Choosing Your Dream Car & Mastering Car Finance

By Jill Gourlay June 19, 2024

It can be overwhelming to choose the right car from a large selection and an abundance of information online. But don’t worry, we’ve got you covered! Let us help you find your dream car today! 

Our comprehensive guide will explore what to look for when choosing your next car, things to avoid, the best way to buy a car, the best second hand car sites, the best finance options for cars, whether it be used car finance or new car finance and much more. 

What to look for when choosing your dream car:

Choosing a vehicle is a significant decision that requires careful consideration of several crucial factors. There isn’t a best way to buy a car, as it comes down to many factors, including your budget and the type of vehicle that suits your needs at the time of purchase. 

If you’re planning to buy a car, it’s essential first to determine what type you’re interested in. Do you need a compact car, an SUV, or a sports car? What is your preferred style, brand, colour, and size? Are you looking for an automatic or manual transmission? Once you have a clear idea of what you’re looking for, you can start researching different brands and models that meet your criteria.

Everyone has different needs when it comes to buying a vehicle. If you plan on using it for long distances, you may be looking for a fuel-efficient model to save you money in the long run. If you just need something to get you from A to B, a small car with a smaller engine size could be perfect for you with a small car price

Reliability is another essential factor to consider. Choose a car that has a good track record of reliability and requires minimal maintenance. Resale value is also worth considering, especially if you plan on selling your car. Look for models that retain their value well and are in high demand in the used car market. But most importantly, choose the dream car you want!

dream car - nikki

After considering all the necessary aspects, you can start narrowing down your options by reading expert reviews online or visiting a branch. You can also explore different payment options and use a car finance checker to get an idea of the cost of financing a car. If you’re purchasing a used car you could explore finance options such as PCP (personal contract purchase) / HP (hire purchase), which could suit your budget. If you are still trying to decide about used or new car finance options, keep reading, as we will cover everything you need to know in our guide!

Used vs new car – What is the right choice for you?

If you’re still unsure whether to choose used vs new cars, let’s discuss some advantages and disadvantages of each. This will help you make an informed decision about which option is best for your current needs.

Used car advantages: 


Used car prices are typically lower than new ones. This enables purchasers to cut costs on the initial buying price and potentially on insurance expenses


Opting for a used car allows you to bypass the most drastic phase of this depreciation curve.

Used car disadvantages:

Ownership costs

The final balloon payment is usually higher than with HP, which you would need to pay to own the car outright.

Maintenance costs

As used cars age, they often demand more frequent maintenance and repairs than new cars. As the vehicle ages, its components may gradually deteriorate, resulting in increased expenses for upkeep.

New car advantages:

Manufacturer warranty

New cars generally include warranties that offer coverage for a specific duration or mileage, ensuring reassurance by safeguarding against unforeseen expenses.

Lower maintenance costs

New cars typically need less frequent maintenance than used cars. With adequate care and regular upkeep, new cars can operate efficiently for a prolonged period without significant repairs.

New car disadvantages:

Ownership costs

The final balloon payment is usually higher than with HP, which you would need to pay to own the car outright.

Condition of the vehicle

You must meet the standards outlined in your contract and will be charged for anything beyond fair wear and tear. So, keeping it in good condition is crucial to avoid these charges. 

Can the size of a car and its engine capacity impact the insurance cost?

A car’s size and engine capacity can significantly impact its ownership costs, including insurance, maintenance, and repairs. Generally, larger cars and those with more powerful engines are more expensive to insure. This is because they can cause more damage in accidents, resulting in increased pay outs for insurance companies.

The size and complexity of the engine can also affect a car’s maintenance costs. Larger engines require more frequent maintenance and expensive components, increasing service expenses. Additionally, road tax is typically higher for larger vehicles as they emit more CO2 than smaller cars.

Larger vehicles often require more expensive parts and labour for repairs. Due to their specialised components, high-performance engines may also be more costly. The availability of parts and the complexity of the vehicle’s design can also impact repair expenses.

Renault Clio vs BMW X5 – Let’s compare insurance costs.

