Finance

Hire Purchase

Hire purchase is a simple, straightforward way to spread the cost of buying a new car.

Your initial deposit is completely flexible - normally between 0-50% of the total vehicle cost. The remaining balance, plus the fixed interest, is repaid in equal instalments over an agreed term (normally 12-60 months).

Why consider Hire Purchase?

  • Low deposit option - meaning more cash available
  • Full Control - you have control over the deposit and the term
  • Fixed monthly payment - perfect for a budget
  • Flexibility - doesn't hurt your other lines of credit
  • Assets - you gain vehicle ownership at the end of the term
  • Tax benefits - Tax allowances for business users
  • VAT free - no VAT on payments

Lease Purchase

Hire purchase with a balloon (Lease Purchase) offers overall lower monthly payments than normal hire purchase. Instead, at the end of the agreement, you can make a final lump sum payment (or 'balloon') to own your car at the end of the term.

It's fixed rate finance - but with a lower fixed monthly outlay since you defer repayment of some of the borrowing. At the end of the agreement options include car purchase, refinance, part exchange or resale.

The deposit you pay is flexible - typically between 0 - 50% of the vehicle cost. The deferred balloon element is calculated on the estimated future resale value of the car.

The difference is repaid in equal instalments over an agreed period (maximum period of 48 months), plus a final balloon payment.

Why consider Hire Purchase with balloon?

  • Low deposit - keeps valuable personal or business cash available
  • Lower fixed monthly payments - perfect for budgeting
  • A better car - lower payments can help you choose a higher specification car
  • Flexibility - does not compromise your other lines of credit
  • Assets - you gain vehicle ownership
  • Tax benefits - Tax allowances for business users
  • VAT free - no VAT on payment

Personal Contract Purchase

Personal Contract Purchase is highly attractive and increasingly popular. It combines low, fixed monthly payments with exceptional flexibility at the end of the agreement.

PCP is ideal if you're opting out of a company car scheme. You use your company car allowance to fund your PCP monthly payments without paying company car tax.

Crucially, you don't commit to buying the car at the outset. Instead, you use it for 24-48 months, deciding at the end of the agreement what you want to do. Either:

Why consider Personal Contract Purchase?

  • 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)
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