Match the finance to how you'll use the car
The best car finance depends on whether you want to own the car, keep payments low, or change cars regularly — and the cheapest total cost varies a lot. Here's how the main options stack up.
1. Personal loan (own the car outright)
Borrow, buy the car, and own it from day one with no mileage limits or balloon payments. Best for those who want ownership and flexibility — often the cheapest if you keep the car. See our loans for large purchases guide.
2. Hire purchase (HP)
Pay in instalments and own the car at the end. Best for those who want to own eventually with no large final payment — secured against the car, so accessible even with weaker credit.
3. Personal contract purchase (PCP)
Lower monthly payments with a large optional 'balloon' payment to own at the end, or hand the car back. Best for those who want low payments and flexibility to change cars — but watch mileage limits and the total cost.
4. Leasing (personal contract hire)
Long-term rental — you never own the car and return it at the end. Best for those who want a new car every few years with predictable costs and no resale hassle.
5. 0% manufacturer finance
Sometimes available on new cars and very competitive if genuinely interest-free. Best when offered — but compare the total cost (and any deposit) against a personal loan.
Which is best for you?
- Want to own, keep the car: personal loan or HP
- Low payments, flexibility: PCP
- New car every few years: leasing
- 0% offer available: compare against a loan
How to find the best car finance
A whole-of-market broker can compare a personal loan against dealer finance to find the cheapest total cost. Find a loan broker through Nesto — free, no obligation.
Frequently asked questions
What's the cheapest way to finance a car?
Often a personal loan if you keep the car, since you own it outright with no balloon payment — but compare against 0% manufacturer offers.
What's the difference between HP and PCP?
HP spreads the full cost to ownership; PCP has lower payments with a large optional final payment to own, or you hand the car back.
Is leasing or buying better?
Leasing suits those wanting a new car regularly with predictable costs and no resale hassle; buying suits those who want to own and keep the car.
Should I use a personal loan or dealer finance?
Compare the total cost. A personal loan means you own the car and can negotiate as a cash buyer; dealer finance can be competitive, especially at 0%.
Can I get car finance with bad credit?
Yes — HP is secured against the car so it's accessible, though at higher rates. Compare options carefully.