Car finance is an excellent way to spread the cost of a vehicle into manageable monthly payments. But if you’re new to car finance, then you might not be aware that you can use it to buy used cars, not just brand new vehicles. Almost any vehicle can be financed. Here’s all you need to know about what used cars can be financed.

What used cars can I get financed?

Depending on the finance provider, you can probably find car finance for any vehicle on the used car market. But in general, most finance providers will not provide finance on a car over 10 years of age. This is because the car is likely to have more wear and tear, so will be less reliable and will not retain its value in the same way. So then finance provider could easily end up losing money.

Some finance providers will only offer a finance package for a car from an approved dealer. Meaning you would be unable to buy a car from a private seller. Speak to your finance provider if you have found a car like this that you want to finance.

Types of finance available for used cars

There are a variety of car finance packages available for used cars. Hire purchase (HP) and Personal Contract Purchase (PCP) are two of the most popular types of finance product available. HP is where you spread the entire cost of the car, including interest, over the length of the agreement. PCP deals work differently in that you don’t own the car at the end of the finance term, instead you have three options – return the car, pay a final one-off payment to own the car, or refinance. In a PCP deal, you don’t finance the cost of the car, but the loss of the car’s value across the length of the agreement.

What about buying from sellers directly?

Many finance companies won’t offer a finance package on cars bought directly from private sellers. This is because it’s a lot more difficult to check the quality of both the vehicle and the seller. Finance companies, if regulated by the Financial Conduct Authority, are obligated to ensure that their customers are empowered throughout the process. So if they were to help finance a vehicle that proved to be very different to advertised, even though it wasn’t provided by them, it doesn’t look good for their reputation. As a result, the vast majority of reputable finance providers prefer to provide finance for cars from approved dealerships.

So if you want to finance a car from a private seller, you will need to speak to the finance provider. There may be additional checks you need to complete before the finance package is approved.

What about classic cars?

Classic car finance is available. The main finance product available on classic cars is hire purchase. Again, you will need to speak to your finance provider if you are thinking about going for a classic car.