Hire purchase, personal contract purchase and personal loan car finance explained.
Hire Purchase (HP)
Hire Purchase car finance is a common way of borrowing money for new or used car purchase. In the beginning, you pay a 10% deposit followed by monthly instalments against the balance of the vehicle cost. The payments are split over 12 to 60 months. Your car loan is secured against the car, which means it’s owned by the lender. Once all payments are made, the car is legally yours and you don’t own anything to the car finance company.
The car loan lender owns the vehicle during the repayment period. At the end of the term, the vehicle is yours once the final repayment has been made.
HP car finance pros
a.| You don’t need to pay cash;
b.| No need for a large deposit;
c.| Fixed monthly payments;
d.| You own the vehicle at the end;
Personal contract purchase (PCP)
Personal contract purchase vehicle finance can be approved with no deposit or part exchange. With this car finance scheme, you will be renting the car from the dealership and you don’t own it until you have repaid the value of the car plus a balloon payment at the end of financial agreement. The value is fixed at the start of the loan agreement and Guaranteed Future Value (GFV) estimates what would be the balloon payment amount in the end.
The finance company owns the vehicle during the repayment period. At the end of the term you take up the option to buy and the vehicle becomes yours.
PCP car finance pros
a.| You can buy an expensive car;
b.| You can keep monthly payment low;
c.| You can change cars regularly;
d.| You don’t want to own the car at the end;
Personal loan car finance
Personal loan auto finance agreements are not secured to the car you are buying. The car legally belongs to you from the start and you simply pay monthly instalments to the lender. This is like a personal loan that you take from the bank. Unlike PCP and HP loans, with a personal loan you can sell your car any time. This scheme is good for people with good or bad credit rating.
Since the personal loan car finance is not secured against the vehicle, you are free to do with it anything you want. You may even sell the car while keeping up with your personal loan repayments.
Personal loan car finance pros
a.| Easy and hassle free car finance;
b.| Car is yours and lender doesn’t own it;
c.| You may sell the car at any time;
d.| You can repay the loan at any time;
How to get the best car loan deal
Know the car finance rate – its important to understand how low the annual percentage rate could be over the whole term of the agreement. Please apply for car finance deal online and get your personalised offer today. Wirth finance from us you can buy your car from any dealership nationwide.
Plan long term – Low monthly repayments are great but you might pay a bigger interest over longer period of finance. The lower the term, the less interest you will pay. Apply for car finance from 18 to 60 months term.
Shop around – Different dealers, even for same model, might be able to offer better prices on their vehicles. Get your car finance deal first on Financible and purchase a vehicle of your choice with our approved car loan offer.
Monthly payments calculator
Calculate your car finance options and see how much your monthly repayment would be.