Price reductions on selected cars, from £250 - £1000 off

skip to main contentskip to footer

How to get cheaper car finance payments

There are ways to reduce your car finance payments if they become too much to manage, you just need to be aware of your options

Car finance

Sometimes circumstances change, and it can be a real stress if your income takes a hit after you’ve started a new car finance deal. With the rising costs of living, you may want to see how you can reduce your monthly car finance payments and make them a bit more manageable.

Getting lower car finance payments

There are a few things you can try to reduce your Hire Purchase or Personal Contract Purchase car finance payments, but not all of these tips will work for all finance contracts. You’ll need to chat with your lender and check the terms and conditions of your agreement to see what works for you.

Extend your car finance loan

You’ll pay your car finance across an agreed period of time (usually 12 months to five years), and this will be a factor in deciding how large your monthly payments will be. If you spread your costs across a longer period, you could see your monthly repayments reduced.

Speak with your lender about how this will work with your car finance deal, as you might see interest rates shoot up if you change the loan period, but going for the maximum loan length and extending your contract might be an option for you.

Refinance your car loan

One way to see a reduction in your monthly car finance payments is to refinance your loan. If you’ve managed to improve your credit score, this could mean you’re offered lower levels of interest.

Most lender won’t allow you to refinance a deal just to get cheaper rates, however – you’ll normally need to switch lenders, which usually means you’ll have to get a loan.

Overpay your car finance

If you’ve come into some extra funds and want to use them towards your car finance, you’re allowed to overpay – all regulated agreements will allow you settle early or make lump sum reductions.

There may be early payment fees to consider in some cases, so check with your lender and get the details.

Voluntary termination of car finance

If you’re struggling with making your car finance payments or just want to finish your contract early and start fresh with something new, you might opt for a voluntary termination.

Under the Consumer Credit Act 1974, you’re given the legal right to terminate your car finance contract early if you've paid off 50% of the total amount payable on your agreement. If you haven’t paid half of this amount, you’ll usually be given the option to pay the extra sum to boost it up.

If your finance deal is a Personal Contract Purchase (PCP) arrangement, this amount will also include the final balloon payment. You’ll also need to make sure there’s no damage to your car if you want to terminate early and hand it back.

Learn more about car finance: