Car Finance Explained
Choosing a finance solution to suit you:
Financing a car is the most popular way in the UK to buy a new or used car. It provides the flexibility of purchasing a vehicle, without having to pay a large lump sum of cash upfront.At Inchcape we have a great selection of finance options for you to choose from. These include:
- Personal Contract Purchase (PCP)
- Hire Purchase (HP)
- Personal Contract Hire (PCH)
- Finance Leasing
Do you have historic credit issues?
Inchcape are here to help you find your perfect vehicle thanks to our Impaired Credit Car Finance.
Private Finance Options
Personal Contract Purchase
How does PCP work:Personal Contract Purchase is a very popular way to own a new, nearly new or used car. It combines fixed monthly payments with exceptional flexibility at the end of the agreement.
At the end of your PCP agreement:
You have total control in deciding which of these choices suits you best.
Retain - Buy the car by paying an optional final payment
Return - Return the car with nothing more to pay, subject to mileage and condition. (i.e. If car prices fall substantially and you find you have negative equity you hand the car back with nothing to pay)
Renew - Part-exchange your car, and if there is any remaining equity after the final payment is taken care of, this is yours to use as deposit or take as cash-back
Discover more about how to finance your new vehicle with our Guide to PCP Car Finance.
Personal Contract Hire
This payment plan allows you to 'hire' vehicles as opposed to owning them.How does PCH finance work?
The amount you pay per month covers the drop in your car's residual value over the length of the lease. It's common to pay three months up front as an initial deposit, which means the initial outlay isn't too large.
At the end of the PCH agreement:
A PCH agreement normally runs over one to four years. Once this comes to an end, the customer simply returns the vehicle.
Is PCH the right option for you?
PCH can be a cost-effective way to keep yourself in a new car. You don't need a big deposit and road tax is covered for the duration of your contract.
Discover more about how to finance your new vehicle with our Guide to PCH Car Finance.
Hire Purchase
Hire Purchase is perhaps the most traditional of funding methods. The monthly payments are determined via the amount of deposit initially paid, the period of the contract and the overall price of the vehicle.How does HP finance work?
A typical hire purchase option will consist of paying a low deposit amount (maybe 10% of the vehicle price) and will entitle you to eventual ownership of the vehicle. There are no mileage restrictions.
At the end of your HP agreement:
Once all the payments due under the agreement have been made the title passes to you and you are free to keep or dispose of the vehicle as you see fit. Should your circumstances change you are able to settle the agreement either partially or in full, and your finance company will be happy to provide a figure for this at any time.
Is HP the right finance option for you?
If you're a high mileage driver or would like to keep your car for a longer period of time, Hire Purchase (HP) can work out more effective than say a PCP deal.
Discover more about how to finance your new vehicle with our Guide to HP Car Finance.
Business Finance Options
Business Contract Hire
Business Contract Hire (also known as an Operating Lease) is a cost effective way of securing the use of a vehicle for a pre-agreed period of time with a low up front rental. Contract Hire, as the name implies, is an agreement to hire the car for a period of time, typically 2, 3, or 4 years with an agreed mileage limit. Advance rentals can be as little as 1 monthly rental, though are more usually either 3 or 6 months. There are certain tax advantages for VAT registered businesses which we can explain to you in more detail.
