Best Car Finance: Direct Lenders Compared

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Last Update: September 8th, 2016

About:

Most people understandably don’t have the money to shell out on a shiny new motor. The common solution for many is to apply for a Car Loan with their bank. The banks have however become increasingly picky these days and this is where car finance providers have stepped forward to fill the consumer demand. Financing is of course not just an option for those turned down by the banks. Those that like to change cars on a frequent basis can essentially rent out the latest model and skip to a new one in just a few years. This is particularly tempting when leading automakers offer 0% deals on their freshest creations of the production line.

Financing cars does naturally have its drawbacks. A key point would be that the lender owns the vehicle throughout the contract and so they can quickly turn to repossession should the customer fall behind on payments. This protection plus strict mainstream lending has helped the subprime side of the industry to boom in recent years. Unlike other comparison pages on this site, you will spot brokers listed below as well as lenders. The simple reason for this is that many lenders don’t allow direct applications. If you want them, you’ll need to head through an approved dealership or a broker. Accessibility is not the only problem we faced when compiling this data.

Many companies choose to not to disclose their interest rates and product specs. As a result, we often had to make estimations on pricing. In essence, the lender is merely providing the funding only whereby you’ll pay a similar ballpark figure from one company to the next. There are other qualities that you could look out for though. This may include customer support hours, how much funding is available, is a login provided and what range of agreements can you choose between. We’ll also look at dealership network sizes to get an idea of where the bulk of business is flowing through. Before getting into the comparison, let’s begin with an outline of the various financing agreements.

Hire Purchase (HP)…
Hire purchase is the most popular financing agreement and the most historic, originating here in the UK back in the 19th century. What you are doing here is paying for the vehicle plus fixed interest over instalments typically between 12 and 60 months. A deposit up to 10% is often required, although this isn’t always the case. Many of those people that do pay one tend to part exchange their older cars. The lender is the legal owner until the final payment (known as the documentation fee) is paid. This is usually priced between £150 and £200. Until you’ve paid a third of the total balance the lender can repossess without the need of a court order. If you have bad credit, then this is the agreement that you’ll be placed on. Hire purchase with balloon agreements are relatively new. This option is well suited to those that wish to keep the instalments low.

Personal Contract Purchase (PCP)…
At the start of a PCP contract the Guaranteed Future Value (GFV) is calculated factoring age, condition, mileage etc. This is the car’s expected value once your contract ends. The payments that you make are based on the difference between the current and future value. The same deposit as HP would usually be required. Repayments commonly last between 12 and 36 months. You must stick to an agreed mileage with excess mileage incurring fees. Once the agreement is completed you’ll be given the opportunity to hand the keys back and walk away or jump into a new agreement on a new model. Finally, you can keep hold of the vehicle by paying the GFV that we mentioned above. Around 80% of customers on these plans don’t make a balloon payment and take ownership. This is due to personal contract purchase agreements being designed for those who wish to choose cars on a frequent basis. You’ll likely need to have good credit to qualify. Whilst this plan does sound cheap, you can actually pay thousands of interest on brand new cars without even taking ownership.

The following agreements are less popular, generally since they aren’t readily available…

Conditional Sale (CS)…
A conditional sale agreement matches hire purchase in most areas. The key difference is that the customer is committed to the sale whilst with HP the goods are essentially hired until the last payment with no forced commitment. The transfer of sale is automatic here rather than having to pay the documentation fee.

Lease Purchase (LP)…
Similar to PCP, but you must eventually take ownership and pay the GFV. An equivalent of a leasing deposit is paid and at the end of the contract a balloon payment is made. In between this, you are simply paying the difference between today’s retail cost and the future cost. This results in low affordable instalments. Luxury cars that hold their value are commonly financed on these contracts. This is also a popular choice for businesses since the payments are not subject to VAT and there are no mileage restrictions.

