Car Financing: Everything You Need To Know

By CarsFellow 6 Min Read

Finding your next car on finance can be just a few clicks away. As with all types of finance agreements, it’s important to know what you are getting into. Below are a few key points, make sure you understand them before committing to any sort of contract. The saying “if you don’t ask, you don’t get”, so be sure to ask all the right questions in the early stages of enquiring about car finance.

  • You will need to submit a finance application and pass the credit check.
  • You will be charged per mile if you go over the mileage limit (usually a few pence per mile).
  • You will need to keep the car in good condition.
  • You will need to take out fully comprehensive car insurance.
  • You can’t exit the finance agreement early, without penalty.
  • You won’t own the car at the end of the agreement, or have the option to.

Personal Contract Hire

There are different types of car purchasing on the market today. Personal contract hire is the traditional finance option which is most commonly used when purchasing a used car on finance.

The Hire Purchase option allows you to pay a deposit towards the vehicle, in some cases a £0 deposit is available, this is then deducted from the price of the vehicle, which leaves a balance to be financed, interest is then added to the balance to be financed, the total balance plus interest is repaid over a number of months ranging from 6 to 60, the flexibility is decided by you to suit your needs although the age and mileage do have restrictions on the length of the loan, upon making the final payment at the end of your agreement, the vehicle is yours to keep with no further payments to the finance company.

You may use our finance calculator to determine a Hire Purchase option suitable to your budget by clicking here (link to iVendi calculator). After choosing your ideal vehicle on our website you can click the apply now button.

There are many reasons why Personal Contract Hire is the fastest growing form of motor finance:

  • Monthly payments are fixed for the length of the contract.
  • Monthly payments are often the lowest of all car finance types.
  • You can often drive a more premium car than you would have done if you were buying.
  • You never have to worry about selling or trading your car in.
  • You are free to go anywhere at the end of your lease.

Personal Contract Purchase

The Personal Contract Purchase (PCP) is an agreement where lower repayments are made for the vehicle through monthly installments in addition to an optional final payment.

You can decide to either pay the final payment or return the vehicle to the finance company. It is common for customers to part exchange the vehicle for their next purchase, as the part exchange value is used to settle the final payment. Thus, the PCP payment plan allows you to drive a vehicle of a higher specification for lower monthly installments.

Some key features of personal contract purchase include:

  • Fixed repayments

As the repayment period is fixed, your monthly sum will not change.

  • Flexible terms

You can later decide whether you would like to make the final payment and keep the vehicle, part-exchange it, or hand it back to us.

  • Affordability

Low sums of monthly repayments will be arranged to suit your budget.

  • Financial Security

Experts can notify you of the minimum value of your car at the end of your agreement in advance.

What Do I Need To Finance A Car?

After finding a lease plan that suits you and receive a quotation, you may need to provide the following documentation as part of the application:

  • Proof of address (Bank statement or tax letter)
  • Proof of ID (Drivers license or passport)
  • Income details (Payslip or bank statements)

This information will also be used by the finance provider to perform a credit check. This will assess if you are eligible for the vehicle you have enquired about. It may help to use a credit check service beforehand to check your suitability.

What Finance Benefits To Look Out For

  • Fixed Rates Your regular payment will not change over the contractual, despite fluctuations of the Bank of England base rate.
  • Low Deposit We offer deposits starting with 0%.
  • Simple Set-Up Bring either your UK Driving License, recent bank statement, a utility bill, or your debit/credit card to you can take advantage of same-day Finance Drive Away.

Source: Parkland Motors

Share This Article
Cars Fellow create well researched and thoughtful automotive stories, news, and reviews.
Leave a comment