Despite the huge growth in leasing , both for business and for personal use , there still remains a place for the traditional purchase finance . Here is a quick rundown of these options , and we can help you with these if required . These range from traditional Hire Purchase , and it ’ s modified form Personal Contract Purchase ( sometimes incorrectly also called leasing ), to Personal Loans . There are some more specialised options , if you would like to hear about them , please contact us .
The biggest drawback of all of these is that as soon as you take the car , not only is there interest on the cost , but the car ’ s depreciation directly affects you . Once the finance is paid off , the car is then yours and you would no longer have a monthly payment . However , you will always be subject to depreciation over time . This is fine if you are happy to run the car the end of it ’ s life and all associated repair and maintenance costs with doing this .
Personal Contract Plan
This shares some similarity to leasing , which is why some people use this term to describe it . With a PCP , you will pay a deposit ( usually capped at around 30 % of the on the road cost ), and have a regular monthly payment . There will be a set end point at 3 or 4 years , with a Guaranteed Minimum Future Value . At this point you can do one of three things . Either hand the car back to the finance firm , part exchange for new model and see what — if any — equity is left in the car , or buy the car out for that set value . This is probably the best option if you want the option to own a vehicle , but has higher risks involved than a lease .
Hire Purchase
This has always been the traditional way to fund a vehicle . You pay a deposit on the car and the balance in full over the term of the finance . Normally this will be set to 5 years to minimise the monthly payment . But outside of a few manufacturers , this would mean potentially 2 years out of warranty over the course of it , and the payment will remain the same right the way through the agreement . The drawback of this form of purchase is that until you have had the car for 3-4 years , it can be difficult to avoid negative equity , and so harder to change your car .
Personal Loan
This is the least preferred way of funder a car , effectively using an unsecured bank loan to fund the price of the vehicle . There are far few protections and options for a consumer in these , and make it harder to part-exchange your car if you come to change . These are most often seen where a previous car had a large amount of negative equity which couldn ’ t be funded on hire purchase options .
We are happy to discuss any of these funding options with you , but it ’ s not by accident that there is a huge growth in leasing vehicles over buying them in the UK . Our view is to look at your car like any other consumer product , the best example is like a smartphone . Why buy it outright at a higher cost , to then have to pay the same high cost when it comes time to change in a few years to keep up with the market . By leasing your new vehicle , you can enjoy paying less , whilst having the most up to date model .
We hope you have found this guide helpful , and look forward to hearing from you to help you find the best deal for you on your next car lease .
9 : @ KingoftheRoadUK : Simplicity Cars : http // www . simplicity-cars . co . uk : andy @ simplicity-cars . co . uk