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’. With so many options and abbreviations, it can all be a little overwhelming, but be assured; you are not alone!
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
Hire Purchase (HP) is the most popular method of car finance as it allows you to make monthly instalments 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. It is important that repayments are made, otherwise the vehicle can be repossessed.
Personal Contract Purchase -PCP
With Personal Contract Purchase (PCP), a deposit is paid and, as with Hire Purchase, you still make monthly payments over an agreed period, which is usually 36 or 48 months. Payments can often 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” – a figure which is given 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 to purchase 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 cannot repossess your vehicle. As the loan is not secured against the car, you can choose to sell it any time, 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 made in regular instalments and are fixed for the agreed period. Completing your payments on time gives you the advantage of helping to rebuild your credit score.
Hopefully this summary of the types of vehicle finance has given you an idea of which option is most suitable for you. Whichever option you choose, please be aware that:
- You should be completely confident 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
Any Questions ?
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.