Personal Contract Hire (PCH)…
Again, similar to PCP, but you are simply hiring and have no option to buy. Instead of a deposit you pay a few rental payments (typically 3 month’s worth). After this point you make fixed payments typically up to 36 months. A maintenance package (road tax, servicing etc) is always factored in the costs, whereas with PCP this is an add-on product. How much you end up paying depends on how long you rent and how much mileage you use. Keeping to the determined mileage is again essential to avoid excessive charges and you must keep the motor in A1 condition. One point to raise is that a fully comprehensive insurance policy must be taken out.

That covers the agreements that you are likely to run into. HP and PCP are the likely candidates that you’ll be offered should you head into a local dealership. One thing to add with deposits is that other than trading in, a popular option is to take out a credit card on a 0% introductory deal. This covers the deposit and depending on how much you are funded, it could attack a portion of the full cost that would help to lower the repayments. As with bank loans, this option is only possible for those with a clean credit rating.

Dominance:

The bulk of UK financing naturally flows through motor dealers and the big banks are usually the winners here since they are found in the most dealerships across the nation. Barclays and Lloyds have been fighting between themselves, but in the meantime Santander has been gathering up market traction. Hitachi Capital and MotoNovo are further brands that have been progressing well. Those mentioned are seeking prime audiences. On the subprime side, the market share is much more sporadic. We’d hedge our bets on Close Brothers being the biggest player and Moneybarn is expected to come along well now that Provident has took ownership.

Eligibility:

Prime = excellent credit and subprime = poor credit (defaults, CCJs etc). You’ll always need to be 18 years old and be in full time employment. If you are self-employed then you may have to chase the high interest products. Most people can get their hands on financing since the lender is always protected legally that we discussed above. The Logbook Loan concept works this same way, with the difference being the excessive rates that they get away with charging there. Repossession is never going to be an enjoyable experience, but it can happen and even those with perfect scores can lose their job at any time. This is why it is very important to think carefully about the agreement that you are entering.

Market Size:

The main comparison lists 28 lenders and 12 brokers. This is a mixture of prime and subprime companies that either fund or arrange contracts for cars up to 10 years old. Then we have 10 in-house lenders from leading automakers. They offer 0% or low rate deals, but this is for their own new cars only. As an exception, Santander works 50/50 with Hyundai and also Groupe PSA (Citroen and Peugeot). We haven’t yet profiled the PSA brands. Many more firms are to follow soon.

We Have Compared:
APR (A): Interest range. Almost always estimated.
Bad Credit (BC): Is bad credit accepted?
Logins (L): Are account logins provided?
Operations (O): Opening days and times (for customer support).
Products (P): The available financing agreements abbreviated.
Sums (S): How much can be borrowed (New = N and Return = R).
Terms (T): The selectable repayments marked in months.

Notes:
– Car finance is in focus, but some lenders cater LCVs, motorbikes etc.
– Listings are sorted alphabetically in 3 groupings. The 1st includes lenders and the 2nd is for brokers. We have now also added the in-house lenders of leading automakers.
– Some product specs are missing since they aren’t shared. Over time the target will be to fill in the blanks.

Best Car Finance: Direct Lenders Compared:

= Lenders…

1st Stop Car Finance (2004)
1st Stop Car Finance
A: 31.9%
BC: No
L: No
O: Mon/Thu (8.30am/6pm), Fri (8.30am/5pm), Sat (9am/5pm)
P: HP
S: £2000 to £15,000 (N and R)
T: 12 to 60
* Now funded by Conister Bank Ltd

Advantage Finance (1999)
Advantage Finance
A: 29.26%
BC: Yes
L: No
O: Mon/Fri (9am/5pm)
P: HP
S: £2000 to £10,000 (N and R)
T: 12 to 60
* Minimum age is 22

Alphera Financial Services (2006)
Alphera Financial Services
A: 5.9%
BC: No
L: No
O: Mon/Fri (8am/7pm), Sat (9am/5pm)
P: HP, PCP
S: ?
T: 24 to 60
* This is a BMW subsidiary

