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Car finance options in 2021

16th February 2021 Print

Now that we are a few weeks into the new year and the expense of Christmas is behind us, many people will turn their attention to their finances and the next big purchase. One of these could be a new car, especially if you are a first-time buyer or looking to upgrade from one that now has high mileage and steeper maintenance costs. Despite record numbers still working from home, there is still a need for a vehicle to get around outside of work, so what options are there this year for those looking to buy a new car?

Car Finance 

In most cases, those looking to purchase a new car will be doing so with a finance option. 2021 will be no different to previous years in terms of options available, with plenty of personal contract purchase (PCP) and hire purchase (HP) options. There is also the option of a personal loan for those preferring to borrow through their bank. One aspect many people overlook when seeking car finance is whether they have a good or bad credit history. For those with a less than perfect credit score, bad credit car finance specialists should be considered. They may provide a better option for people who have struggled to get finance elsewhere due to poor credit, whether that’s through their bank or a car dealership. If you are someone with bad credit, then it’s recommended that you review your current finances first before entering into any further loan agreements.


Personal contract hire (PCH) is an alternative option to owning a car outright or through finance. The difference is that at the end of the agreement, you will need to return the car to the dealer. This can be a more expensive option than others, but where you will have a fixed monthly cost, this will include servicing and maintenance costs. If you need a new vehicle and aren’t particularly concerned about owning a car, PCH can be a reasonable and affordable option if you’re happy with potentially higher monthly payments in the process. You may also need to pay a higher deposit upfront compared to other finance options, so it’s worth doing your homework before proceeding.

Buying Outright

Whilst there are plenty of finance options available this year, buying the car you want outright does have its advantages. If you have available cash, or even the credit available already through a bank loan or credit card, paying in full for the vehicle means it's yours from day one. The downside to this compared to PCH, of course, is that it won’t come with any additional extras such as the servicing and maintenance costs (unless specifically agreed in addition to the value of the car). It also means at any point you can look to sell or part-exchange the car when you want a change, for example.  

Whichever option works out best for you, considering all your available finance options first will help you make an informed choice that you can afford.