There are different kinds of finance options you can choose between when purchasing your next vehicle. You need to know these options to make sure you’re picking the one best suited to you.
Personal Contract Purchase (PCP)
You will pay an initial deposit and then plan monthly payments. However, you are only paying off the depreciation of the car instead of the total sum. At the end of the agreement there is a larger amount to pay if you want to keep the car. With this contract, there may be penalties for damage on the car, plus penalties for going over the mileage agreed. However, this is the most popular contract for UK car owners. The popularity is due to the low monthly payments, however, the payment at the end of the contract is significantly larger. This is known as a balloon payment and must be payed to keep the car. This means that if you are looking for a long-term vehicle, PCP probably isn’t the best option for you. However, if you’re looking to change cars, then this is the best option.
Hire Purchase (HP)
This agreement is similar to the PCP agreement in the sense that a deposit is payed at the beginning. Then the entire cost of the vehicle is payed in monthly instalments, unlike PCP. Once all the payments are made, the contract ends, and you officially own the car. This is a great idea for people who can’t afford a car outright but want to own it for a long time. Buyers still need to bear in mind, the monthly payments will be higher than other finance options.
Personal Contract Hire (PCH)
If you aren’t looking to buy the car at the end of the contract and won’t need to change it, then a personal contract hire is the best option for you. With this agreement, you can simply lease the car for a set amount of time, paying monthly payments as you go. At the end of that set time, you return the car. This means you won’t have to resell the car, and your payments will be lower than full price. However, there is no option to buy the car at the end.
If you are looking for a vehicle with tailored finance deals, then Quick Car Credit has the vehicle for you. They have a specialist team of finance advisors on hand to help you find the best deal possible. With a free online application form, you can get a finance quote today!