Car Finance
Explained

WHAT’S HIRE PURCHASE?

Hire Purchase (HP) secures your finance agreement against the car. It’s a way of spreading out the cost of the car in a series of monthly payments. Once you’ve completed all your payments, you’ll own the vehicle outright. Your monthly payments will include the cost of the vehicle, plus the interest, and an administration fee – you also have the option of paying for this upfront. Any fees on the agreement are charged by the lender you may be matched with, as a broker we do not charge any fees to you for our service.

WHAT’S A PCP?

A Personal Contract Purchase (PCP) secures a loan against the car. The key difference between HP and PCP is that here the value of the car at the end of your finance agreement is calculated at the start, and deducted from your monthly repayments. This means that generally, PCP monthly repayments are lower than Hire Purchase. A PCP agreement gives you the flexibility to decide whether you want to own the car outright at the end of your agreement. You can either pay the deferred value in order to take ownership of the vehicle, (this is sometimes referred to as a ‘balloon payment’) or return the car to the lender. Charges, mileage and other terms and conditions may apply. Any fees on the agreement are charged by the lender you may be matched with, as a broker we do not charge any fees to you for our service.

WHICH OPTION SHOULD I GO FOR?

The option you choose all depends on if you would like to own the vehicle, once you have made all of your finance payments. If you do, then a HP agreement is most likely to be the option you want. If you like to change your car every few years or so, then you are likely to want the PCP option. If you are wanting this option, you would generally need a fair to excellent credit rating.

CRITERIA WHEN FINANCING YOUR VEHICLE

When lenders look to finance a vehicle, they take into account many factors about the vehicle. Some of those factors being, Its Age, Mileage and Value. Each lender will set different criteria around these factors. Most lenders generally will only finance vehicles that are less than 10 years old and have done less than 100,000 miles. Vehicle finance agreements can generally be taken over a period of 24-60 months (2-5 years) Older vehicles may be subject to shorter repayment terms due to their age. Generally the newer the vehicle the more options you will have.

CREDIT RATING

Whether you have a BAD, POOR, GOOD, FAIR or EXCELLENT credit rating we are here to help match the most suitable finance deal to you. We work with a panel of lenders who offer credit for all types of credit ratings who want to finance a vehicle for you. Finance is subject to status and an approval can’t be guaranteed, however all circumstances can be considered, so let us match finance to you.