How Does Financing a Car Work? | Kia UK
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How Does Financing a Car Work?

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How Does Financing a Car Work?

Car financing is an increasingly popular way to buy a car. It enables you to get a new set of wheels without paying for a car outright. However, with the range of car finance options available, it can be difficult to know which is best for you.

At Kia, we understand the confusion of navigating all these offers, which is why we do all we can to make financing a Kia car simple, hassle-free and rewarding.

In this article, we break down the ins and outs of how financing a car works, the various car finance options and whether financing a car is a good idea for you.

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How can I get a car on finance?

Car financing describes various ways you can borrow money to fund a new or used car over a set term or contract, sometimes with the option to own the car at the end.

If you’re thinking of applying for a car on finance, you should ensure you know all your options and how they work before deciding.

View of the Kia Niro tiger nose

Personal Motor Loan (PML)

A Personal Motor Loan (PML) is a traditional finance method whereby drivers pay fixed monthly repayments over a set contract. PML gives you the option to pay an initial deposit to reduce the monthly fees. You can also trade in your existing car to put towards this deposit.

As your interest rate is fixed, you’ll know exactly how much you’ll repay at the outset of the agreement. You will own the vehicle only once all monthly repayments have been made. Find more information about PML finance deals available now with Kia.

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Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) is a way of financing a car through an initial deposit amount of your choice, followed by monthly payments over an agreed term.

At the end of a PCP contract, you will have three options: to return, renew or buy. You have the choice to buy the car with an optional final payment. You can also renew your deal using any equity you’ve built during the contract towards a deposit for an upgraded car.

If you decide to simply return the car, excess mileage charges may apply if you have exceeded the limit set out at the beginning of the contract. When it comes to PCP vs Lease , PCP provides much greater flexibility when structuring your contract and throughout.

For more information, or to discover the extensive range of Kia cars available with PCP, visit our dedicated PCP finance page.

Kia ceed in green, side view

Personal Contract Hire (PCH)

Personal Contract Hire (PCH) is only offered by Kia to private individuals (e.g. sole traders). It’s a popular way to lease a car for private individuals who do not wish to own the vehicle. This is because PCH doesn’t grant you the option of ownership .

In a PCH agreement, you pay an upfront advance rental fee followed by fixed monthly rental payments during the contract, until you hand it back at the end of the lease. PCH contracts usually have mileage limitations that, if exceeded, will prompt an excess mileage charge.

Learn more about PCH car lease deals with Kia.

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Looking for your next Kia car? Find out how you can buy at home with Kia.

Considering financing a Kia car? Use our car finance calculator to get a personalised quote

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What checks are done for car finance?

The checks for car finance usually include:
• Proof of identity
• Proof of address
• Driver’s licence
• Proof of income
• Employment
• Credit check

Models shaking hands in a Kia dealership

Can I sell my car with outstanding finance?

No, it is illegal to sell a car with outstanding finance, as the car is not legally yours at this point. Once you’ve paid off your lease and you legally own the car, as with PCP and PML, you’re entitled to sell the car as and when you please.

If you wish to pay off your car finance early, some options will allow you to do this. At Kia, we allow you to settle both PML and PCP agreements early by paying the remaining balance in the contract. With PCP car deals, you can also terminate your contract early once you’ve paid 50% of the loan amount, although this may incur an additional fee.

Kia ceed back view driving on road

Can you modify a financed car?

If you have fully repaid your finance and are the legal owner of the car, you are free to modify it.

However, if you’re in the middle of a finance agreement, this means the lender or dealership still legally owns the car and must therefore approve any modifications you want to make. Usually, your car finance lender will want the car returned in its original condition, so modifying it will be forbidden. In certain cases, it may be approved, so it’s always best to consult your lender directly.

Kia Niro EV plugged in with model sitting on bonnet

So, is financing a car a good idea?

Car financing can be a great way to fund a car purchase without paying the upfront cost. However, understanding the details of various finance options and being able to identify the best option for you is crucial to ensuring your commitment is worthwhile.

At Kia, we like to keep car financing simple. With our tailorable finance services, your plan is personalised to suit your needs, always with no arrangement or purchase fees. Discover our exciting range of Kia cars available on PCP, PML and contract hire finance, including Hybrid, Plug-In Hybrid and pure Electric cars.

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Images shown are for illustration purposes only and may not be to full UK specification. Features shown are not standard across the Kia model range and availability will vary dependant on model. For further details please refer to the individual model specification sheets.