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Buying a desirable car often leads the buyer to the question - what is the most profitable way to do it? A person does not always have the money to buy a new car. Applying to financial institutions for a loan can be problematic, as banks often have very strict requirements for customers.

The interest rate is quite high, and your credit rating may not be good enough. A way out of this situation is to purchase a car under the terms of a PAYG financial lease or, in other words, a pay as you go car finance scheme.

Car finance calculator

Good credit
Bad credit
Amount to borrow:
£
To repay over:
5 Years
Car finance rate XX% APR
Cost of credit £ XXX
Total repayment £ XX,XX.XX
48 monthly payments of
£ 245 /mo

Representative example - Borrowing £5,500 over 4 years with a representative APR of 19.8%, and a deposit of £0, the amount payable would be £162 per month, with a total cost of credit of £2,282 and a total amount payable of £7,782.

Carplus will find the best car loan rate from our panel of lenders and will offer you the best possible deal. We don’t charge fees, but we earn a commission. This does not influence the APR you’re offered in any way.

What is pay as you go car finance?

Pay as you go car finance system implies a long-term lease based on a Hire Purchase (HP) agreement. It requires an initial payment plus scheduled monthly payments. Applications for PAYG car finance are usually much easier and faster to process than loan applications.

The user who bought the vehicle will be the owner in payment of the vehicle's residual value only after the expiry of the contract. Until then, the lessor will be considered the owner.

How does it work?

The scheme of black box car financing works like this. Every car bought via PAYG in the UK is equipped with a black box. This box is a special device that helps keep track of your monthly payments and your car company. The device is installed under the dashboard or in the glove compartment. Once installed, the box connects to the car's internal computer via the EOBD port and communicates with the lending company through GPRS.

Three days before your monthly payment, the green light on the box will turn red and flash to remind you. After you make the payment, you will receive an activation code. You need to enter it in the black box, and for another month, you can forget about the device.

At the end of the financial agreement, the black box is removed, and ownership of the car passes to you, provided all payments have been made.

Why do lenders use the black box?

The answer is simple - black boxes have been proven to reduce delinquencies by up to 500%. With this system, lenders can have confidence in providing financing to clients who may have previously been considered risky due to poor ratings. A black box car finance system is good for the customer as well - it improves credit rating because they are paying bills on time each month.

PAYG car finance helps improve your credit rating

A pay as you go car finance system truly improves your credit score. First, with monthly payment reminders, you won't be able to fall behind on payments. Second, by paying your bills on time and covering the same amount each month, you can raise your credit score. It is a win-win situation for both you and the lender because it improves your chances of getting better deals in the future, and it ensures that the lender gets regular payments on time.

Choose Carplus for black box car finance!

Carplus has four distinct advantages. With us, you can compare car financing deals and look for the best deals because we are an FCA-authorised credit broker. A quote from Carplus will have no impact on your credit; plus, you can check your offer for free. We have no-deposit car financing and a soft search option. Finally, you can get a car financing decision within minutes - and confidential.

Pay as you go car finance FAQ

Let us answer the most common questions about pay as you go finance.

Is it worth getting a black box?

Suppose you want to improve your credit rating or don't have the full amount right now to buy a car in a single payment: yes. The black box system will help you own auto and raise your credit score simultaneously in just a few months.

Can you remove your black box?

The lending company can only remove the black box after the full value of the car has been paid. You cannot remove the black box yourself.

How long does a black box stay in your car?

The black box is in the car the whole time you pay for the vehicle. As soon as the full amount is paid and the contractual obligations are fulfilled, the black box is removed, and you completely take over the car.

What happens if I don’t make a car finance payment on time?

If you are unable to make a payment for some reason, or if you are in arrears, the black box will not allow you to start your car. If you have difficulty making a payment, always keep the company informed so they can set up a suitable payment plan if necessary.

Does a black box in your car guarantee car finance?

The black box itself does not guarantee anything. If you make your monthly payments on time, there is no threat to the car's financing. But if you miscalculate the payments, the financing may run out.

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