Most people who buy a nearly new or used car use finance to pay for it. We’ve put together a short guide on getting finance through Unbeatablecar, the different types of finance we have on offer and the pros and cons of each type.
On PCP finance you pay a regular monthly fee for a fixed term then at the end of this term you have the option to buy the car as the final payment of the agreement for a pre-determined amount.
You choose the amount to pay as an initial deposit, then pay a regular monthly fee over a fixed term of your choice usually 36 months. The monthly fee will depend on the APR (which on our cars is identical across all of our main lenders) the amount of deposit, the cost of the car and the GFV.
(Note: The APR rates can increase for lenders who specialize in obtaining finance for customers who have bad credit or have had difficulty in the past)
At the end of the agreement usually as the last payment you have the option, but are not obliged, to buy the car for a pre-agreed price, called the GFV (Guaranteed Future Value)
So at the end of the agreement you have 3 options:
1.) Give the car back and walk away.
2.) Buy the car for the GFV and own it, this can be done as a lump sum or can be paid monthly as a separate loan.
3.) Trade in the car for a new one, using the GFV as part of the payment.
HP finance is a loan which is secured against the car, similar to taking out a mortgage on a house.
You choose the amount to pay as an initial deposit, then an agreed monthly fee which is dictated by the amount of initial deposit, cost of the car and the APR. The length of the loan is chosen by you to suit your budget and can vary from 12 – 60 months, but once all payments are made you are then the owner of the car. Until you make all the payments the finance company still owns the car, but you are the registered keeper.
Lease Purchase is similar to a Personal Contract Purchase (PCP), with an agreed sum at the end of the agreement, but the final sum is not a guaranteed future value of the vehicle. (Lease Purchase final balance sum is usually higher than PCP-GFV)
You choose the amount to pay as an initial deposit, then pay a regular monthly fee over a fixed term of your choice usually 36 months. The monthly fee will depend on the APR the amount of deposit, the cost of the car and the final balance sum.
At the end of the agreement you have 2 options usually as the last payment you have the option to pay the final balance sum and buy the car, or trade in the car for a new one.
When you take a Bank loan out from the bank/finance company, there is no need to provide a deposit and the loan is not secured against the car. you pay back the loan over a fixed monthly term usually 12 to 72 months, the amount of payment is dictated by the amount of the loan and the APR.
You can do whatever you want with the car, you own it, you can sell it or part exchange it without having to settle the outstanding balance owed, you just have to keep paying off the loan until the the end of the term.