Car Finance: Explained | HCS

10th Apr 2023

Everything You Need To Know About Car Finance

Car finance is a great way to get the car of your dreams without having to pay for it all upfront. There are several different types of car finance available, each with its own set of advantages and disadvantages. In this guide, we'll take a look at and explain the most common types of car finance options available.

PCP Finance:

Personal Contract Purchase (PCP) finance is a popular option for many car buyers. With PCP, you'll pay a deposit upfront and then make monthly payments for a set period of time, usually two to four years.

At the end of the agreement, you'll have the option to either pay a final lump sum payment (often called a "balloon payment") to own the car outright or return the car to the finance company.

HP Finance:

Hire Purchase (HP) finance is another option to consider. With HP, you'll pay a deposit upfront and then make monthly payments for a set period of time, usually two to five years.

Unlike PCP, there's no balloon payment at the end of the agreement. Once you've made all the payments, you'll own the car outright.

Zero Deposit Finance:

Zero-deposit finance is exactly what it sounds like; car finance with no deposit required upfront. This option may be available for those with a good credit score, and you'll make monthly payments as usual.

However, it's worth noting that you'll likely end up paying more interest overall than if you put down a deposit upfront.

Part Exchange Finance:

Part Exchange finance is an option where you trade in your existing car as part of the deal. The finance company will value your car and then deduct this from the total cost of the new car, meaning you'll only need to finance the difference. This can be a convenient option if you want to upgrade your car without selling your old one separately.

How Car Finance Can Benefit You:

Car finance can offer several benefits to buyers. Firstly, it allows you to spread the cost of your car over a longer period of time, making it more affordable. Secondly, you'll have the flexibility to choose from a range of cars that may have been out of your budget if you were paying upfront.

Finally, car finance can be a good option for those who want to build up their credit score. Making regular payments on time can demonstrate to lenders that you're a responsible borrower and help improve your credit score.

In conclusion, car finance offers a range of options to suit different budgets and preferences. PCP and HP finance are the most common types, but zero deposit and part exchange finance are also worth considering.

Car finance can make it more affordable to get the car you want and can even help improve your credit score. However, it's important to read the terms and conditions carefully and ensure you can afford the monthly payments before signing up for any finance agreement.

At Hilton Car Supermarket, we can help you get approved for car finance in Milton Keynes when you apply online.