With the rising cost of living and an increased reliance on vehicles for daily travel, choosing the right car finance provider in the UK is more critical than ever.

In 2025, the car finance market continues to evolve, driven by innovation in fintech, more inclusive lending practices, and changing consumer behaviour.

Whether you’re buying a new or used car, how you finance that purchase can significantly impact your financial stability and ownership experience.

A suitable finance provider not only offers competitive rates but also ensures transparency, flexibility, and customer support throughout the loan period. Furthermore, the provider’s reputation and FCA regulation status serve as indicators of reliability.

As more consumers move online for car purchases, companies offering digital applications and pre-approval tools have become preferred choices.

What Is Car Finance?

Car finance refers to borrowing money or securing a financial arrangement to pay for a vehicle over time rather than upfront. This is particularly helpful for individuals who cannot or prefer not to pay the full cost of a vehicle outright.

Who Can Apply for Car Finance in the UK?

Car finance is accessible to a wide range of individuals in the UK, but there are a few standard eligibility criteria. Applicants must usually be at least 18 years old, legally reside in the UK, and demonstrate a stable income.

Lenders assess applications based on credit history, income level, employment status, and current financial commitments. While those with excellent credit scores can access the best rates, there are also specialist lenders catering to individuals with poor or limited credit history.

Documentation typically required includes proof of identity, recent payslips or bank statements, and address verification. The approval process can range from a few hours to several days, depending on the lender’s internal checks and the applicant’s profile.

What Are the Different Types of Car Finance in 2025?

In 2025, several types of car finance arrangements are available to UK consumers, with options tailored for both high-credit and low-credit individuals. Understanding these will help prospective buyers select the most suitable option:

• Personal Contract Purchase (PCP): PCP remains a popular choice for those interested in lower monthly payments and the option to switch cars regularly. At the end of the contract, customers can pay the final balloon payment to own the car or return it.
• Hire Purchase (HP): With HP, the buyer pays a deposit followed by equal monthly payments until the car is paid off. The ownership of the vehicle is only transferred after all payments are completed.
• Personal Loans: These unsecured loans are offered by banks and lenders. Consumers use the funds to buy a car outright, giving them immediate ownership.
• Leasing (PCH): This is a rental model where the customer pays monthly to use the car but returns it at the end of the car lease term. Maintenance may be included depending on the agreement.
• Subscription Services: Emerging in popularity, car subscriptions combine finance, insurance, and maintenance into a single monthly payment. This option suits those who value flexibility and all-inclusive service.

How Do Interest Rates Affect Car Finance Deals?

Interest rates play a critical role in determining the overall cost of car finance. They directly influence the monthly repayments and the total amount repaid over the loan period.

In 2025, interest rates vary based on several factors:

• Credit Score: Higher credit scores typically attract lower interest rates.
• Loan Duration: Longer terms may reduce monthly costs but increase the total interest paid.
• Car Type: New cars often attract lower rates compared to used ones due to reduced risk for the lender.
• Deposit Size: A larger deposit reduces the amount borrowed, potentially securing better terms.

Lenders usually advertise Representative APR to help customers compare offers, but actual rates may differ based on individual circumstances.

Which Factors Should You Consider When Choosing a Car Finance Company?

Choosing a car finance company involves more than finding the lowest monthly payment. Other factors should be weighed to ensure you’re entering into a fair, manageable, and transparent agreement.

Key considerations include:

• APR (Annual Percentage Rate): This reflects the true cost of borrowing, including fees and interest.
• Reputation and Reviews: Customer service ratings and online reviews can provide insight into the company’s reliability.
• Flexibility: Options for early repayment or contract adjustment in case of financial changes are important.
• Application Process: Some lenders offer seamless online applications, while others may require in-person visits.
• Credit Profile Accommodation: Certain companies specialise in customers with poor or limited credit histories.

Using comparison tools can simplify the process by showing personalised quotes from multiple providers based on your profile.

