Search our panel of trusted UK lenders to find the right loan at the right rate for you. You can check if you’re eligible for a loan without impacting your credit score to give you a decision in minutes.
Why choose Asda Personal Loans?
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A loan offer that’s right for you and your circumstances
What are car loans?
A car loan is a personal loan taken out to pay for a car. You can use it to pay for the full cost of a car or some of the total, or to put down a deposit. Personal loans are ‘unsecured’ – so they don’t need to be secured against an asset such as your home.
What are the different types of car loans?
If you need a loan for a car, there are several personal car finance options available on the market. Here’s a simple guide to help you decide which one is right for you.
Personal loans for cars
If you’re looking to buy a new car, you can ask a bank, building society or lender for a personal loan (also known as an unsecured loan) so you can buy the car in full straight away. If you take out a personal loan, your lender will give you the agreed amount upfront, and you’ll have to pay it back every month over a set period of time. Although a car dealership might offer lower monthly repayments, using a personal loan to buy a car means that the car will be yours as soon as you make the purchase. Asda enables you to search a selected panel of trusted lenders to source the right loan and rate for you.
Personal Contract Purchase (PCP)
A PCP, also known as a lease agreement, is a loan from a car dealership that will help you get a car, but you won’t be expected to pay off the full value of the vehicle up front. Also, unless you choose to, you won’t own the car at the end of the deal. After paying a deposit and making monthly repayments, you can give the car back to the lender as a deposit for a new vehicle. Alternatively, you can choose to pay a large final payment, called a ‘balloon payment’, to make the car yours.
The price of both the deposit and the repayments will depend on the cost of the car, the interest rate, and how much the dealer thinks they can sell the car for once the agreement is over. Many people pay a deposit of around 10% of the car’s value, but remember that the larger the deposit you make, the less you’ll have to borrow. You can usually choose the length of your PCP deal, too, with most people opting for anywhere between 24 and 48 months.
Personal Contract Hire (PCH)
PCH and PCP might sound similar, but there are a few key differences. A PCH is more suitable if you don’t want to own the car at the end of your lease, as this type of hire doesn’t give you the option to do this, unlike a PCP. You’ll agree to a set period and mileage with the car dealer and pay fixed monthly repayments.
As there is no option to pay a ‘balloon payment’ like you can with a PCP, you simply hand the car back to the dealership at the end of the contract. Once you’ve started an agreement, there’s usually not much flexibility to change it, so you need to be sure that you want the car for the agreed length of time before you sign.
Hire Purchase (HP)
A HP is like a PCP, but the car is legally yours once the final payment is made. You’ll pay a deposit, usually around 10%, and then pay off the car’s value in monthly repayments, using the car as collateral. Unlike a PCP, the car is yours after the last monthly payment, and there is no option for a one-off ‘balloon payment’.
Most people choose a HP contract of between one and five years, but remember, the longer the term, the more interest you’ll have to pay overall.
How do our car loans work?
At Asda Money, we work with a carefully selected panel of trusted lenders. With just one online eligibility check, you’ll see all the available car loans that match your requirements. We perform a soft credit check, so it won’t appear on your credit file.
This initial eligibility check will give you a list of potential loans to browse. Choose one that works for you and apply directly with the lender.
How much can I borrow?
Most people look to borrow between £1,000 and £25,000 for a car loan. The panel of lenders we work with offer loans up to £25,000. The individual lender will determine the repayment term, which is usually between one and seven years. The lender will also determine the available interest rate.
How much does car financing cost?
If you’re taking out a loan to pay for your car, the cost will depend on several factors. They include:
- The amount you’re borrowing: The more you borrow, the more you’ll have to pay back.
- The interest rate: The higher the interest rate you get, the more you’ll have to pay back over the loan term.
- The loan term: Be aware that if you borrow over a longer term, your monthly payments will be lower than a shorter-term loan, but you will pay more in interest over the length of the loan.
- Your credit score and history: If you have poor credit, you likely won’t qualify for the best interest rates. This could mean you’ll pay more in interest, making the overall cost of the loan more expensive.
Car loans with bad credit
If you’ve previously struggled with borrowing and have a low credit score, it will likely affect your ability to borrow for a car loan now. Not all lenders will lend to you, which can decrease the number of loans available. The lenders that do provide loans will often ask for a higher interest rate, and may not offer the full amount you want.
A guarantor loan may be an option if you have a poor credit score. This is where a family member or friend agrees to pay the debt if you can’t pay it back. Whilst this may seem viable, it’s important to consider the financial pressure it puts that person under. You may be unable to borrow the full amount through a guarantor loan.
Top Personal Loans FAQs:
- Why choose a Personal Loan through Asda?
Customers could access great rates from carefully selected trusted lenders, so you can sit back and let us do the leg work. What’s more, when you search for a personal loan, you’ll only have a soft search on your credit history, which means you can check your eligibility without harming your credit score.
Once your loan is approved, you could receive your funds the same day.
- How does it work?
Asda is in partnership with Aro which is a trading style of Freedom Finance Limited, who are a leading credit broker to offer our customers a different solution to borrowing money and finding a loan. We work alongside Aro so we can provide our customers with the right offer from a panel of handpicked trusted lenders.
With one eligibility check, you can search a panel of carefully selected lenders and provide you with a loan tailored to your needs. Once you have been approved you receive your funds which could be as quick as the same day.
So sit back, relax and let us do the hard work.
- Who are your lenders?
We have carefully selected a number of trusted lenders to be on a panel. You can search the panel to provide you with the very best offer you are eligible for. Find out more about each of our lenders here.
If you have any questions on our lenders, please call our Customer Service Team on 0333 555 0560 and a colleague will be happy to help.
- How much can I borrow?
Lenders offer loans from £1,000 up to £25,000 with repayment periods ranging from 1 to 7 years.
- Will applying affect my credit rating?
No. One of the best things about our service is you get access to a panel of trusted lenders with no credit footprint left on your credit file. When you apply with us, a soft search is completed which doesn’t harm your credit score.
However, if you do proceed with an offer from your search with us, the lender will complete a hard search once you have accepted your offer. This will show on your credit file.
About our trusted provider, Aro
Asda is in partnership with Aro which is a trading name of Freedom Finance Limited. Both Asda Money and Aro are credit brokers, not lenders. We offer our customers a different solution to borrowing money and finding a loan.
We work alongside Aro so we can provide our customers with their very best loan offer from a panel of handpicked trusted lenders.
With one simple eligibility check, our panel of lenders can provide you with a loan tailored to your needs. It’s also a safe way to find a loan without negatively affecting your credit rating.
ASDA Money is a trading name of Asda Financial Services Ltd who are an Introducer Appointed Representative of Aro which is a trading name of Freedom Finance Limited (company number 06297533) of Atlantic House, Atlas Business Park, Simonsway, Manchester, M22 5PR. Aro acts as a credit broker and not as a lender and is authorised and regulated by the Financial Conduct Authority (FRN 662079).
Terms and conditions apply. UK residents aged 18 and over. If you take out a loan, Asda Money and Aro receive a commission payment from the lender. Different amounts of commission are received from different lenders and the amount will be either a fixed amount or a percentage of the amount you borrow and dependant on the lender you select. We will not charge you a fee for our services.