Bank of Scotland (2015) (1695: Roots)
Bank of Scotland Car Finance
A: 4.6%
BC: No
L: Yes
O: Mon/Sun (8am/8pm)
P: HP, PCP
S: £3000 to £60,000 (N and R)
T: 12 to 60
* Bank of Scotland customers (3 months+) only

Barclays Partner Finance (2003) (1930s: Roots)
Barclays Partner Finance
A: 6% | 4.9% (loan)
BC: No
L: No
O: Mon/Fri (8am/8pm), Sat (9am/5.30pm)
P: CS, PCP and loans
S: £1500 to £50,000 (N and R)
T: 12 to 60
* Estimated rate

Billing Finance (1983)
Billing Finance
A: 30% to 35%
BC: Yes
L: No
O: Mon/Fri (8.30am/5.30pm)
P: HP
S: £1000 to £10,000 (N and R)
T: 12 to 60
* Estimated rate

Black Horse (2001) (1922: Roots)
Black Horse
A: 6.7%
BC: Yes
L: Yes
O: Mon/Fri (8.30am/6pm), Sat (9am/1pm)
P: HP, LP, PCP and loans (motorbikes)
S: £1500 to £250,000 (N and R)
T: 12 to 60
* Estimated rate. Has 1 million customers

Blue Motor Finance (2005)
Blue Motor Finance
A: ?
BC: Yes
L: No
O: Mon/Sun. Times unknown
P: ?
S: ?
T: ?
* Listing to be updated

Close Brothers Motor Finance (2014) (1988: Roots)
Close Brothers Motor Finance
A: ?
BC: No
L: Yes
O: Mon/Fri. Times unknown
P: CS, HP, PCP
S: £1500+ (N and R)
T: 12 to 60
* Has 15 branches

First Response Finance (1998)
First Response Finance
A: 22.9% to 42.9%
BC: Yes
L: No
O: Mon/Tue (9am/7pm), Wed (10.30am/5.30pm), Thu (9am/7pm), Fri (10.30am/5.30pm), Sat (10am/4pm)
P: HP
S: £2000 to £10,000 (N and R)
T: 12 to 60
* Minimum age is 21

Glenside Finance (1990)
Glenside Finance
A: 13.5% to 34%
BC: Yes
L: No
O: Mon/Fri (9am/5.30pm)
P: HP
S: £2000 to £75,000 (N and R)
T: 24 to 48
* Non

Halifax (2015) (1853: Roots)
Halifax Car Finance
A: 4.6%
BC: No
L: Yes
O: Mon/Sun (8am/8pm)
P: HP, PCP
S: £3000 to £60,000 (N and R)
T: 12 to 60
* Halifax customers (3 months+) only

Hitachi Capital (1982)
Hitachi Capital
A: 11.7% | 3.8% (loan)
BC: No
L: No
O: Mon/Fri (8.45am/7.30pm), Sat (8.45am/12pm)
P: HP, PCH and loans
S: £2000 to £25,000 (N and R)
T: 24 to 60
* Has 800,000 motoring customers

Lloyds Bank (2015) (1765: Roots)
Lloyds Car Finance
A: 4.6%
BC: No
L: Yes
O: Mon/Sun (8am/8pm)
P: HP, PCP
S: £3000 to £60,000 (N and R)
T: 12 to 60
* Lloyds customers (3 months+) only

London & Surrey Motor Finance (1972)
London & Surrey Motor Finance
A: 32% to 38%
BC: Yes
L: No
O: Mon/Fri (9am/5.30pm), Sat (10am/4pm)
P: HP
S: ?
T: 12 to 60
* Has operated as a lender since 1997

Marsh Finance (1973)
Marsh Finance
A: 19% to 24%
BC: Yes
L: No
O: ?
P: HP, PCP
S: ?
T: 12 to 60
* Estimated rate