Top 10 Car Finance Companies in UK 2025

1. Black Horse (Lloyds Banking Group)

With a heritage that traces back to 1922 and an official formation in 2001, Black Horse, a part of Lloyds Banking Group, has become one of the UK’s most trusted motor finance providers.

Black Horse delivers car, motorcycle, caravan, and motorhome finance through a broad dealership network and also supports SME customers with dealer stocking and fleet finance solutions.

Finance Products Offered:

Black Horse specialises in Hire Purchase (HP), Personal Contract Purchase (PCP), and Lease Purchase. Each product is designed to provide flexible options for different types of buyers, whether private individuals or businesses.

Hire Purchase (HP):

This is a straightforward path to vehicle ownership. After agreeing on a deposit, term, and monthly repayments, the customer pays fixed monthly instalments over one to five years. Ownership transfers at the end, following a nominal purchase fee.

Personal Contract Purchase (PCP):

This product is ideal for those seeking lower monthly payments. A significant part of the total cost is deferred to the end of the agreement in the form of an optional final payment (balloon payment). At the end, the customer can either return the car, pay to own it, or part-exchange.

Black Horse also offers a finance calculator to provide indicative quotes and a product comparison tool to help customers choose the best plan.

2. Santander Consumer Finance

Santander Consumer Finance serves both personal and business customers across the UK, offering a comprehensive suite of vehicle finance options. Known for speed, transparency, and flexibility, Santander collaborates with dealerships to deliver tailored finance packages.

Personal Finance Products:

For individual customers who’ve already selected a vehicle, Santander provides several options:

• Purchase Plan (HP)
• Conditional Sale
• Personal Contract Purchase (PCP)
• Conditional Sale with Balloon
• Personal Contract Hire (PCH)
• PCH Flex (shorter, more flexible leasing)

Customers are supported by tools like the “Help Me Choose” assistant and downloadable product guides.

Business Finance Options:

Santander’s business offerings include Lease Purchase, Contract Hire, and Contract Purchase, with terms from 6 months to 5 years. All are designed to help companies manage or grow their fleets efficiently.

The bank-backed infrastructure, combined with competitive rates and rapid approvals, make Santander a reliable choice for personal buyers and corporate clients alike.

3. MotoNovo Finance

MotoNovo Finance has gained prominence for providing accessible and innovative vehicle finance solutions across the UK, particularly through its strong dealership network. MotoNovo caters to both consumers and commercial clients, offering a range of flexible finance options.

Personal Finance Options:

• Hire Purchase (HP) is available with or without a deposit, allowing customers to spread the cost of the vehicle over 12 to 60 months. Once all payments, including the option to purchase fee, are complete, the vehicle becomes the customer’s property.
• Personal Contract Purchase (PCP) offers lower monthly payments and defers a large portion of the loan to a final balloon payment. At the end of the agreement, customers may keep the vehicle, return it, or replace it with a new one.

Business & Commercial Services:

MotoNovo also provides:

• HP Balloon: Tailored for businesses to reduce monthly repayments with a larger payment at the end.
• Fleet Funding: Helps businesses replace or expand vehicle fleets.
• Asset Finance: Funds for tools, machinery, and commercial vehicles.

Their focus on digital solutions and flexible repayment terms makes MotoNovo particularly suitable for modern, budget-conscious consumers and SME businesses.

4. Close Brothers Motor Finance

Close Brothers Motor Finance is one of the UK’s longest-serving financial institutions, offering practical vehicle finance solutions through a nationwide dealer network. Their products are designed to be clear and customer-focused, with an emphasis on long-term value.

Available Finance Options:

• Personal Contract Purchase (PCP): Designed for those who want low monthly payments and flexibility at the end of the contract. Includes a Guaranteed Minimum Future Value (GMFV), which safeguards the vehicle’s expected value.
• Hire Purchase (HP): Allows for full vehicle ownership after fixed monthly payments over one to five years. Customers can opt for a balloon payment to reduce regular payments.
• Conditional Sale (CS): Similar to HP but with ownership automatically transferred at the end, with no final payment.

