Compare the Best Car Finance Offers
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You pay for a car on a monthly basis when you finance it. As a result, you won’t have to pay a lump sum upfront, but instead pay over time, though some car finance providers may require a down payment as well.
Term lengths vary between finance types and providers, but typically range from 12 months to five years.
Depending on the car finance type you choose, the agreement will work differently. Until the loan is repaid, you simply pay off the personal loan by making monthly payments.
PCP works in a similar way to hire-purchase, however monthly payments cover depreciation over the term of the loan rather than the total cost of the vehicle.
It is possible to compare car finance offers, which are also known as HP, a method of paying for a vehicle without paying the full amount upfront. The car is essentially hired for the duration of the contract, with the option to purchase it at the end.
Car Finance Comes in a Variety of Forms.
It is possible to obtain car financing in a variety of ways. Among them are:
Loans for Cars
A car loan is effectively a personal loan used to buy a car. If you are approved for a loan, you can use it to buy the car of your choice from your bank or online provider. The car will be yours from the beginning since you will be purchasing it outright. Your lender will then require you to make the agreed monthly payments until the loan is paid off.
Hiring Purchase (HP)
A car is bought with hire purchase by putting down a deposit and then taking out financing for the remainder of the price.
You repay this amount through monthly instalments, but the finance provider remains the legal owner of the vehicle while you make repayments. In order to transfer ownership of the car from the finance provider to you, you can pay a small “option to purchase” fee at the end of the term.
In a conditional sale, you become the owner of the vehicle after you pay the final payment, similar to a hire purchase, except you don’t have to pay an additional fee to own the car at the end of the term.
Preferred Purchase Contract (PPC)
In contrast to hire purchase, PCP does not require you to pay off the entire value of the vehicle up front. Therefore, your payments relate to the estimated depreciation of the vehicle; that is, you pay the difference between what the car was worth at the time of purchase and what it is expected to be worth at the end of the term. The monthly payments are lower than other finance options since you do not pay off the total value of the car.
You have the option of keeping or returning the car at the end of the term. You will be required to pay a final ‘balloon’ payment which is usually a substantial sum if you prefer to keep the car. In this case, the payment is based on the vehicle’s Guaranteed Minimum Future Value (GMFV), which is approximately the value of the vehicle at the end of the term.