The Renault Clio is popular among consumers when comparing insurance costs between a Renault Clio and a BMW X5 due to its attractive design, cost-effective maintenance, and budget-friendly insurance rates.

In the UK, vehicles are sorted into insurance groups ranging from 1 to 50, with group numbers determining the premium cost. Cars in Group 1 are the least expensive to insure, while those in Group 50 are the most costly.

bmw x5 vs clio

The insurance cost can vary depending on model choice, driving experience, claims history, and age. For example, the Expression model is categorised under the 3-4 insurance group, while the Play model falls under group 4-12. A more affordable car to insure and run would be an excellent option for those looking for their first car. The estimated cost for the standard version of this model ranges from £250-650 per year. However, actual quotes may differ based on personal factors.

Now, let’s look at the BMW X5. The insurance group for this vehicle ranges from 40 to 50, depending on the model. As a high-end luxury vehicle, it is classified under the upper range of insurance groups, meaning you can expect to pay between £800 and £1,500 annually for insurance. However, these are just estimates, and the actual cost will depend on personal factors. Remember that luxury vehicles often have higher insurance costs due to their brand name, so it is essential to research before purchasing.

Does the age of a car impact its financing eligibility?

The age of a car can significantly impact its financing options. New car finance can usually be provided with lower interest rates and extended repayment periods from lenders. Cars ranging from one to three years old fall under this category because newer cars are perceived as less risky due to their lower likelihood of needing expensive repairs and maintenance early on in the agreement. 

On the other hand, financing for older cars may come with stricter conditions, or they may not qualify for certain types of funding altogether. Lenders are often cautious about financing older vehicles due to their dependability, potential maintenance issues, and depreciation concerns.

Nikki with money | master car finance - dream car


Increasing your initial deposit when buying a car can significantly impact your monthly payments and the likelihood of getting approved for car finance. By paying a larger deposit, you will need to borrow less money to finance the vehicle, resulting in lower monthly payments as you invest a smaller amount. A larger deposit can also lead to better financing terms, such as lower interest rates, which can further reduce your monthly payments.

A significant deposit reduces the lender’s risk, immediately increasing the vehicle’s equity. This makes you a less risky borrower and improves your chances of getting approved for auto financing. Lenders may approve your loan request and offer better terms by providing a larger deposit. This demonstrates your ability to save and your commitment to the purchase, giving lenders confidence in your creditworthiness.

Car finance – What is the best option for you?

So you have found your dream car, let’s explore how to pay for it! There are various ways to finance options for a new or used car to consider:


Hire Purchase (HP)

With HP, you pay a deposit and commit to making fixed monthly payments over an agreed term, usually 1 to 5 years. Until the final payment is settled, the car remains the property of the finance company. Once you have made the final payment, you become the complete owner of the vehicle.


Personal Contract Purchase (PCP)

PCP normally entails an initial deposit – depending on the lender you could get a no-deposit deal, followed by regular fixed monthly payments for a predetermined duration. With the no-deposit deals, you usually need to pay higher monthly payments. At the end of the term, you have three options: return the car, trade it in for a new one (using any equity towards the deposit), or make a final payment (often called a balloon payment) to gain full ownership of the car. PCP usually offers lower monthly payments than HP but may require a larger final payment to secure ownership at the end of the agreement. PCP used car and PCP new car deals work the same way.  


Car Loan

When you decide to buy a car but don’t have the full amount to pay upfront, you can take out a car loan. This means you borrow money from a lender to buy the car, and then repay the loan over time with interest. Throughout the repayment process, the lender holds a lien on the vehicle, granting them the legal right to repossess the car if you default on your loan payments. Upon complete repayment of the loan, along with any interest and charges, you officially become the owner of the car.


Car Leasing

Car leasing is similar to PCH, renting a car for a predetermined period and making fixed monthly payments. Business contracts and finance leases are also types of car leasing, which may offer different terms and conditions.

