Our finance partners
We have partnerships with a number of finance companies so we can remain impartial and have a choice between funders when it comes to securing finance on your car. Every year our partners underwrite over £500 million of business, funding thousands of cars. We will use our experience and buying power to find you the best value option for your dream car.
We offer three different types of finance agreement. Each option is described in detail below.
>Personal Contract Purchase (PCP)
With a personal contract purchase you pay an agreed amount each month, then at the end of the contract you have a choice; to pay a sum to purchase the vehicle (known as a “balloon payment” which is a large final payment), return the vehicle or terminate the agreement and take out a new PCP agreement for a new vehicle.
Here’s an overview of how Personal Contract Purchase works, provided by Black Horse, our finance partner.
- You have the option to take ownership of the vehicle at the end of the contract
- The final purchase price will be agreed at the start of the arrangement
- A low initial payment, normally 10% of the vehicle’s value
- First year’s road tax is included
- Lower monthly payments than you would have to meet with hire purchase, as you will only be covering the cost of the vehicle’s estimated depreciation – not its full value
- You will have to make a decision at the end of the contract as to whether you wish to sell the vehicle, keep it or return it.
- If you damage the vehicle, you may incur a charge (any damage not covered in the fair wear and tear guide)
- If you exceed the agreed mileage you will incur an extra charge
>Hire Purchase (HP)
A hire purchase (HP) plan is a very popular and flexible way for people to acquire the vehicle they want immediately and to take ownership of it once the value has been fully repaid. Hire purchase is similar to a bank loan that is secured against the value of the car, as ownership of the vehicle is assumed once the repayments have been completed.
How hire purchase works
A deposit payment is agreed – typically 10% of the monthly payment – and repayments will be calculated based on this figure, the value of the vehicle, and the length of the repayment term. Once all the repayments have been completed, you will become the legal owner of the vehicle.
Here’s an overview of how Hire Purchase works, provided by Black Horse, our finance partner.
- There’s no contractual mileage restrictions or charges for damage
- There’s no large upfront investment, the deposit is usually around 10% of the purchase price and the cost is spread over a period of time and paid by fixed monthly instalments that will not increase – even if bank interest rates rise
- You can save money by paying off your unpaid instalments early
- You own the vehicle once your final instalment has been paid
- The loan is secured against the vehicle: The vehicle can be repossessed if payments are not kept up
- If you miss payments, this can negatively affect your credit rating
- The finance company are the legal owners of the vehicle until the agreement is paid in full
- Repayments will include interest charges, and the car will overall cost more than a cash purchase
- The rate of interest will reflect the level of risk to the lender. Previous poor credit will represent higher risk and a higher rate will be charged
Lease purchase can be a good option for people who would like to own a vehicle but do not necessarily have the money to buy one immediately. Once you’ve made something called a ‘balloon payment” (a large final payment) at the end of the contract you take ownership of the vehicle. The monthly payments cover the difference between the value of the car at the start and end of the agreement.
How lease purchase works
When the lease purchase ends you have two options: either you can make the balloon payment and then take ownership of the vehicle, or you can choose to part exchange your vehicle – you make the balloon payment then lease a newer car.
- You’ll have lower monthly payments than if you opted to pay via a hire purchase agreement
- You can choose to settle your agreement early by paying off any outstanding payments
- You will own the vehicle at the end of the contract
- The balloon payment must be paid for at the end of the contract before you can take ownership. This can be a relatively high cost.
- In some cases, the balloon payment can be higher than the residual value
- Unable to add maintenance or any other value-added services to your contract