Car Finance Myths Debunked

Check Your Eligibility in 60 Seconds

Navigating the world of car finance can be tricky, especially with the abundance of misinformation out there. This article aims to debunk some of the most common car finance myths, helping you make informed decisions about financing your next vehicle.

Myth 1: You Need Perfect Credit to Get Car Finance

While having a good credit score can help secure better terms, it’s not a necessity for obtaining car finance. Many lenders offer bad credit car finance options tailored for those with less-than-perfect credit.

  • Fact: There are specialised lenders who cater to individuals with bad credit, offering flexible terms and reasonable interest rates.
  • Tip: Check your credit score and shop around for the best deals.

Myth 2: Car Finance is Only for New Cars

Contrary to popular belief, car finance isn’t limited to new vehicles. You can finance used cars, motorbikes, and even classic cars.

  • Fact: Many finance options are available for used cars, motorbikes, and other types of vehicles.
  • Tip: Explore different financing options to find the one that best suits your needs.

Myth 3: Leasing and PCP are the Same as Buying

Leasing and Personal Contract Purchase (PCP) are often confused with buying, but they have distinct differences.

  • Fact: Leasing and PCP involve lower monthly payments and the option to return the car at the end of the term. Buying through Hire Purchase (HP) or a personal loan results in ownership.
  • Tip: Compare PCP and HP options to decide which financing method is right for you.

Myth 4: You Can’t Refinance a Car Loan

Refinancing isn’t just for mortgages; it’s also possible for car loans. Refinancing can lower your monthly payments or reduce the interest rate.

  • Fact: You can refinance your existing car loan with the same lender or a different one. Learn more about car loan refinancing.
  • Tip: Check if you qualify for refinancing and compare offers from various lenders.

Myth 5: You Must Make a Large Down Payment

While a larger down payment can reduce your monthly payments, it’s not always required. There are no-deposit finance options available.

  • Fact: Some lenders offer no-deposit car finance deals, though they might come with higher interest rates.
  • Tip: Evaluate your financial situation to decide the best down payment amount for you.

Myth 6: Car Finance is Too Complicated

Many people believe car finance is overly complicated, but with the right guidance, it can be straightforward.

  • Fact: Understanding the basics of car finance, such as HP, PCP, and leasing, can simplify the process. Use resources like car finance guides to educate yourself.
  • Tip: Don’t hesitate to ask questions and seek advice from finance experts.

Comparison Table: Car Finance Options

OptionDescriptionOwnershipMonthly Payments
Hire Purchase (HP)Pay a deposit and fixed monthly payments. Own the car at the end of the term.YesHigher
Personal Contract Purchase (PCP)Lower monthly payments with an option to buy, return, or trade in the car at the end.OptionalLower
LeasingPay monthly to use the car, then return it at the end of the lease term.NoLower
Personal LoanTake out a loan to buy the car outright.YesVaries

Myth 7: You Can’t Get Car Finance if You’ve Been Refused Before

Being refused car finance once doesn’t mean you can’t try again. Different lenders have varying criteria.

  • Fact: Some lenders specialise in helping those who have been refused finance previously. Visit our guide on getting finance after being refused for more information.
  • Tip: Improve your credit score and try again with different lenders.

Myth 8: All Car Finance Deals are the Same

Not all car finance deals are created equal. Interest rates, terms, and conditions can vary significantly.

  • Fact: Shopping around and comparing different offers can help you find the best deal. Use tools like our finance calculator to estimate your payments.
  • Tip: Read the fine print and understand all terms before signing a finance agreement.


Debunking these common car finance myths can help you make better-informed decisions when financing your next vehicle. Whether you have good or bad credit, are looking to buy a new or used car, or need specific advice, there are resources and options available to suit your needs.

For more information and personalised advice, explore the resources available at Happy Motor Finance.

Check Your Eligibility in 60 Seconds

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Carol St Clair
Carol St Clair
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idrees ali
idrees ali
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Matt James
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Andy Ryan
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Victoria Sumner
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Peter Killiard
I could make this very very long winded but I won’t. I’ll just say that Kirsty and the team gave me the best customer service and buying experience ever. Thank you very much and I’ll be back when it’s time to upgrade.
Barry O'Brien
Barry O'Brien
Kirsty was very patient, I don’t think I was an easy customer, I can’t remember how many cars I looked at, there was no pressure and Kirsty was extremely helpful and nothing was too much trouble, we eventually got a great deal on my ideal car, Thank you Kirsty
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Jack Scorey
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Kyle Dann
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Company Name & Contact Details
Happy Motor Finance
Clippers House
Clippers Quay
M50 3XP
0161 524 0582
Happy Motor Finance Limited is registered in England and Wales under company number: 14387669. Registered office address: Clippers House, Clippers Quay, Salford, England, M50 3XP

Happy Motor Finance Limited (FRN - 989250) is authorised and regulated by the Financial Conduct Authority. We act as a credit broker not a lender. We work with a number of carefully selected credit providers who may be able to offer you finance for your purchase. (Written Quotation available upon request). Whichever lender we introduce you to, we will typically receive commission from them (either a fixed fee or a fixed percentage of the amount you borrow) this will not affect the rate you are offered or the amount you will pay back. The lenders we work with could pay commission at different rates. All finance is subject to status and income. Terms and conditions apply. Applicants must be 18 years or over. We are only able to offer finance products from these providers.

Happy Motor Finance Limited are registered with the Information Commissioners Office under registration number: ZB408604

VAT Number: 456 0212 21
Specialist Automotive Finance Approved
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