The value of a credit score

When considering applying for a car loan, it is crucial to understand that a favourable credit score can enhance the likelihood of approval. Lenders use credit scores to assess the lending risk associated with individuals. A high credit score indicates a history of borrowing responsibly and repaying your loans, making you a more desirable candidate for a car loan. On the other hand, if your credit score is low, you may be refused a loan or need to explore different financing options that come with higher interest rates, such as dealer financing or subprime lenders.

Interest rates

Credit scores play a direct role in determining the interest rates offered on auto loans. People with outstanding credit scores typically meet the requirements for reduced interest rates, leading to decreased monthly payments and lower total interest costs throughout the loan. On the other hand, those with lower credit scores could face higher interest rates to offset the perceived risk of default.

Loan terms

Credit scores can also impact the auto loan terms, including the loan duration and down payment requirements. Borrowers with higher credit scores may enjoy greater flexibility in selecting loan terms and could be eligible for extended repayment periods with lower monthly instalments. On the other hand, borrowers with lower credit scores may be restricted to shorter loan terms and required to make larger down payments to reduce the lender’s exposure to risk.

Mobility Scheme

The Motability Scheme is a government-funded initiative that assists individuals with disabilities in leasing a car, scooter, or powered wheelchair. This scheme enables individuals who have received a qualifying benefit for a minimum duration of 12 months to rent a car, scooter, or powered wheelchair.

Under this scheme, your vehicle tax will be covered annually. In addition to your contract hire lease, you will also benefit from insurance coverage and complimentary replacement tyres and windscreens as required. You must pay for fuel as part of the scheme, as this is not included.  You can view Mobility’s eligibility checker online to see if you qualify for this.

Using dealer finance or a broker – Which is better for you?

In the UK, there are significant differences between accepting car finance proposed by a dealer and contacting a broker to find the best interest deal among multiple lenders. Here’s a breakdown of both options:

Dealer Finance:

Convenience: Arranging finance through the dealer is often convenient when buying a car. They typically offer on-the-spot finance options, making it a quick and seamless process.

Limited Options: However, the downside is that dealers usually work with a select group of finance companies or banks. You might get the least competitive interest rates or terms, as the dealer’s priority might be maximising their profit.

Potential for Higher Costs: Since the dealer may receive commissions or incentives from the finance provider, the interest rates might be higher to cover these costs.

Broker Services:

Access to Multiple Lenders: Brokers act as intermediaries between you and various lenders, including banks, credit unions, and finance companies. They have access to a broad range of finance options, which increases your chances of securing the most favourable terms.

Tailored Solutions: A broker can assess your financial situation and needs to recommend the most suitable finance options. They can tailor the loan terms, such as the deposit amount, repayment period, and interest rate, to align with your preferences and budget.

Competitive Rates: Brokers can collaborate with numerous lenders, enabling them to secure favourable interest rates and terms on your behalf. This can lead to potential savings throughout the loan.

Expert Guidance: With their extensive industry knowledge, brokers play a crucial role in guiding you through the intricacies of car finance. They can elucidate the terms and conditions, address uncertainties, and ensure you grasp the loan agreement’s full implications.

Dealer finance can be more convenient but may only sometimes be the most cost-effective or tailored solution. On the other hand, brokers can offer access to a wider range of options and potentially better deals. However, the research and application process may require more time and effort.

Stock cars

At CarMoney, we work with some of the industry’s largest used and new car stock sites! You can search and find the perfect car for you there, and come to us for the right finance package to go with it! We work with:

partner stock list - carmoney

We also have our own stock list from our partner dealers on our website, which you can browse here:

CarMoney LIMITED is authorised and regulated by the Financial Conduct Authority (FCA) for consumer credit activity and our registration number is 674094. Representative 17.9% APR. Over 18’s only. CarMoney IS A BROKER NOT A LENDER.

REGISTERED ADDRESS: Pioneer House, 2 Renshaw PL, Motherwell, ML1 4UF, Scotland.Company Number: SC467274.

All finance is subject to status and income. Written Quotation on request. CarMoney Limited can introduce you to a limited number of finance providers based on your credit rating and we will receive a commission for such introductions.