How to Buy a Car When You Have £0 Saved
You’ve looked on Autotrader. You’ve been to the car showroom. You know exactly the car you want. The problem is that you don’t have all the money for it right now.
If that sounds like you, it might feel like a big challenge, but there are still plenty of ways to get behind the wheel.
Many people fund their vehicles with credit, which allows you to spread the cost over time.
In this article, we’re going to walk through the main car finance options, how they work, and what you need to know to make the decision that’s right for you.
What are my options for buying a car with no savings?
Finance option | How it usually works | Do you own the car? |
A deposit followed by fixed monthly payments. Some agreements may be available with no deposit. | Usually, once all required payments and any final fee are paid. | |
A deposit and monthly payments, with a larger optional final payment if you want to own the car. | Only if you make the final payment and meet the agreement's terms. | |
No deposit needed. Borrow the full vehicle cost from a lender and repay it in monthly instalments. | You generally own the car from purchase when using an unsecured personal loan. |
Availability, deposit requirements and eligibility vary by provider.
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, subject to 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 can 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 and whether a deposit is required.
2. Personal contract purchase (PCP)
PCP is another type of car finance commonly arranged through a dealership or finance provider.
You usually pay a deposit followed by monthly instalments. These payments cover the expected depreciation of the car during the agreement rather than the full purchase price.
At the end, you generally have three choices:
Pay the final balloon 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 available equity and the next 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 loan
A personal 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 and own the car outright and repay the loan in monthly instalments over an agreed term.
If you choose an unsecured personal loan, like the Car Loan by Plane Saver Credit Union, the car isn't used as security for the borrowing, and you own the car from the point of purchase.
You can explore personal loans through banks, credit unions and other lenders. Compare interest rates, fees, repayment terms and the total amount payable, as these can vary.
Can I get a personal car loan through Plane Saver?
Plane Saver Credit Union offers Car Loan options for eligible members who want to finance a car.
If you're considering borrowing directly from a lender, you can explore our Car loan and check the current terms and eligibility criteria.
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.
Always consider the full terms and additional costs like insurance, fuel, and car maintenance before deciding.
