How to upgrade your car without breaking the bank in 2025
Whether your current car is starting to show its age or you just want something more modern, it might be time to switch to something that better suits your needs.
Upgrading doesn’t always mean spending a fortune; and there could be ways to get a better car without putting pressure on your wallet. Here’s everything you need to know.
What does upgrading a car mean?
Car upgrading simply means moving from your current car to one that’s newer, more reliable, or better suited to your lifestyle.
If your car is an old model with out of date features or keeps breaking down, you might want to upgrade to a more reliable car with better technology. Or, you might want to switch from petrol to an EV. Maybe your family has grown so you need to swap to a bigger vehicle.
There are lots of reasons people choose to upgrade their car, and we’re here to see if we can help!
Can you upgrade a car during a car finance agreement?
You may be able to upgrade your car during a car finance agreement, but it depends on your current deal and how much you still owe.
You first have to get a settlement figure from your lender, if they agree. This is the amount you need to pay to end your finance agreement early.
Next, get your car valued. If it’s worth more than the settlement figure, that extra amount (called positive equity) could go towards your next car as a deposit. If it’s worth less, you have negative equity. This means you might need to pay the difference or roll it into your next car finance agreement, which could increase your monthly payments.
If you want to upgrade your car during a car finance loan term, you may have options:
- Part exchange – this is when you put the value of your existing car towards your upgrade, either outright or by starting a new finance deal.
- Pay the settlement in full – you might also be able to pay your settlement figure and then look for a new car separately, but bear in mind there may be early termination fees.
- Use voluntary termination – this is only an option if you’ve repaid at least 50% of the total amount owed, and fees may also apply.
Note: If you’re considering upgrading during your car finance agreement, make sure you fully understand your settlement figure, including any fees that may be applied.
Whether it’s during or after your car finance agreement, there are a few things you could do to try and reduce the costs of upgrading your car, even if you’re on a budget. Here’s how.
How to upgrade a car without breaking the bank
Upgrading a car doesn’t have to mean a massive expense. With the right approach, you could get a better car and potentially even reduce long-term costs.
Time your upgrade carefully
If you're already financing a car, check how far you are into the agreement. You may have more options if you wait until closer to the end of your contract, because you’re more likely to have built up positive equity in the car.
By waiting, there’s a better chance your car is worth more than what you still owe, meaning that extra value can go towards your next car.
Look at nearly-new and used cars
Brand-new cars lose value quickly, especially in the first year. But a car that’s a few years old can still feel like a big upgrade and still have low mileage, sometimes at a better price.
Used cars also tend to have lower monthly payments, so you could upgrade without spending more than you do now.
Be realistic about what you need
It can be tempting to opt for a flashy model, especially if you’ve had your old car a while and are excited for a change. But it’s important to think carefully about which features are actually essential for your lifestyle, and which ones you can live without!
You can still enjoy the feeling of a newer car, with more comfort and convenience, even if you don’t go for the top model. By compromising on some of the fancier features, you could save a lot of money.
Consider trading in your current car
If your current car is still in good condition, you may be able to trade it in and use its value as a deposit on your next car, if you’re in positive equity. This could lower the amount you need to borrow and even reduce your monthly payments.
You don’t always need to wait until the end of your finance agreement, but if you’re still paying off the car, check whether its value is higher than what you owe.
Compare your new finance options
Whether you’re thinking about Hire Purchase (HP), Personal Contract Purchase (PCP), or another option, make sure to compare interest rates, the total amount payable and any extra fees.
Getting a deal that suits your budget could be the difference between stretching your finances and upgrading comfortably.
Remember: Interest rates, monthly payments, and fees may vary depending on your credit score and personal circumstances.
The costs to consider when upgrading a car
Upgrading often means you’re paying more for a newer or higher-spec car. But it’s important to bear in mind how much extra you could end up paying. You might face:
- Higher monthly finance payments
- More expensive insurance
- Added finance costs like admin fees
- Early settlement fees if you’re ending your current finance agreement before the term is up.
It could be a good idea to factor these in if you choose to upgrade your car to a new one, as this will give you a better idea of the total cost, and if it’s worth it.
If you're in the middle of a car finance agreement and not in positive equity, you may want to consider refinancing instead. Visit our guide on trading in or refinancing to find out more.
The takeaway
Upgrading your car doesn’t have to break the bank if you take the time to plan it right. Whether you decide to trade in your current car, pay off your finance early, or decide to upgrade at the end of your current finance agreement, there are plenty of ways to try and make the process more affordable.
Just remember to consider your options, check your car’s value and think carefully about how upgrading will fit into your budget first.
Disclaimer: Car finance is subject to status and affordability. Terms and conditions apply. Lenders will assess your credit history and financial situation before offering finance. Make sure to carefully consider all costs involved, including any fees, interest rates, and charges that may apply to your agreement. Always seek professional advice if you're unsure about your financial commitments.