Manufacturer Car Finance: Is It a Good Deal?

What is manufacturer car finance?

Manufacturer finance is finance provided by the carmaker's in-house lender, sold through its franchised dealers. It's typically PCP or HP on a new or approved-used car from that brand.

Because the carmaker controls both the car price and the finance, it can subsidise the rate — which is why 0% and low-APR deals are nearly always manufacturer offers. See how the rate translates into cost on the APR & true-cost calculator.

Is manufacturer finance a good deal?

Manufacturer finance is a good deal when the subsidised rate saves more than any discount you'd lose by using it. Sometimes it wins; sometimes a discounted cash buy or a bank loan beats it.

A true 0% manufacturer deal can be excellent if you'd pay the same price anyway. But carmakers often reserve their cash discounts for buyers who don't use the finance, so the 'deal' can quietly cost you that discount. Compare both totals before deciding.

The catch with manufacturer deals

The catch is that manufacturer deals are built to sell that brand's cars, so the savings come with strings. Read the conditions before the rate dazzles you.

None of this makes manufacturer finance bad — it makes the true cost the only fair way to judge it.

• Lost discount: the best cash discounts are often off the table when you take the finance offer.
• Tied to the brand: the deal only applies to that manufacturer's models, so you can't shop the car around.
• Deposit contribution rules: a tempting 'deposit contribution' can come with a minimum term or a higher list price.

Manufacturer finance vs a bank loan

Manufacturer finance can beat a bank loan on rate but lose on flexibility; a loan lets you buy the car outright and chase a discount. Compare on the total amount payable.

If the manufacturer rate is 0% and the discount is small, the finance often wins. If the discount is large, a bank loan plus the discount can beat it. See the full comparison in dealer finance vs a bank loan.