PERSONAL FINANCE OPTIONS

To help you choose the right personal finance option to suit your vehicle lease or purchase needs,  we provide a summary of the main types of finance available to you below. If you have any questions get in touch.

Personal Contract Hire

Personal contract hire is commonly referred to as a vehicle lease. The vehicle is purchased by the finance company who estimates a value of the vehicle at end of the term and your monthly payment consists of the depreciation and interest.

The benefits are simply no residual value risk and fixed payments but the vehicle has to be returned in a reasonable condition and not a greater mileage than stated at contract inception or the finance company will levy a charge for this.

Personal Contract Purchase

Personal Contract Purchase (PCP) is a type of vehicle finance agreement for personal customers looking to fund a new or used vehicle in a manageable way

The monthly payments are not subject to VAT, however if you do take out the optional service package then you will have to pay VAT on the service costs.

Advantages:

  • Low initial payment.
  • Fixed monthly payments.
  • You may be able to refinance the balloon payment.
  • No depreciation concerns if you wish to walk away at the end.
  • Maintenance and servicing can be included.
  • Fixed balloon or guaranteed future value to purchase payment when you first take out the contract.
  • Cost effective.
    Can be used to finance new or used vehicles.

Disadvantages:

  • You will have to make a decision at the end of the contract as to whether you wish to sell the vehicle, return it or Keep it - this is often seen as an advantage to most people.
  • You must have fully comprehensive vehicle insurance.

More Information on Personal Contract Purchase:

PCP is ideal for any individual who would like options at the end of their finance agreement. PCP customers make an initial payment when they first take out the contract, then pay fixed monthly payments and finally have an Optional Final Payment (OFP) at the end at the end of the contract which is also referred to as the GFV (Guaranteed Future Value).

You can trade in or sell your vehicle at a dealership and take another vehicle from them. If the trade in value is larger than the OFP you will be able to use the difference towards a deposit on a new vehicle. Or, you can simply return the vehicle to the funder, as long as you have not exceeded the mileage and the vehicle is in an appropriate condition for its age there will be no charge. Finally, you can keep the vehicle either by paying the OFP in full or you will find that most companies offer the opportunity to re-finance the OFP.