Getting a car finance quote is often the first step people take when considering their next vehicle. It’s important that understand what you can afford, the monthly repayments, and the overall cost of financing. Whether you're eyeing a nearly-new model or a used car, a clear finance quote provides the info you need to make a decision. At Prefinance, we help you compare finance options from specialist brokers, to find a deal that suits your budge.
Your Car Finance Quote
A car finance quote includes key elements that you should understand before committing to any agreement. Knowing what each component means will empower you to compare offers effectively and choose the best option for you.
Key Elements of a Car Finance Quote
The Vehicle Price: This is the agreed-upon price of the car you wish to finance. Sites like Autotrader and other aggregators often give you info on whether the price of the vehicle is competitive compared to other cars in the market. The cash price is a key driver of monthly payments, especially on PCP.
Deposit Amount: The initial lump sum you pay upfront. A larger deposit can often lead to lower monthly payments and potentially better interest rates. For more on this, read our guide on how much deposit you should put down.
Amount of Credit: This is the total amount you are borrowing after your deposit has been deducted from the vehicle price.
Interest Rate: The cost of borrowing money, expressed as a percentage. This significantly impacts your monthly payments and the total amount you repay.
APR (Annual Percentage Rate): This is the total cost of your finance over a year, including the interest rate and any additional fees. It's a standardised way to compare the cost of finance products. Our specialist brokers offer rates from 7.9% APR, with a representative APR of 8.9%.
Term of Agreement: The length of time you will be making repayments, usually expressed in months (e.g., 36, 48, 60 months). A longer term might mean lower monthly payments but could result in paying more interest overall. Many lenders offer individual terms like 39 or 41 months. If you have a specific monthly budget, you can ask the broker to match the term to your exact payments.
Monthly Repayments: The fixed amount you will pay each month for the duration of the agreement.
Total Amount Payable: The sum of all your monthly payments plus any deposit and other charges for credit epresenting the overall cost of the finance.
Commission: How much commission the broker or dealer is being paid by the lender. The higher the commission, the higher the rate.
Types of Car Finance Products
When you get a car finance quote, it will usually be for one of the main types of finance products available in the UK:
Personal Contract Purchase (PCP): This is a popular option where you pay monthly instalments to cover the depreciation of the car, not its full value. At the end of the term, you have three options: return the car, pay a balloon payment (Guaranteed Future Value - GFV) to own it, or part-exchange it for a new one. Learn more about PCP car finance.
Hire Purchase (HP): With HP, you pay monthly instalments over an agreed term, and once all payments are made, you own the car. It's a straightforward way to spread the cost and eventually become the car's owner.
Lease Purchase: Similar to HP, but with a balloon payment at the end of the term, much like PCP. However, with Lease Purchase, you are generally committed to paying the balloon payment to own the car, as there's no option to simply return it without penalty. It's mainly for business and High Net Worth Individuals as it carries a higher risk than PCP.
Understanding the differences between these products is key to choosing the right one. Our guide on PCP vs HP car finance offers a detailed comparison.
How to Get a Car Finance Quote
Getting a car finance quote is a straightforward process, especially when you use a comparison service like Prefinance. We connect you with specialist finance brokers who can offer competitive rates.
The Prefinance Process
Get a quote: We'll use the vehicle details from a URL ( a web page) to get the finance details from either the dealer's website or sites like Autotrader. This is a very good estimate of the payments our brokers will offer, but it's not guaranteed. Your credit profile, the GFV if it's a PCP and the age of the car all have an effect onboard the lenders available and the rate offered.
Use our free car finance calculator: You can edit the quote as many times as you want, add other cars and we'll store them in your PreFinance dashboard. When you're ready, apply for finance and we'll send the details to the relevant broker.
Provide Your Details: You'll start by providing some basic information about yourself and the car you're interested in. This typically includes your personal details, employment status, income, and an estimate of the car's value.
Soft Credit Check: Our partners will perform a 'soft credit check'. This is a preliminary check that doesn't leave a mark on your credit file, meaning it won't affect your credit score. It helps them understand your financial standing and determine suitable finance options.
Receive Your Quotes: Based on your information and the soft credit check, our specialist brokers will present you with tailored car finance quotes. These quotes will outline the monthly payments, interest rates, and terms for various finance products.
Compare and Choose: This is where Prefinance truly shines. We allow you to easily compare these quotes side-by-side, helping you identify the best deal for your circumstances. Remember, we are a comparison service, not a lender, so our focus is on helping you save money.
Proceed with Confidence: Once you've chosen a quote, you can proceed with the application. A full credit check will then be conducted by the chosen broker or lender.
Factors Affecting Your Quote
Several factors influence the car finance quotes you receive:
Credit Score: A strong credit history generally leads to more favourable interest rates.
Income and Affordability: Lenders assess your income and outgoings to ensure the repayments are affordable for you.
Car Value and Age: The value and age of the car can impact the finance options available and the interest rates offered. Financing a used car often has different considerations than a new one; explore the best way to finance a used car.
Deposit Amount: As mentioned, a larger deposit can reduce the amount you need to borrow and potentially lower your monthly payments.
Term Length: The longer the finance term, the lower your monthly payments might be, but the more interest you could pay overall.
