Financing Explained

Your Options

In the UK, there are several common ways to finance a new or used car, each designed to suit different budgets and preferences. Here's a breakdown of popular finance options:

• Personal Contract Purchase (PCP)

  PCP is a flexible finance option where you pay a lower monthly fee compared to other finance options. With PCP, you pay a deposit, followed by fixed monthly payments. At the end of the term, you have three choices:

  • Return the car with nothing more to pay (subject to mileage and condition).
  • Pay a final “balloon” payment to keep the car.
  • Trade it in for a new model, using any equity as a deposit on your next car.
• Hire Purchase (HP)

  With HP, you essentially hire the car until you’ve made all the payments, at which point you own it outright. HP involves an initial deposit, followed by regular monthly payments. Once the final payment is made, the car is yours with no additional fees.

• Personal Leasing (PCH)

  Personal Contract Hire (PCH), or leasing, is an option where you pay to use the car rather than own it. After making an initial payment, you’ll have set monthly payments. At the end of the lease, you simply return the car with no option to buy. Leasing is ideal for those who like to change cars frequently and don’t want ownership responsibilities.

• Personal Loan

  A personal loan allows you to borrow money from a bank or lender to buy a car outright. You then repay the loan in monthly instalments over an agreed period. This option allows you to own the car from the start, with no mileage restrictions, and it is independent of the dealership.

• Cash Purchase

  Paying cash for a car is straightforward, with no additional costs or finance agreements to consider. You own the car outright from day one, with no interest to worry about. This option is ideal for those who have saved and wish to avoid monthly payments.