How interest-free car financing works?
Interest-free car finance deals in the UK, also known as 0% Annual Percentage Rate finance. The essence of such programs is as follows - the value of the car is divided into equal parts during the set period without paying interest on the borrowed amount. Such loans are quite common in the UK and are created by car manufacturers and dealers to attract customers.
So, the principle of interest-free financing is as follows: according to the loan agreement, you pay 0% per annum, that is, only the cost of the vehicle itself, which is divided into monthly payments. Some financing programs require the payment of an advance deposit, which is usually a certain percentage of the value of the car. If the deposit is paid in advance, the balance is divided into equal monthly payments during the term of the agreement.
It is worth noting that the interest-free term of financing is usually valid for a fixed period (for example, from 12 to 60 months). After this period, an annual interest rate may be charged. Therefore, it is worth making all monthly payments during this interest-free period.
As an alternative, you can also take out a personal loan. Your possible expenses:
Personal loan calculations for 1 year (example)
| Amount, $ | Rate, % | Accrued %, $ |
| 5,000 | 7.50% | 203 |
| 5,000 | 8.50% | 230 |
| 5,000 | 9.50% | 257 |
| 10,000 | 9.60% | 520 |
| 10,000 | 10.60% | 574 |
| 10,000 | 11.60% | 628 |
| 20,000 | 11.70% | 1,268 |
| 20,000 | 12.70% | 1,376 |
| 20,000 | 13.70% | 1,484 |
| 25,000 | 13.80% | 1,869 |
| 25,000 | 14.80% | 2,004 |
| 25,000 | 15.80% | 2,140 |
What are the types of 0 vehicle financing?
In the UK, the most common types of zero financing are:
- Personal Contract Purchase (PCP)
- Hire Purchase (HP)
- Leasing (Personal Contract Hire)
This page compiles various zero-vehicle financing deals. Therefore, we recommend comparing all offers and choosing the one that best meets your needs.
Our analysts have researched the UK car loan market and selected for your consideration the cheapest offers for popular car brands. Just follow the links and select the proposal, that suits you best.
