Traditionally, getting the right personal car finance deal used to mean deciding which bank to apply for a loan. Nowadays, there are now more ways to finance your next car, with the addition of hire purchase, personal contract hire, personal finance lease and lease purchase. This article aims to provide more information to find the right personal car finance deal.
Hire purchase is often used alternative to a bank loan when it comes to financing a new car. The finance company will pay the dealer for a car and then returns the finance company. You can pay for the car in a fixed period of up to 72 months, and there is no VAT charged on top of monthly repayments. Once the last repayment has been made, the vehicle is yours.
Personal contract hire
Personal contract hire is a way of leasing a vehicle for a period of time. The annual mileage is determined by the leasing company and is usually 10,000 miles per year, although this can be changed, but will increase the monthly payment. E 'can also embed the service in the monthly payment.
Personal contract hire is very similar to leasing arrangements to leases that companies use, but for individuals. The main advantage of a lease is that the company has the lease on some of the costs of car ownership such as depreciation. Most vehicles will depreciate by 40% in the first year, and have lost 60% of their value after three years. branded products, will hold their value better than traditional brands, but are not always accessible. Maybe you will be able to afford a bigger car or better hire contract staff using a bank loan or hire purchase.
There is usually a small deposit to pay when taking the Personal Contract Hire plan agreement, and a lower monthly repayment compared to Hire Purchase. In addition, the family budget can be accurate and projections for the years ahead, such as insurance and the distribution of maintenance costs, such as maintenance, waste, tires and batteries may be included in monthly payments. There should be no expensive surprises if the car breaks down and needs a lot of work doing to it.
Personal contract hire is also a popular choice for drivers of company cars that have received a car or mileage allowance instead of a company car.
Personal contract purchase
Personal contract purchase is similar to Personal contract hire but with more options at the end. Lower payments are achieved as there is a Guaranteed Future Value (GFV), which states that the vehicle will be worth at the end of the lease period.
Using Personal contract purchase helps save money and offers peace of mind. However, the depreciation must be considered, as this helps to determine the GFV. A car that depreciates more will be worth less and therefore have a smaller GFV at the end of the lease period. At the end of the lease, there are three options: give the vehicle to a leasing company, purchase the vehicle at the GFV, or part exchange the vehicle. Part exchange the vehicle is the most popular choice because it allows everyone to capital (which the vehicle is beyond the GFV) to be used against another car.
Lease purchase is similar to hire purchase but there is a final payment (balloon payment) at the end of the lease period, which explains the monthly payments. Finance can be used to pay the down payment balloon. This method can help you afford a car that was previously investment, but the final payment can still be very high, and perhaps more Than the value of the car.