Finance Explained

A quick guide to the different types of finance.

Personal Contract Purchase (PCP)

Personal Contract Purchase is highly attractive and increasingly popular. It combines low, fixed monthly payments with exceptional flexibility at the end of the agreement.

Your car's guaranteed future value is calculated (based on agreed mileage and age) and becomes deferred as a final payment (“balloon”).
Crucially, you don't commit to buying the car at the outset. Instead, you use it for 24-48 months, deciding at the end of the agreement which of the following options you prefer:

1. Purchase the car at an agreed minimum residual value ;
2. Part-exchange the vehicle for another ;
3. Sell the vehicle privately and settle the balloon ;
4. Return the car ( subject to mileage and condition) with nothing more to pay (e.g. if depreciation resulted in negative equity) .

PCP is ideal if you're opting out of a company car scheme. You use your company car allowance to fund your PCP monthly payments without paying company car tax.

Why consider Personal Contract Purchase?

  • Low risk - a minimum future value is guaranteed
  • Low deposit - keeps valuable personal or business funds available
  • Fixed monthly payments - perfect for budgeting
  • Choice – purchase the car, part-exchange it or just return it
  • A better car - lower payments can help you choose a higher specification car
  • Tax breaks - if you're opting out of a company scheme, your cash alternative isn't subject to company car tax
  • VAT free - no VAT on payment

Hire Purchase

Hire purchase is a simple, straight forward way to spread the cost of buying a new car.

It is a fixed rate finance, with a fixed monthly payment. The deposit you pay is flexible - typically between 10% to 50% of the vehicle cost.

The remaining balance, plus fixed interest, is repaid in equal instalments over an agreed period (12-60 months).

Why consider Hire Purchase?

  • Low deposit - keeps valuable personal or business funds available
  • Control - you decide the deposit, you decide the term
  • Fixed monthly payments- perfect for budgeting
  • Flexibility - doesn't compromise your other lines of credit
  • Assets - you gain vehicle ownership
  • Tax benefits - tax allowances for business users
  • VAT free - no VAT on payments

Hire Purchase with Balloon (lease purchase)

Hire purchase with a balloon offers lower monthly payments than normal hire purchase. The difference being, at the end of the agreement, you can make a final lump sum payment (“balloon”) so as to own your car.

It is a fixed rate finance - but with a lower fixed monthly outlay since you defer repayment on some of the borrowing. At the end of the agreement, options include car purchase, refinance, part exchange or resale.

The deposit you pay is flexible - typically between 10% to 50% of the vehicle cost. The deferred balloon element is calculated on the estimated future resale value of the car.

The difference, plus fixed interest, is repaid in equal instalments over an agreed period (12 - 60 months), plus a final balloon payment.

Why consider Hire Purchase with balloon?

  • Low deposit - keeps valuable personal or business funds available
  • Fixed monthly payments - perfect for budgeting
  • A better car - lower payments can help you choose a higher specification car
  • Flexibility - does not compromise your other lines of credit
  • Assets - you gain vehicle ownership
  • Tax benefits -Tax allowances for business users
  • VAT free - no VAT on payment

Balanced Payments Plan (balloon optional)

(AKA: Standard Variable Rate)

Generally you will need to qualify as a “High Net worth individual”  which will require you to meet certain criteria for lenders to consider lending on these types of contracts.

Balanced payment is a finance option resembling Hire Purchase (HP) for contracts over £25K. Unlike HP, where interest is fixed, Balanced Payment tracks changes in the finance house base rate. As rates fall or rise, so does the interest charge you pay over the period of the contract.

After the initial deposit, the balance is repaid in fixed monthly instalments over an agreed period (12 - 60 months). At the end of the agreement, any interest variation is reconciled and settled as final credit or a charge. Options include a deferred 'balloon' final payment or lump sum payment to settle the agreement early.

Why consider Balanced Payments?

  • Low deposit - keeps valuable personal or business funds available
  • Flexibility - ability to make lump sum payments
  • Competitive - low cost options for early termination
  • Fixed monthly payment - perfect for budgeting
  • Tax benefits - tax allowances for business users
  • Potential savings - save if interest rates fall
  • VAT free - no VAT on payments

TESTIMONIALS

See a small selection of our testimonials below, alternatively, click here to view all of our testimonials.

  • Tonia was fantastic throughout - always happily catering to my questions and queries. Timing and car exactly as promised. Highly recommended. P Cridge
  • I was very happy with the whole serive from when I first made an enquiry to keeping me posted up to taking delivery and aftersale. I would recommend to anyone looking to buy / sell a vehicle and would not hesitate to use again. Manju
  • I bought a Nissan GT-R from Autopia and the service they provided was second to none. They helped me with all my questions and queries and made the buying process as easy as can be. The support continued after the sale, Tonia went out of her way to help resolve a mistake by the DVLA for me. I Would ... Jon Littlechild
  • Awesome and honest service from start to finish. I'm sure we will deal again and it's especially nice that you are so close to me too. I highly recommend them and have done so already to friends. Thank you all! Aemish
  • I had a couple of cars on finance that I wanted to trade for a GT-R and Andy and Tonia took out the hassle of me getting rid of these - and gave me a better price than my local dealers. They also got me my new car much quicker than the dealers could do and were a pleasure to deal with - keeping me ... Matthew Cole

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