Financing your car on monthly payments, instead of paying the whole amount upfront, can be a way of spreading the cost of your car purchase, be it new or used.
The two most common forms of car finance are PCP (Personal Contract Purchase) and HP (Hire Purchase).
This page is packed with information on financing a car. Read on and explore!
Personal Contract Purchase (PCP) is one of the most popular ways to buy a new car. This means lower monthly payments for you, but you will need to pay a final payment at the end (the Guaranteed Future Value) if you want to keep the car.
In many instances, when buying a new car, many manufacturers offer finance deposit contributions to help. Sometimes you don’t even need a deposit.
PCP finance can be tailored to your needs – you can specify the term (normally 2 to 4 years) and your annual mileage.
At the start of your PCP contract, a Guaranteed Future Value (GFV) of the car you choose is set. This is the car's expected value when your contract ends.
This means that your monthly payment is the difference between what the car is worth now and what it will be worth at the end of your contract (the depreciation) plus interest, which is calculated on the full value of the vehicle. You'll pay this difference off in monthly instalments and at the end of the agreement you will need to pay a final payment if you choose.
Remember: you are still liable for the full amount of the vehicle if anything happens to the car or if you settle early.
At the end of the agreement you’ll have three options:
Things to bear in mind
You can normally settle your deal early, however the finance company will require you to pay off the difference between what your car is worth now, and what you still owe.You can always speak to our sales team about upgrading or changing early.
This video clearly explains how a PCP plan works. Take a look!
If you choose to pay for your car with a Hire Purchase agreement, you will normally pay a deposit and will pay off the entire value of the car with your monthly installments. When all the payments are made, the agreement ends and you own the car.
Things to bear in mind
This video clearly explains how an HP plan works. Take a look!
This is a way of leasing a vehicle without having to own it. At the end of the agreement you can hand back the car as long as you have serviced and maintained it in line with your agreement. This is a less common way of financing your car, but do ask the showroom for details. Main things to think about are:
This video clearly explains how a PCH plan works. Take a look!
Finally, here is one more video that may help explain dealership finance versus personal loans.
If you still have questions, please ask to speak to the Business Manager in any of our branches. Any of the Sales Executives will be able to help too. They are all trained, accredited and regulated by the Financial Conduct Authority.