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.

  • The service was extremely helpful and professional from when I first made an enquiry to keeping me posted up to taking delivery and after-sales support. I would recommend them to anyone looking to buy / sell a vehicle and would not hesitate to use again. Anthoula Madden
  • Wasn\'t sure about this company when I first saw the Range Rover sport advertised on autotrader as I had not heard of them. ... Ian Robinson
  • I have purchased 3 cars through Autopia. Each time they were able to source cars to spec in a fraction of the time a main dealer would take, and cheaper! Highly recommended. Brian
  • Tonia and Andy have been fantastic throughout the whole process of purchasing my new car. I am extremely happy with my new car and it was sold to a very high standard exactly as described. I will definitely be buying from them again. Kirsty Jessica Gray
  • I just wish to thank Andi and Tonya for all their help in assisting me to obtain the perfect car for my wife. I found their service and expertise second to none and their after sales client care re-affirmed my view that i will be turning to them again. i would certainly be recommending them to my ... Ferdy

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