These products are available for cars, motorcycles, and light commercial vehicles, making Close Brothers a solid option for both private and business buyers.

5. Oodle Car Finance

Oodle Car Finance stands out for its technology-first approach to vehicle financing. The company’s mission is to make car finance simple, accessible, and fast. Unlike traditional providers, Oodle combines finance approval with car selection in one seamless digital journey.

Finance Options:

• Unsecured Personal Loan: Customers receive funds directly and own the vehicle from day one. Ideal for those with strong credit histories.
• Hire Purchase (HP): Offers fixed monthly payments and the option to own the vehicle after all instalments and fees are paid.
• Personal Contract Purchase (PCP): Lower monthly payments with a deferred balloon payment at the end, giving flexibility to own, return, or trade the car.
• Car Leasing: For users who want to avoid ownership but prefer driving newer vehicles every few years.

Oodle’s easy-to-use finance calculator and instant eligibility checks (without affecting credit score) make them especially appealing to tech-savvy customers who value speed, clarity, and convenience.

6. Zuto Car Finance

Zuto is a credit broker, not a direct lender, but it stands out as one of the UK’s most accessible car finance platforms. It works with a large panel of lenders to find tailored vehicle finance solutions for a wide range of credit profiles, from excellent to bad credit.

What sets Zuto apart is its simplified application process, car finance calculator, and range of vehicle finance options that can be tailored to both budget and lifestyle needs. The platform caters to applicants with no deposit, negative equity, or those financing electric vehicles.

Finance Products Offered:

Zuto facilitates access to:

• Hire Purchase (HP): A traditional finance method where ownership of the vehicle is transferred after all payments are made.
• Personal Contract Purchase (PCP): Enables customers to make lower monthly payments with the option to buy the car at the end.
• Used Car Finance: Custom quotes for second-hand vehicles, with assistance in sourcing cars.
• Electric Vehicle Finance: Tailored options for financing both new and used electric vehicles.

Representative PCP Example (Zuto):

Zuto’s strength lies in flexibility and accessibility. It offers bad credit finance, no deposit deals, and real-time quotes without affecting your credit score. As a broker, it efficiently matches customers with the most suitable lenders from its network.

7. CarFinance 247

CarFinance 247 is one of the most established and highly-rated car finance brokers in the UK, known for its strong customer reviews and expansive panel of lenders. It simplifies the financing process by integrating a car search tool with tailored finance options.

The platform supports users with a range of credit backgrounds and offers various calculators to help customers estimate repayments for HP, PCP, and bad credit finance plans.

Representative HP Example:

Services and Features:

• No Deposit Finance: Available on both HP and PCP products
• Bad Credit Car Finance: Designed for applicants with poor credit history, offering flexible terms
• Instant Decisioning: Users can get pre-qualified in minutes
• Mileage Limits: PCP plans generally include annual mileage limits with excess fees

Whether you’re financing a first-time purchase or upgrading to a newer model, CarFinance 247 offers one of the most user-friendly and comprehensive experiences in the market.

8. Evolution Funding

Evolution Funding is the UK’s largest motor finance broker and a significant force in the auto lending space. Established in 2002, it has grown from a small regional operation into a national leader, supporting more than 4,000 dealerships and financing over 87,000 vehicles annually.

The company provides digital lending solutions for dealerships and consumers, making vehicle finance more efficient through tech-driven platforms. Its acquisition of companies like Click Dealer and Motion Finance enhances its market capabilities.

