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Can You Buy a Car When You Have £0 Saved?

 

Can You Buy a Car When You Have £0 Saved?

You've looked at Auto Trader. You've found a car that suits your needs. The problem is that you don't have the money to pay for it upfront.

If you need a car for commuting, family life or getting between home and base, waiting until you've saved the full amount might not feel practical. Borrowing could help you spread the cost, but it's important to understand how the different options work before committing.

In this guide, we'll walk through the main ways to finance a car, what to compare, and how to make a more informed decision.

What are your options for buying a car with no savings?

If you don't have money set aside for a car, there are several ways you might be able to finance one. Availability depends on the lender, the agreement, and your eligibility.

Finance option	How it usually works	When do you own the car?
Hire purchase (HP)	Usually an upfront deposit followed by monthly payments. Some agreements may be available without a deposit.	Generally, after all required payments and any final fees are paid.
Personal contract purchase (PCP)	Monthly payments, often with a larger optional final payment if you want to own the car.	Usually only if you make the final payment and meet the agreement's terms.
Personal car loan	Borrow a set amount from a lender and repay it in instalments.	With an unsecured personal loan, you generally own the car from the point of purchase.

No-deposit options aren't guaranteed, and borrowing the full cost of a car may mean higher repayments or a greater total cost. Let's look at each option in more detail.

1. Hire purchase (HP)

Hire purchase allows you to spread the cost of a car over an agreed period, usually through fixed monthly payments.

You typically pay a deposit first, but some providers may offer HP agreements with no deposit, depending on their lending criteria.

You'll make regular payments throughout the agreement. You generally become the owner once you've paid everything required, including any applicable final fee.

HP may be worth exploring if you want to own the car at the end of the agreement and prefer a set repayment schedule.

Before signing, check the interest rate, total amount payable, whether a deposit is required, and what happens if you miss payments.

2. Personal contract purchase (PCP)

PCP is another type of car finance commonly arranged through a dealership or finance provider.

You usually pay an upfront deposit followed by monthly instalments. These payments are based in part on the car's expected value at the end of the agreement, rather than paying off the full purchase price.

At the end, you generally have three choices:

• Pay the final payment to own the car.

• Return the car, subject to the agreement's mileage, condition and other requirements.

• Part-exchange it for another vehicle, depending on the car's value and the terms of any new agreement.

Some providers offer PCP without a deposit, although this depends on the deal and your eligibility.

PCP can offer flexibility at the end of the agreement but remember that the monthly payments don't usually mean you'll own the car automatically.

3. Personal car loan

A personal car loan is another way to finance a vehicle, particularly if you'd prefer to arrange the borrowing yourself rather than through a dealership.

You apply to a lender to borrow a set amount. If approved, you use the money to buy the car and repay the loan in monthly instalments over an agreed term.

With an unsecured personal loan, the car generally isn't used as security for the borrowing, and you usually own it from the point of purchase.

First Defence Finance (FDF) offers a Car Loan for MOD personnel who want to spread the cost of buying a car. You can explore borrowing options directly with FDF and compare the available terms with other finance deals.

As with any loan, approval, rates and repayments depend on your circumstances and affordability. Check the total amount repayable as well as the monthly payment before making a decision.

Explore the First Defence Finance Car Loan →

Which car finance option should I choose?

There's no single option that's right for everyone.

• HP may suit you if you want to spread the cost and own the car at the end.

• PCP may suit you if you want the flexibility to return, replace or buy the car when the agreement ends.

• A personal car loan may suit you if you want to arrange the borrowing separately and buy the car outright.

If you have no savings, pay particular attention to whether a deposit is required. A no-deposit agreement may also mean higher monthly payments or a higher total borrowing cost.

It's worth comparing the APR, fees, repayment period, total amount repayable and any final payment before deciding.

Remember the cost of running a car

The finance payment is only one part of owning a car.

You'll also need to consider insurance, fuel or charging, vehicle tax, servicing, MOTs, tyres and unexpected repairs. These costs can vary considerably depending on the vehicle and your circumstances.

Work out how much the car could cost you each month, including the finance repayment, before you commit. This can help you see whether the overall cost fits your budget.

Looking for a way to finance your next car?

If a personal loan sounds like the right route for you, First Defence Finance offers car loans for eligible members of the Armed Forces community, including serving personnel, veterans and qualifying family members.

Explore the current terms, check the eligibility criteria and consider whether the repayments would fit comfortably alongside your other commitments.

Find out more about the First Defence Finance Car Loan →



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