Deciding Which Finance Option Is Right For You

There is much in the press at the moment about car financing, so we thought this was an ideal time to explain the different options available – clarifying a few of the myths and, hopefully, helping you to make the right choice for your circumstances.

Personal Contract Purchase (PCP)

PCP plans are very popular, and can be used to buy any new or pre-owned Land Rover up to 3 years old.

A simplistic explanation goes as follows: you put down a deposit, after agreeing a contract length and mileage allowance. Based on this information, an estimate of the car’s value at the end of the contract is made – this is known as the Projected Value.

This figure is offset until the end of the contract, and the balance (plus interest) is divided into fixed monthly instalments. You make the payments for the duration of the contract, and when it expires you have several options.

You can pay the Projected Value and take ownership of the car; use any equity (the difference between the PV and its actual value) as the deposit on a new car; or hand the car back and walk away.

PCP agreements are available to both private and business drivers.

Business Contract Hire

This is a convenient rental plan, designed for business drivers. BCH plans are available on any new Land Rover, and have the option to include the cost of maintenance in your monthly payments.

You simply agree a rental term and mileage allowance, then put down a deposit. The larger your deposit, the cheaper your monthly payments. When you make the final payment, simply hand the car back and walk away.

As the name suggested, Business Contract Hire is available to business drivers. It can be convenient because it does not include the obligation to buy, leaving your business with an asset that it does not want or need.

Hire Purchase

A Hire Purchase agreement is a very traditional form of finance, and works much in the same way as a mortgage on a house. You put down a deposit and agree a term, then just pay off the balance in fixed monthly payments. There are no mileage limits, and you can use HP to buy any new or used Land Rover up to 10 years old.

When you make the last payment, the car is yours to keep.

Hire Purchase is available to private drivers.

Balloon Hire Purchase

A Balloon Hire Purchase agreement works in much the same way as a standard Hire Purchase, with one key difference: a large ‘balloon’ final payment due at the end. This reduces the cost of your payments during the term of the contract.

You must plan for paying this – you don’t have the option to return the car instead. You will have to either find the cash, or another way of financing it; perhaps by part-exchanging the car for a new vehicle. In this instance, the purchasing dealer will clear the balloon payment and use any surplus as the deposit on your new car.

Balloon Hire Purchase is available to both private and business drivers, and can be used on any new or used Land Rover so long as the car is no more than 7 years old when the agreement ends.

Advance Payment Plan

An APP is designed for people who want to own their car outright – people who would otherwise be cash buyers – but want to defer some of the upfront cost, perhaps because they don’t plan on keeping the car for longer than a few years.

There are no monthly repayments with an APP. You agree a contract length and mileage allowance, and an estimate of its future value – the Guaranteed Future Minimum Value (GMFV) – is calculated and set aside until the end of the agreement. You then pay the balance up front.

When the agreement ends, you can either pay the GMFV and keep the car; hand the car back and walk away; or part-exchange, using any equity to fund the deposit on a new car.

APPs is available only to business customers, on vehicles up to 3 months old.

Get a quotation from Hunters Land Rover

Speak to a member of the team at your nearest Hunters Land Rover location to get a finance quotation for any Land Rover or Range Rover vehicle. If desired, you can compare different finance options too.