A Brief Guide to Vehicle Loans.

Lots of people require a personal loan to help buy a vehicle, whether this is a new car, a van for work or even a motorbike or scooter.

As a broker, we can help provide you with the funds you need to make that purchase.

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Understanding Vehicle Loans

What you will need to consider before applying for the finance is your budget, what can you realistically afford for your new vehicle. You will need to contemplate the repayments, how much it will be on fuel consumption, insurance premiums and not forgetting ongoing maintenance.

A lot of individuals prefer to purchase a used vehicle rather than buying a new one. The previous owner will have seen the principal amount of depreciation (reduction in initial value), which can give you the most worth upon purchase. You will get the vehicle at a lower cost, see less depreciation and possibly pay less on any insurance premium.

Buying a vehicle is a big commitment so you will want to ensure that what you are purchasing is worth it. Get together a checklist, there are many good examples on the internet, these are specifically aimed at used vehicles, this article from the AA is good place to start.

You’ve done all of the relevant checks and have made the decision to purchase the vehicle, the next step is to decide on how you want to finance the purchase. Please have a look at the funding options below and FAQ’s to help you in your choice.

Buying a vehicle outright with an unsecured loan can be a convenient way of making your purchase. Unsecured loans are generally repayable on a monthly basis at a fixed rate of interest.

They are not linked to any security, such as your property, or the vehicle itself, hence the use of the term unsecured. You will know how much you are paying each month, the APR and if you want to settle the loan early, you can.

If you buy a vehicle on hire purchase, you will only own the vehicle after the majority of the credit has been repaid. There is one other thing to remember with hire purchases - you don't even have to buy the vehicle outright. So long as you have paid at least 50%, you will be able to give the vehicle back and you will owe nothing else.

This is just a glorified term for renting the vehicle. In many cases, you will not have to worry about M.O.T's or repairs as this is generally included in the lease agreement dependant on the and type of lease you chose. At the end of the lease, you return the vehicle. One important thing to look for is the amount of miles you are restricted to each year, ensure it is enough for your needs. If you go over the mileage they will charge you a predetermined amount per mile, so it can be very expensive.

If you have a vehicle already, give it a good clean inside and out when you go to part exchange it. This can make a large difference to the price the dealer will give you. Most places will part exchange your old vehicle against another vehicle. You can always try to sell your vehicle privately first, as you will normally get more for it.

Contract hire for business vehicles means that you lease brand new vehicles for a fixed monthly fee, agreed at the start of the contract. At the end of the contract (usually 2 or 3 years), they collect the vehicle. You may then lease another new vehicle – this means that you are always driving a new vehicle.

The benefits of leasing your company vehicles through contract hire include the ability to stick to a fixed monthly budget, in addition to tax and VAT advantages.

Contract hire for personal use is similar to business contract hire, and is specifically designed for the private user. If you lease a new vehicle through personal contract hire, you pay a fixed monthly fee for the life of the contract – and at the end they collect the vehicle – allowing you to begin a new lease contract on another new vehicle.

Leasing vehicles through personal contract hire allows you to benefit from fixed monthly budgeting.

The difference between business contract purchase and contract hire is that you retain the option to keep the vehicle at the end of the agreement. This is a more flexible lease method – you can return the vehicle, or extend the contract, or keep the vehicle, and you don’t have to decide until the contract is over.

Contract purchase for personal vehicles works like business contract purchase; the contract is designed specifically for the private user, and your options as to keeping or returning the vehicle are open until the end of the contract.

Finance lease works like a contract hire arrangement, but there is usually no option for a maintenance agreement. At the end of a finance lease contract, the lessee becomes the owner, usually upon payment of a final rental. In addition, there are the usual tax and VAT advantages.

All credit transactions are stored in your credit history. This keeps a record of all of your financial dealings with credit institutions such as lenders, banks and building societies. Bad credit, also known as poor credit or adverse credit occurs when a consumer falters in their repayments.

This can be as minor as missing a credit card payment. Missed payments on a mortgage are a common cause of a poor credit rating. County Court Judgements are likely to result in a severely damaged credit rating, known as heavy adverse credit.

Unfortunately, in some instances people who have no credit history have problems with applications for credit.

Some lenders will not lend to borrowers who have no history of credit, because their credit status is unproven. However, when it comes to vehicle finance, there are a number of companies who will provide finance to people with no credit history.

Most vehicle finance lenders will still consider your application for finance if you have poor credit, and many will offer you a deal.

However, some mainstream lenders will refuse you vehicle finance or unsecured loans if you have bad credit. In some cases, poor credit finance deals will be set at slightly higher interest rates, particularly in cases with heavy adverse credit such as bankruptcy.

Not in all situations. There are many lenders out there who believe borrowers should have access to finance whatever their credit history, and whatever type of vehicle you buy. The risk you represent to the lender may be passed on in higher interest rates on your finance.

Absolutely, just fill in the free, no obligation vehicle finance enquiry form below and let us find the right finance deal for you.


  • A flexible range of lending options are available.
  • This type of loan may be ideal if you have been refused vehicle credit elsewhere.
  • All applications considered, regardless of your credit history.


  • Access to certain finance options may be restricted, depending on your individual circumstances.

Loans up to £100,000

Whatever your circumstances

  • Loans up to £100,000
  • No complicated forms
  • No 'Up-Front' fees

APR 9.9%, APR representative 19.9%

Representative Example:
Borrowing £5,500 over 48 months with a representative APR of 19.9% the amount payable would be £162 a month, with a total cost of credit of £2,295 and a total amount payable of £7,795.



*Unsecured loans are available to a maximum of £25,000. Loans of up to £100,000 may
be offered by the lenders subject to affordability and secured against your property.
Typical Example for illustration purposes only: £25,000 over 10 years with 7.8% APR, Total to repay: £35,664, Monthly Repayment: £297.20.
Overall cost for comparison is 5.5% APR typical. Overall cost for comparison for unsecured loans is 22.1% APR typical.
Unsecured Loan Typical Example for illustration purposes only: Borrowing £4,500 over 36 months. Repaying £219.55 per month.
Total repayable £7,903.80. Annual interest rate is 49.9% (variable).

This article is intended to provide information only, and does not constitute financial advice or assistance, without limitation, warranties as to satisfactory quality, fitness for purpose, accuracy or skill. The information contained in this article is generic and non-specific to your own individual circumstances or anyone else.



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