Using car finance calculators can also give you an initial estimate of what you might pay, helping you budget before you even get a formal quote.
Comparing Car Finance Quotes to Save Money
The real benefit of using a service like Prefinance is the ability to compare multiple car finance quotes in one place. This comparison can lead to significant savings over the life of your finance agreement.
Why Comparison is Key
Different specialist brokers and lenders have varying criteria and offer different rates. What might be the best deal for one person may not be for another. By comparing quotes, you can:
Find the Lowest APR: Even a small difference in the APR can save you hundreds, if not thousands, of pounds over the term of your finance.
Identify Flexible Terms: Some quotes might offer more flexible terms regarding deposit amounts or repayment schedules.
Understand Total Cost: Comparing the total amount payable across different quotes gives you a clear picture of the overall cost.
Here’s an example of how comparing different finance options for a £20,000 car could look:
Finance Product | Deposit | Amount Borrowed | APR (Representative) | Term (Months) | Monthly Payment | Total Amount Payable |
|---|---|---|---|---|---|---|
PCP | £2,000 | £18,000 | 8.9% | 48 | £320 | £20,360* |
HP | £2,000 | £18,000 | 9.5% | 48 | £445 | £23,360 |
Lease Purchase | £2,000 | £18,000 | 9.2% | 48 | £350 | £21,800* |
*PCP and Lease Purchase total amount payable includes an estimated balloon payment. This table is illustrative and actual rates may vary. Use our get a quote service for an individual example or see our representative examples below.
Tips for Comparing Quotes
Look Beyond the Monthly Payment: While a low monthly payment is attractive, always consider the total amount payable and the APR. A seemingly lower monthly payment might come with a much longer term or a higher overall cost.
Check for Fees: Ensure you understand any potential fees, such as arrangement fees or option to purchase fees, as these contribute to the overall cost.
Read the Small Print: Always review the terms and conditions carefully. Understand mileage limits for PCP, early repayment penalties, and any other clauses.
Consider Your Future Plans: If you like to change your car frequently, PCP might be a good fit. If you prefer outright ownership, HP could be better.
Comparing quotes from various sources, including specialist brokers, can help you avoid paying more than you need to. Many people often accept dealer finance without shopping around, potentially missing out on better deals.
Common Questions About Car Finance Quotes
It's natural to have questions when navigating car finance. Here are some common queries we encounter:
Will Getting a Quote Affect My Credit Score?
When you use Prefinance, the initial checks performed by our specialist brokers are 'soft credit checks'. These do not impact your credit score. A 'hard credit check' will only be performed by the chosen lender when you proceed with a full application, and this will appear on your credit file.
How Long is a Car Finance Quote Valid For?
The validity of a car finance quote can vary between different brokers and lenders. Typically, a quote might be valid for 14 to 30 days. It's always best to check the specific terms of the quote you receive. Interest rates and lending criteria can change, so it's advisable to act within the validity period if you're happy with the offer.
Can I Get a Quote Without Knowing Which Car I Want?
Yes, you can often get a 'pre-approved' or 'agreement in principle' quote. This type of quote will give you an indication of how much you could borrow and at what rate, allowing you to shop for a car with a clear budget in mind. You'll still need to provide an estimated car value for the quote to be accurate.
What if My Quote is Higher Than Expected?
If your initial quote is higher than you anticipated, there are several steps you can take:
Increase Your Deposit: A larger upfront payment reduces the amount you need to borrow, which can lower your monthly payments and potentially the overall interest.
Extend the Term: A longer repayment period will spread the cost over more months, reducing each individual payment, though you might pay more interest overall.
Consider a Less Expensive Car: Adjusting your budget for the vehicle itself can significantly impact your finance costs.
Improve Your Credit Score: While not an immediate fix, working on your credit score over time can lead to better rates in the future.
Here’s a look at how different factors can influence the representative APR offered by specialist brokers:
Factor | Impact on APR (Illustrative) | Explanation |
|---|---|---|
Excellent Credit Score | Lower APR (e.g., 7.9% - 8.5%) | Indicates lower risk to lenders, leading to better rates. |
Good Credit Score | Standard APR (e.g., 8.9% - 10.5%) | Typical rates for applicants with a solid financial history. |
Higher Deposit (e.g., 20%+) | Potentially Lower APR | Reduces the amount borrowed, lowering lender risk. |
Lower Deposit (e.g., 10%-) | Potentially Higher APR | Increases the amount borrowed and perceived risk. |
Newer Vehicle | Potentially Lower APR | Newer cars often hold their value better, reducing lender risk. |
Older Vehicle | Potentially Higher APR | Older cars can depreciate faster and may be seen as higher risk. |
This table is illustrative and actual rates will depend on individual circumstances and lender assessments.
Your Next Steps to a Car Finance Quote
Getting a car finance quote is an essential step towards driving your next car. By understanding the components of a quote, knowing how to obtain one, and effectively comparing offers, you put yourself in a strong position to secure a great deal. Prefinance is here to simplify this process, connecting you with specialist finance brokers who can offer competitive rates from 7.9% APR (representative 8.9% APR). Start your journey with us today and discover how much you could save on your next car finance agreement.
