The first phase is to decide what type of business you want: loan, leasing, hire-purchase or dealer financing. Next, it`s a matter of choosing the supplier whose product best suits your needs. If the GMFV is set at the beginning of the agreement, it is usually lower than the expected value of the car at the end of the agreement, so there is some fairness in the car at the end of your agreement. However, if the value of used cars has dropped at the end of your PCP, you may not have equity in the car at the end of the deal. And if your car is in poor condition, the value may be lower than you`d expect. If you don`t have equity that you can use as a deposit on your next car, you`ll need to fund it in other ways. Or, if you want to pay the GMFV and own the car, you may find that you pay more than the value of the car. * This article contains affiliate links, which means that we may receive a commission for the sale of products or services we write about. This article was written completely independently. You can use a car finance broker like CarFinance247. By using a specialized broker, you can get a quote for a car financing contract (without compromising your credit score) and find the right vehicle for your needs.
Buying a personal contract (PCP) is by far the most popular way to finance new or used cars, according to the latest available data from the Finance & Leasing Association (FLA). Conditional sale is similar to hire-purchase, but you own the car at the end of a conditional purchase agreement. There are no fees to pay for the call option, as is the case with a hire purchase, so you automatically become the owner of the vehicle once you have made all your repayments to your lender. One of the most popular ways to finance a new car. The money is borrowed to finance the purchase, often from a bank or construction company. When you buy the car, you immediately own the car. You then repay the loan to the lender over a period of time that suits you with interest. The amount of interest varies from lender to lender and usually depends on the duration of the loan, as well as your personal situation and creditworthiness. This option is especially good if you are there in the long term and do not intend to change cars very often. With a PCP, you can terminate your contract at any time and return the car and pay half the price of the PCP – this is called the “half rule”. Lease-to-purchase contracts are available at most car dealerships.