments leave the rest to us.

At any stage you can also talk to your dedicated buying expert if necessary to help with your car search on 01384 212144.

Yes – All Connect Me Car Finance vehicles are HPi clear, and a certificate of proof can be provided whenever requested. This ensures you can purchase with confidence, in the knowledge your new vehicle has never been written off, been stolen/recovered and had no outstanding finance secured against it.

Yes, all cars under 3 years old will have the balance of the car manufacturer warranty.

As a minimum, each car will have a standard mechanical, electrical, parts and labour warranty up to 3 months. Vehicles sold under manufacturer approved used car programmes by franchised dealers usually have longer warranty periods with 1 year as standard.

You we also offered the opportunity to upgrade your warranty, which can also be done online.