Moneybarn (2011) (1992: Roots)
Moneybarn
A: 19.9% to 46.3%
BC: Yes
L: No
O: Mon/Fri (8am/5.30pm)
P: CS
S: £4000 to £25,000 (N and R)
T: 24 to 48
* Minimum age is 21

Moneyway (2007) (1954: Roots)
Moneyway
A: ?
BC: ?
L: No
O: Mon/Fri (9am/7pm), Sat (9am/1pm)
P: HP and loans
S: ? to £20,000 (N and R)
T: 12 to 60
* Support times listed. Underwriting however extends to 5pm on Saturdays
* Loan stops at £15k with minimum age of 25

MotoNovo Finance (2012) (1972: Roots)
MotoNovo Finance
A: 13.9%
BC: No
L: Yes
O: Mon/Fri (9am/6pm), Sat/Sun (10am/4pm)
P: HP, HP with balloon
S: £2500 to £50,000 (N and R)
T: 12 to 60
* Offers retailer discounts between 5% and 10%

Northridge Finance (1999) (1956: Roots)
Northridge Finance
A: ?
BC: No
L: No
O: Mon/Fri (9am/5pm)
P: HP, HP with balloon, PCP and loans
S: ?
T: ?
* Listing to be updated

Paragon Car Finance (2014) (1998: Roots)
Paragon Car Finance
A: ?
BC: No
L: No
O: Mon (8.30am/7pm), Tue/Fri (9am/7pm), Sat (10am/5pm)
P: HP, LP
S: ? to £100,000 (N and R)
T: 12 to 60
* Network tally is shown for 1998 to 2008

Private & Commercial Finance (1993)
Private & Commercial Finance
A: 13% to 35%
BC: Yes
L: No
O: Mon/Fri (9am/5.30pm), Sat (9am/3pm)
P: HP
S: £3000+ (N and R)
T: 12 to 60
* Estimated APR. Can pay online

Raphaels Finance (2015) (1957: Roots)
Raphaels Finance
A: ?
BC: Yes
L: No
O: Unknown
P: HP, LP, PCP
S: ?
T: ?
* Listing to be updated. Possible guarantor when aged below 23

Santander Consumer Finance (2005)
Santander Consumer Finance
A: 6% | 3.9% (123/Select) or 4.4% (loan)
BC: No
L: Yes
O: Mon/Fri (8am/6.30pm), Sat (9am/1.30pm)
P: CS, LP, PCP and loans
S: £7500 to £20,000 (N and R)
T: 12 to 60
* Estimated rate. Minimum age is 21 (for loan)

Startline Motor Finance (2013)
Startline Motor Finance
A: ?
BC: Yes
L: No
O: Mon/Fri (9am/6pm)
P: ?
S: ?
T: ?
* Listing to be updated

The Car Finance Company (2007)
The Car Finance Company
A: 49.57%
BC: Yes
L: No
O: Mon/Fri (8am/8pm), Sat (10am/5.30pm)
P: HP
S: £1500 to £6000 (N) and £10,000 (R)
T: 12 to 48
* Can pay online

The Car Loan Centre (2013)
The Car Loan Centre
A: 53%
BC: Yes
L: No
O: Mon/Sat (9am/5pm)
P: HP
S: ? (N and R)
T: 36 or 48
* Logbook loans also available. Must use their approved cars

The Funding Corporation (2001)
The Funding Corporation
A: 49.9%
BC: Yes
L: No
O: Mon/Fri (9am/5pm)
P: HP
S: ?
T: 12 to 60
* Minimum age is 21

= Brokers…

CanCan Car Finance (2011)
CanCan Car Finance
A: 5.9% onwards
BC: Yes
L: No
O: Mon/Thu (9am/8pm), Fri (9am/6pm), Sat (9am/4pm), Sun (10am/4pm)
P: ?
S: £3000 and £15,000 (N and R)
T: ?
* Around a dozen lending partners

