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Finance Plans
There are four ways to finance your car:
Hire Purchase
The key characteristics of how hire purchase works are:
- After paying the initial deposit, the balance is repaid by fixed, equal monthly payments
- The Hire Purchase agreement can be transacted over a maximum term of up to 5 years
- Once all the payments are made, you become the owner of the vehicle.
- You can change your vehicle at any point during the agreement. A settlement figure is agreed, saving some of the interest charges and allows total flexibility.
The benefits of Hire Purchase are as follows:
- You don't have to use bank borrowing to fund the vehicle purchase.
- The fixed repayment period helps you plan your finances.
- Total Flexibility.
- Terms / Structures to suit your needs
Lease Purchase
- This is similar to Hire Purchase offering all the benefits, but with the main difference of a large amount of the loan deferred until the end of the agreement. This is often known as a balloon or bullet payment.
- Lease Purchase transactions can be taken over 4 years with an agreed balloon amountFull flexibility, allowing you to settle at any stage throughout the term
- Once all amounts have been repaid title passes to you, the client
- As a proportion of the loan is deferred until the end it keeps the payments low, or allows you to buy a more expensive vehicle.
Personal Leasing
Personal leasing is an option for consumers, offering the peace of mind of a new vehicle, without the worry of maintenance or depreciation costs. All you do is pay for the use of vehicle and change it when you want to.
The benefits of Personal Leasing are as follows:
- Low deposit
- Fixed monthly payments
- No hidden extras
- No residual to pay at the end of the agreement
- Competitive rentals up to 5 years
- Full maintenance packages (2 or 3 year contracts available)
- Road tax and manufacturer's warranty is included
Personal Contract Purchase
This is how a Personal Contract Purchase works:
- At the start of the contract, a balloon payment or Guaranteed Future Value (GFV) is agreed, which is paid at the end of the contract. This amount and the deposit you choose to pay are set against the vehicle price and your monthly repayments are based on the balance, plus interest.
- Affordable monthly payments which are often lower than those from a traditional finance plan
- At the end of the agreement, you can:
- Return the vehicle and choose a new vehicle using any excess value over the GFV towards your deposit on your next vehicle
- Pay the GFV and take ownership of your vehicle
- Return the vehicle with nothing more to pay (provided that you have made all monthly payments, the vehicle being in good condition and has not exceeded the agreed mileage)
The benefits of a Personal Contract Purchase are as follows:
- Peace of mind from knowing that you have the benefit of a Guaranteed Future Value.
- Lump sum Balloon Payment can reduce your monthly payments making your chosen vehicle more affordable, or allowing you to but a more expensive model.
- Variable repayment and deposit terms to help you budget your finances.
Balance Payments Plan
This is a variable rate option linked to either, Bank of England Base Base, London Interbank Offer Rate (LIBOR) or Finance House Base Rate (FHBR) now only available to Limited Companies or High Net Worth Individuals i.e. people earning in excess of £150,000 net per annum or with a worth in excess of £500,000 outside there personal residence. In order to proceed with this personally a financial statement is required from your accountant.
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