Why buy a car on finance?

Roman Danaev

Buying a car is a big financial decision, and aside from buying a house, it’s probably the largest single purchase you’ll ever make. As such, some people look to secure a loan in order to pay for it. There are a number of reasons why you might wish to buy a car on finance. In this article, we’re going to discuss why buying a car on finance is not just a fall-back option, it can actually be beneficial for you and your finances.


Buying a car on finance means that you don’t have to pay a lump sum of cash all at once; you can spread the cost of the car over several months. This makes the purchase far more manageable and easier to integrate into your life. It also means that buying a car won’t necessarily burn through your savings.

Spreading the payments in this way allows you to purchase a better, more expensive car. A wider range of cars is now affordable since you don’t have to pay a lump sum upfront. Purchasing a car on finance allows you to buy beyond your typical means while staying financially responsible.

Improve credit score

Perhaps counterintuitively, buying a car on finance can actually improve your credit score. It all depends on how you manage your finances with respect to the loan repayments. If you meet the deadline for loan repayments each month, then over the course of your finance term, you’ll develop an excellent credit profile with evidence of successful, reliable money management. This boosts your credit score.

Many people think that avoiding all forms of credit is good for their credit score, but this is actually more likely to harm your credit score. This is because lenders look for a track record of fiscal responsibility; if you haven’t had a loan of any kind, then there is no evidence that you can meet repayments on time. The best thing for your credit score is taking out affordable credit and paying it back on time. Read more about improving your credit score on our blog.


Some car finance deals will include certain perks or add-ons. This could consist of several months road tax free of charge, or perhaps free car servicing for a set period of time. Some may even offer to provide a free inspection of your vehicle before you buy it, as a form of quality assurance. Of course, it’s important to weigh these perks up against the actual cost of monthly repayments – these perks may in fact just be built into the price you’re paying. That being said, some of these perks can be both financially and logistically beneficial, so it’s worth considering.

End of Term Options

When you buy a car outright, you spend a significant sum of money and then you own (and are liable for) the car. It’s as simple as that. However, when you purchase a car on finance, depending on the type of finance you secured, you’re presented with a number of options at the end of your term.

For instance, a Personal Contract Purchase will give you the option of paying a final lump sum in order to become the owner of the car, or you can choose to return the car and upgrade to another model. In essence, you have the option to change cars every few years. Read more about the different types of car finance here.

You may think we’re biased in favour of car finance, but the aforementioned benefits are undeniable. We understand that buying a car on finance isn’t for everybody, but we hope we’ve shown that it’s worth considering. For more information on how car finance works, check out our dedicated How It Works page or get in touch with our team today.

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