Compare Car refinance Car finance quotes (UK)

Find cheaper car finance without denting your credit score

Rising costs mean every pound counts. With average car finance now around £244 per month in 2025, many UK drivers can cut payments by refinancing. Switcha explains how to compare quotes smartly and spot a genuinely better deal.

Understanding APR is knowing what you will pay in real terms.

Is this guide right for you?

You already have car finance - PCP or HP - and want to reduce interest or monthly costs. Your credit may have improved since you signed. You are approaching a PCP balloon payment and want options. You prefer quick, no-impact comparisons across multiple FCA-regulated lenders.

Key terms made clear

• APR: The annual cost of borrowing including interest and certain fees. In 2025, competitive UK car finance typically sits between 6% and 11%. Below this is strong, above may signal room to negotiate or refinance.
• PCP: Personal Contract Purchase. Lower monthly payments with a large optional final balloon payment to own the car.
• HP: Hire Purchase. Higher monthly payments than PCP, but you own the car after the last instalment.
• Balloon payment: The lump sum due at the end of a PCP if you want to keep the vehicle. Can be refinanced to spread the cost.
• Soft search: An eligibility check used by most brokers that does not affect your credit score, allowing you to compare multiple offers safely.
• Representative APR: The rate that at least 51% of customers receive for a given product. Car refinance deals in early 2025 often show a representative APR around 14.9%, with best-case offers from about 8.9%.

Short standout: Competitive APRs are 6% to 11% in 2025 - aim low.

Your main routes to a better deal

Below are the most common ways UK drivers refinance or switch finance.

Side-by-side comparison

• If your credit score has improved or rates have eased, refinancing can save £100s or £1,000s over the term.
• Approaching a PCP balloon? Refinancing spreads the lump sum into manageable payments.
• Always compare multiple FCA-regulated lenders using soft searches to find your true market rate.

What it might cost - and where savings come from

• Average monthly car finance is around £244 in 2025, up about 8% since 2022. That makes shaving a few percentage points off your APR meaningful.
• Personal loans can advertise lower rates for larger sums - often 5.8% to 5.9% if you qualify - while many car refinance offers start around 8.9% with a representative 14.9%.
• The Bank of England base rate fell to 4.25% in May 2025. Lenders may pass on some of this over time, so timing can help.
• Savings depend on your remaining balance, current APR, and fees. Some drivers save £1,500+ in interest by switching at the right moment.

Risks to weigh:

• Early settlement or exit charges on your current agreement.
• Extending the term can lower monthly payments but may increase total interest.
• Variable fees and optional insurances can offset headline APR gains.

Who typically qualifies

• Age and status: You must be at least 18 and pass a credit check. UK residency and proof of income are standard.
• Credit profile: Better credit usually unlocks lower rates. Those with thin files or past issues may still get offers, but expect higher APRs.
• Vehicle and balance: Lenders assess car age, mileage, and remaining balance. Some set limits on vehicle age or minimum loan amounts.
• Documentation: Proof of identity, address, income, current finance settlement figure, and car details.

Tip: Use soft-search comparison first. It does not impact your credit score and quickly shows likely APR ranges before any hard check.

Step-by-step to compare and switch

1. Gather your current APR, term, and settlement figure.
2. Check your credit report for errors and quick wins.
3. Use a soft-search comparison across multiple FCA lenders.
4. Benchmark quotes against 6% - 11% competitive APRs.
5. Calculate total cost including any settlement or arrangement fees.
6. Choose PCP, HP, or personal loan based on goals.
7. Let the new lender settle your old agreement and confirm terms.

Pros, cons, and practical considerations

Pros:

• Potential to save £100s or £1,000s in interest.
• Lower monthly payments or shorter term flexibility.
• Soft checks allow safe comparison without score impact.
• Option to refinance a PCP balloon payment.

Cons:

• Early settlement fees can reduce or remove savings.
• Extending terms may increase total interest paid.
• Not everyone qualifies for headline rates.

Balanced view: Focus on total cost to the end of term, not just the monthly.

Checks before you hit apply

• Confirm settlement figure and any exit fees with your current lender.
• Compare at least three quotes - ideally more - using soft searches.
• Watch for optional add-ons that inflate the APR or total cost.
• Validate the lender or broker is FCA-regulated.
• Run the numbers on keeping the car vs returning it on PCP.

Bottom line: If the total cost falls after all fees, you are saving.

Alternatives if refinancing is not right

• Overpay your existing finance to cut interest faster, if allowed.
• Switch to a shorter term if you can sustain the payment.
• Consider a personal loan for potentially lower APRs on larger amounts.
• Return the car at PCP end and reassess your budget.
• Delay action if your credit is improving and rates are trending down.

Frequently asked questions

Q: Will comparing refinance quotes harm my credit score? A: No. Most UK brokers use soft searches for initial checks, so you can compare offers without any impact. A hard check typically occurs only when you proceed.

Q: What is a good APR for car finance in 2025? A: Competitive rates usually fall between 6% and 11%. Offers below that are strong, while higher rates may justify renegotiation or refinancing.

Q: Can I refinance a PCP balloon payment? A: Yes. Many drivers refinance the final lump sum into a new loan or HP, spreading the cost into monthly payments.

Q: How much could I save by refinancing? A: It varies, but savings can reach £1,500 or more in interest if you move from a high APR to a lower one and avoid excessive fees.

Q: Are personal loans cheaper than car finance? A: They can be, especially for larger balances where representative APRs of 5.8% to 5.9% are available to well-qualified borrowers. Eligibility and loan size matter.

Q: How quickly do rate cuts lower car finance costs? A: Lenders move at different speeds. The May 2025 base-rate cut may feed through gradually, so keep checking quotes.

What to do next

• Check your current APR, balance, and settlement fee.
• Compare offers from multiple FCA-regulated lenders using soft searches.
• Aim for competitive APRs and calculate total cost.
• Decide on PCP, HP, or personal loan to fit your goals.
• Apply with the best-value lender and let them settle the old deal.

Important information

This guide provides general information only. It is not financial advice. Always check your own figures, eligibility, and fees. Lenders and brokers should be FCA-regulated. Rates and terms can change without notice.