A Quick Look At Car Finance
You may not know your Hire Purchase from your Personal Contract Purchase and you may not be aware of the difference between a personal loan and a guarantor loan? But be assured, you are not alone! With so many options and abbreviations it can all be a little over whelming.
At Sameday Car Finance it’s important to us that we find the most beneficial car finance package for you. We are happy to provide help, advice and clarification on details that you may not be confident with.
About Hire Purchase - HP
HP is the most commonly used type of car finance it allows you to make monthly installments on a regular basis. It also gives you the option to settle the agreement at any point. This can be done by requesting a settlement figure from the lender and paying the remaining balance off in one final payment. At the end of the agreement you will own the vehicle. Benefits can include a zero deposit option and a fixed monthly payment for up to five years. Its important that repayments are kept to otherwise the vehicle can be repossessed.
Personal Contract Purchase -PCP
With PCP a deposit is paid and like HP you still make monthly payments over an agreed period, which is usually 36 or 48 months. Often payments can be kept low as at the end of the agreement you can choose to return the vehicle or make a bigger final payment enabling you to keep the vehicle. This final payment is often referred to as a ‘balloon payment” this payment amount is provided to you before you sign the agreement.
If you choose to return the vehicle at the end of the term it is possible that you may be charged for any excess mileage or damage.
A personal loan is where you take out a loan and use the funds for purchasing a car. Usually the loan is agreed at a fixed cost and over a fixed period and you can use the loan to purchase any item you require. The loan is unsecured which usually means the lender can’t repossess your vehicle. As the loan is not secured against the car you can choose at any time to sell it although you must continue to make your repayments to your lender.
This type of loan is most suitable for those who have difficulty in getting approved for finance. You will need to find a third party, usually a parent or partner that agrees to guarantee to make the repayments if for any reason you are unable to. Like other finance options your payments are in regular instalments and are fixed for the agreed period, keeping to your payments can have the advantage of helping to rebuild your credit score.
Hopefully this summary of the types of vehicle finance has enabled you to feel more confident about which option is most suitable for you. Whichever option you choose please be aware that
- You should be completely happy that you can afford your monthly payments before, you sign your documents.
- Your credit profile will be affected if you fail to do so.
- You are also free to settle your agreement early or you can part-exchange your vehicle allowing the dealer to assume responsibility for any outstanding finance.
Feel free to call us with any questions or for your no obligation quote. Our team of personal finance experts are here to advise you on the best finance option for you. Be assured that we will be actively working hard to get you the best rates and the best car for your monthly payment.