CarFinance247 (2006)
CarFinance247
A: 5.8% to 49.9%
BC: Yes
L: Yes
O: Mon/Thu (8am/8pm), Fri (8am/6.30pm), Sat (9am/5.30pm), Sun (11am/5pm)
P: CS, HP, PCP and loans (guarantor and personal)
S: £1000 to £75,000 (N and R)
T: 12 to 60
* Between 22 and 24 lending partners. Private sales considered

CreditPlus (2004)
CreditPlus
A: 5.9% to 31.6%
BC: Yes
L: Yes
O: Mon/Thu (9am/7pm), Fri (9am/5.30pm), Sat (10am/4pm)
P: HP, LP, PCP
S: £3000 to £100,000 (N and R)
T: 12 to 60
* Between 20 and 22 lending partners

Evolution Funding (2002)
Evolution Funding
A: ?
BC: Yes
L: No
O: Mon/Fri (9am/7pm), Sat/Sun (10am/4pm)
P: HP, Loan, PCP
S: £1000 to £50,000 (N and R)
T: 24 to 60
* 21 lending partners plus EvoLoans (in-house)

Eurodrive Finance (2013)
Eurodrive Finance
A: 4.9% to 33.99%
BC: Yes
L: No
O: Mon/Fri (9am/6pm)
P: HP, LP, PCP
S: £1000 to £50,000 (N and R)
T: 12 to 60
* 15 lending partners

Infinity Finance (2007)
Infinity Finance
A: 29%
BC: Yes
L: No
O: Mon/Fri (9am/6pm), Sat/Sun (10am/4pm)
P: HP
S: £2500 to £20,000 (N and R)
T: 12 to 60
* Panel not shared

Midland Credit (2011)
Midland Credit
A: 5.99% to 36.99%
BC: Yes
L: No
O: Mon/Fri (9am/6pm), Sat/Sun (10am/4pm)
P: ?
S: £3000 to £50,000 (N and R)
T: 24 to 60
* Panel not shared

Mann Island Finance (1991)
Mann Island Finance
A: ?
BC: ?
L: No
O: Mon/Fri (9am/5.30pm), Sat/Sun (9am/4pm)
P: HP, LP, PCP and loans
S: ?
T: 24 to 60
* 25 lending partners

My Car Credit (2013)
My Car Credit
A: 5.9% to 24.9%
BC: Yes
L: No
O: Mon/Fri (9am/7pm), Sat (10am/4pm)
P: CS, HP, PCP
S: £1500 to £50,000 (N and R)
T: 12 to 60
* 22 lending partners

Oracle Finance (2005)
Oracle Finance
A: 7.95%
BC: No
L: No
O: Mon/Fri (8.30am/6pm), Sat (10am/4pm)
P: HP, LP, PCP
S: £15,000 to £5 million (N and R)
T: 12 to 60
* 15 lending partners. Private sales considered. Times TBC

The Car Loan Warehouse (2012)
The Car Loan Warehouse
A: 5.9% to 33.9%
BC: Yes
L: No
O: Mon/Thu (9am/7pm), Fri (9am/6pm), Sat/Sun (9am/5pm)
P: HP, HP with balloon
S: £3000 to £50,000 (N and R)
T: 12 to 60
* Panel not shared

Zuto (2015) (2006: Roots)
Zuto
A: 5.9% to 31.6%
BC: Yes
L: Yes
O: Mon/Fri (9am/8pm), Sat/Sun (9am/6pm)
P: CS, HP, PCP
S: £1500 to £50,000 (N and R)
T: 24 to 60
* 18 lending partners. Private sales considered

= In-House Lenders…

Audi: 2.9% to 6.7% (usual: 6.7%)
Ford: 0.9% to 6.9% (usual: 2.9%)
Honda: 0% to 5.9% (usual: 5.9%)
Hyundai: 0% to 6.9% (usual: 0% or 6.9%)
Mini: 5.8% to 5.9% (usual: 5.9%)
Nissan: 0% to 5.9% (usual: 0% or 4.99%)
Renault: 0% to 5.9% (usual: 0% or 3.99%)
Toyota: 0% to 6.9% (usual: 0% or 4.9%)
Vauxhall: 0% to 6.9% (usual: 0%)
Volkswagen: 5.1% to 6.9% (usual: 5.4%)

*Displayed: APR range + most common rate(s) charged.