Evolution Loans (Subsidiary):

• Focused on Hire Purchase (HP) agreements
• Accepts customers who may have been declined elsewhere
• Reviews financial behaviour and vehicle specifics before decisioning
• Often able to fund “out of criteria” vehicles or complex credit cases

Key Features of Evolution Funding

Evolution Funding’s approach to inclusive underwriting and seamless integration with dealership systems makes it a leader in operational efficiency and customer approval rates.

9. Carmoola

Carmoola is a modern, tech-forward finance company that delivers flexible and fast car finance options through a mobile-first platform. It appeals to a younger, digitally-savvy audience by simplifying the approval process and offering transparent loan options in under 60 seconds, without impacting credit profiles.

Finance Products:

• Hire Purchase (HP): Customers spread the cost of a vehicle over 2 to 5 years, with fixed monthly payments and no mileage restrictions.
• Personal Contract Purchase (PCP): Offers lower fixed payments and the flexibility to either own, return, or swap the car at the end of the term.

PCP vs HP Comparison:

Carmoola’s straightforward, user-led design combined with highly competitive APR rates (starting from 6.9%, with a representative 13.9%), makes it a standout provider for buyers looking for ease, speed, and clarity.

10. First Response Finance

First Response Finance is widely known for its customer-first approach, specialising in providing vehicle finance to individuals with poor or limited credit history. With a representative APR of 29.9%, it caters to a specific segment of the market that values accessibility over ultra-low rates.

Finance Offering:

• Hire Purchase (HP) loans ranging from £2,000 to £15,000
• Terms between 18 and 61 months
• Designed to serve applicants with varying levels of creditworthiness

HP Finance Example (Representative):

Application Criteria:

First Response Finance also offers car finance for used and electric vehicles. It is a particularly strong option for those who may have been turned away by traditional lenders and value a non-judgmental, supportive application process.

Car Finance Provider Comparison Table – UK 2025

Final Thoughts – Choosing the Best Car Finance Deal in 2025

The UK car finance market in 2025 is more diverse and accessible than ever. Whether you’re purchasing a new or used car, looking for low monthly payments, or navigating a less-than-perfect credit history, there’s a provider suited to your financial situation.

From traditional lenders like Black Horse and Santander to digital-first platforms like Carmoola and Oodle, today’s top finance companies offer tailored solutions, fast approvals, and user-friendly experiences.

Brokers like Zuto and CarFinance 247 expand your options by matching you with the best deal from a panel of lenders, while specialists like First Response support those rebuilding their credit.

Before choosing a provider, it’s crucial to consider:

• The type of finance (HP, PCP, PCH, etc.)
• Monthly affordability and deposit flexibility
• Ownership options and end-of-agreement terms
• APR and total repayment cost

Always compare quotes, understand all contractual terms, and choose a provider that aligns with your needs, not just the monthly cost. A well-informed decision today can save you money and stress throughout your car ownership journey.

Frequently Asked Questions

What’s the difference between HP and PCP car finance?

HP leads to full ownership after all payments are made. PCP offers lower monthly payments with the option to buy the car at the end, return it, or trade it in.

Can I get car finance with bad credit?

Yes, several providers like First Response and Zuto specialise in bad credit car finance and offer flexible terms based on affordability rather than credit score alone.

Is it better to use a broker or go directly to a lender?

Brokers give access to a wider range of lenders, often increasing your chances of approval and getting better terms. However, direct lenders may offer simpler processes for well-qualified applicants.

How does a balloon payment work?

In PCP agreements, a balloon payment is a large final payment you must make to own the car. It’s based on the car’s projected future value.

Can I get car finance without a deposit?

Yes, providers like Carmoola, Zuto, and First Response offer no-deposit options, though it may affect your monthly payments or APR.

Are there mileage limits with car finance?

Yes, PCP and leasing plans usually have mileage limits. Exceeding these may result in additional charges at the end of the agreement.

How long does car finance approval take?

Many providers offer instant decisions or approvals within 24–48 hours, especially through digital platforms like Oodle, Carmoola, and CarFinance 247.