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Car Finance Options Explained…

Car Finance Options Explained…

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Finding the right car that’s suitable for you is an exciting experience but deciding how to pay for your new car can be a challenge as there are various options to choose from, some of which not everyone fully understands. Below we will explain the most popular forms of payment options, to help you decide which one is right for you.

Personal Contract Purchase (PCP)

Personal Contract Purchase is where you pay an initial deposit followed by a series of monthly payments. At the end of your contract you have three options of what to do with the car:

1. Hand it back to the dealer, as long as it is in good condition.
2. If you want to buy it outright, you pay the final payment, also known as the balloon payment.
3. If your car is worth more than the Guaranteed Future Value (GFV) then you can use that equity towards a deposit on a new car.

Please be aware that if you go over your agreed annual mileage, an additional cost will be required when your contract ends. This also applies to any major bumps/scrape beyond the usual wear and tear. It is important to thoroughly read through your contract as all terms & conditions are outlined.

Hire Purchase (HP)

Similar to PCP, you’ll pay a deposit and monthly payments over an agreed time, however you’re paying off the entire value of the car not the depreciation of the car. Unlike a PCP agreement, there will be no terms and conditions in relation to annual mileage and wear and tear, as at the end of the agreement, you will own the car.

Personal Contract Hire (PCH)

If you do not want to buy the car at the end of a contract period, nor are you looking to change your car during your agreement, then a Personal Contract Hire would be the best choice as it is essentially a long-term rental. Once the agreement ends, you will not own the car and it will be returned to the dealer. Charges will still apply if you go over your agreed annual mileage and if there is any damage on the car.

Personal Bank Loan

With a personal bank loan you can personally arrange to either take out the full amount of the purchase price of the car, or a certain amount if you are shortfall if you want to pay cash. The positives of this option is that you will own the car outright from the start, and you don’t need to worry about limiting your annual mileage or returning the car after so many years.

With all of the above options you need to consider if you can afford the monthly payments/cost before signing the contract. If you would like more information, do not hesitate to contact our Centres across the North East.

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Posted on: 19th May 2018

As of 20th May 2018, the MOT test has undergone some of the most significant changes of its near 60-year history. Some of the changes include new defect categories, stricter rules for Diesel car emissions and some cars over 40-year-old will be exempt from the MOT test. The main changes which you need to know about are explained below.