Comparison Insights:

The following data doesn’t include the automaker deals just yet. We are firstly adding more companies.

Cheapest Car Finance (APR Estimates):

Prime…
1) Bank of Scotland: 4.6%
2) Halifax: 4.6%
3) Lloyds Bank: 4.6%

Subprime…
1) Advantage Finance: 29.26%
2) Billing Finance: 30% to 35%
3) First Response: 42.9%

Brokers…
All promote starting rates ranging between 5.8% and 6%.

Notes: We have had to display estimates since many companies do not disclose product costs. With an excellent score, you can expect to pay around 6%. Halifax and Lloyds now come in at just 4.6%, but you’ll need to use their current accounts. With good credit you should expect to pay 12%. The bad credit finance rates start at 29%, but on average you’ll pay closer to 40%.

Customer Support on Sundays: Blue Motor, BOS, Halifax, Lloyds, MotoNovo

Most lenders open on Saturdays, but those noted are the only providers that extend to Sundays. Underwriting delays should be expected since the ins and outs of the plans have to be arranged.

Dealer Network Size: Close Brothers

Close Brothers surprisingly headed the largest dealership network of 8000 and they notably also have 15 retail branches. Black Horse has 5000 and 1 million customers. Santander has quickly grown to reach 3500 partners. Barclays and MotoNovo are a little vague on their network sizes, just heading that they have 1000s. Alphera is a name to keep a close eye on. Their network has grown to 1120 since 2006. BMW owns the company and so they have massive growth potential through their motoring connections. They did notably become Credit Today’s Car Finance Provider of the Year (2015) that shows that they are a rising force.

Experience: Black Horse

Some banks have been around for a long time, but we are looking at sector experience here. Black Horse was formed in 2001 through the merge of Chartered Trust and Lloyds UDT, with roots here of 1922. The Barclays brand was formed recently in 2003, but the brand that they acquired started out in the 1930s. MotoNovo was based on a company formed in 1972 and then there are a few companies that started out in the 80s. The first broker to pop up was London & Surrey (1972), although they became a lender in 1997.

Flexibility: NA

Product flexibility has been skipped. Most companies offer hire purchase agreements that carry the same 12 to 60 month term range.

Largest Lender Panel: Mann Island

Mann Island heads 25 partners, but with no names. Various other firms use 20+.

Logins: Black Horse, Close Brothers, Halifax, Lloyds, MotoNovo, Santander, The Car Finance Company

These companies all provide a handy login for you to keep track of your agreement online. CarFinance247, CreditPlus and Zuto also provide logins, but they are brokers.

Sums (Largest When New): Black Horse

Black Horse delivers contracts as high as £250,000. Paragon heads to £100,000. With brokers, Oracle interestingly heads £5 million (update to follow when we learn more). CreditPlus displays £100,000, whilst other introducers stop at £50,000.

Sums (Largest When Returning): As above

Financing sums are commonly available to all customers whether new or returning.

Related: Dealers

Arnold Clark
Bristol Street Motors
Carcraft
Car Giant
CarShop
Credit Car Sales
Essex Car Company
Evans Halshaw
Fords of Winsford
Fowlers Finance
Glyn Hopkin
Greenhous Group
Group 1 Automotive
Inchcape Retail
JCT600
Jardine Motors Group
Listers
Lookers
Macklin Motors
Marshall
Mercedes-Benz Retail Group
Motorpoint
Perrys
Peter Vardy
Ridgeway Group
Robins and Day
Stratstone
Sytner Group
The Car People
TrustFord

More to follow soon.