Finance Options

Personal Contract Purchase (PCP) is an increasingly popular choice for car finance. It offers the best in elasticity at the end of the contract, together with low, fixed monthly payments. Personal Contract Purchase agreements involve the finance company buying your vehicle for you, with monthly payments being made at a fixed rate over a fixed period. At the end of the purchase agreement period, and once all monies owed are paid, the car is owned.

PCP is ideal if you are selecting out of your company car scheme. Your company car allowance can fund your monthly payments, but there is no company car tax to pay.

At the beginning of the contract your vehicles guaranteed future value is calculated, based on an agreed mileage and age. This is deferred as a final ‘balloon’ payment.

With PCP you do not have to commit to buying the car at the outset. You use it for an agreed period of time (24-48 months) and then decide at the end of this period what you would like to do. You have four options:

• Buy the car by paying an agreed minimum residual value
• Part-exchange the vehicle for another
• Sell the vehicle privately (settling the balloon)
• Or, subject to mileage and condition, return the car with nothing more to pay (e.g. if depreciation resulted in negative equity)

The benefits of Personal Contract Purchase:

• Low risk - A minimum future value is guaranteed
• Low deposit - keeps valuable personal or business cash available
• Low fixed monthly payments - perfect for budgeting
• Options - Buy the car, part-exchange it or just return it
• An improved vehicle - lower payments can help you choose a higher specification car
• Tax benefit – the cash alternative when you opt out of a company car scheme is not subject to company car tax
• VAT exempt - no VAT on your payments
• Any UK Address Delivery – Vehicles are sourced from and across the UK and can be delivered to virtually every UK address

Hire purchase offers a clear-cut way to spread the cost of your new car. With this method of finance you have a fixed rate of interest with fixed monthly payments, making financing simple and easy.
You select the amount of deposit you wish to pay, in general between 10-50% of the car’s cost. The remainder of the balance, together with fixed interest, is repaid over an agreed period of your choosing (12-60 months).

The benefits of Hire Purchase:

• Low deposit - keeps valuable personal or business cash available
• Control - you decide the deposit, you decide the term
• Fixed monthly payment – makes budgeting simple
• Flexibility – does not compromise your other lines of credit
• Ownership - you gain ownership of the car
• Tax gain - Tax allowances for business users
• VAT exempt - no VAT on payments

Hire purchase with a balloon offers greater flexibility than normal hire purchase. You pay lower monthly fixed payments and at the end of the agreement, you can make a final lump sum payment or 'balloon' to gain ownership your vehicle. This payment is calculated on the estimated future resale value of the car.
You gain the benefits of fixed rate finance, but with the additional advantage of a lower fixed monthly outlay because you defer repayment of some of the borrowing. At the end of the agreement your options include car purchase, refinance, part exchange or resale.
In a typical agreement, you select the amount of deposit to pay, generally 10-50% of the car’s cost. The difference between this and the agreed balloon, plus the fixed interest, is repaid over a fixed term (12-60 months). At the end of the term you can make the final balloon payment, and own the car.