What is pay-as-you-go car finance?Pay-as-you-go (PAYG) car finance is a type of hire purchase or personal contract purchase (PCP) agreement where the car is fitted with a GPS tracker and a payment device. If you miss a payment, the lender can remotely immobilise the vehicle until payment is made. PAYG car finance is designed for people with poor credit or no credit history who cannot access standard car finance. PAYG car finance typically carries higher interest rates (40–60%+ APR) than standard car finance. It is a last-resort option and should be compared carefully before committing. How does pay-as-you-go car finance work?Once approved, the lender installs a small device in the car. You make weekly or monthly payments via app, direct debit, or payment card. Miss a payment — or fail to make contact — and the lender can use GPS tracking to locate the vehicle and trigger immobilisation remotely. Once payment is made, the car is re-enabled. PAYG car finance vs standard finance
Who offers PAYG car finance in the UK?Specialist lenders offering PAYG or similar products include Moneybarn, First Response Finance, and Car Finance 247 (via sub-prime lenders). Some independent used car dealers also offer in-house PAYG agreements. Most major banks and mainstream lenders do not offer this product. What are the risks of PAYG car finance?
Are there alternatives to PAYG car finance?
Verdict Viable but expensive — use cautiously PAYG car finance is a legitimate option for those with very poor credit who genuinely need a vehicle. However, the high APR makes it expensive — always calculate the total amount payable, not just the monthly figure, before signing. Frequently asked questionsIs pay-as-you-go car finance regulated in the UK? Yes. PAYG car finance is regulated by the Financial Conduct Authority (FCA). All lenders and brokers must be FCA-authorised. Check the FCA register at fca.org.uk before dealing with any lender. Can PAYG car finance improve my credit score? Yes, if you make all payments on time. PAYG lenders report to credit reference agencies. Consistent payment history builds positive credit data over time, which can open access to better-rate finance in future. What credit score do I need for PAYG car finance? PAYG is specifically designed for borrowers with poor or thin credit files. Most PAYG lenders will consider applications from borrowers with CCJs, defaults, or no credit history — though income and affordability checks still apply. Can the lender really immobilise my car? Yes. PAYG finance agreements include a term allowing the lender to remotely immobilise the vehicle on payment default. This is done via the GPS/payment device installed at the start of the agreement. The lender must notify you before doing so in most cases — check your agreement terms. |
Pay-As-You-Go Car Finance UK: How It Works 2026
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