In-depth guide to Car Finance (PCP vs Leasing vs HP, etc)
- 4 years ago
This video explores the alternatives forms of car finance available to you - PCP (Personal Contract Plan), HP (Hire Purchase) and Leasing.
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▶️ ON OUR WEBSITE & "MONEY MATTERS" BLOG
- Car Finance: https://www.solution-loans.co.uk/car-finance/
- How to Buy a Used Car using car finance: https://www.solution-loans.co.uk/blog/buy-used-car-using-car-finance/
- 6 reasons why people use car finance: https://www.solution-loans.co.uk/blog/6-reasons-why-people-use-car-finance/
- Why young drivers are leasing cars: https://www.solution-loans.co.uk/blog/younger-drivers-car-leasing-not-buying/
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▶️ VIDEO TRANSCRIPT
If you’re looking for a new car, there are a myriad of ways to finance it - from bank loans, to finance packages offered by the dealership, to hire purchase agreements. In recent years there has been a huge growth in the number of Hire Purchase (HP) and Personal Contract Plans (PCP). Both of them allow people who would not otherwise be able to afford a new car to drive the vehicle of their choice for a series of monthly payments regardless of their credit history.
Under HP, a motorist chooses their new vehicle and it is bought from the dealership by the finance company. The lender then owns the car and the motorist hires it by making a series of monthly payments. Once the final monthly payment is made, the lender transfers ownership of the vehicle to the motorist who is then free to keep it or sell it. HP is generally more expensive than PCP be-cause the motorist will eventually own the vehicle while under PCP the motorist has to make a final ‘balloon’ payment to gain ownership of the car.
A PCP is a leasing arrangement between the borrower and the finance company. The motorist chooses a new vehicle and the lender then buys it from the dealership. The motorist will decide how big a deposit he or she can afford and then the vehicle is leased back in return for a series of monthly payments. The size of the initial deposit will increase or reduce the size of the monthly payments.
At the end of the leasing agreement - provided all the monthly payments have been made - the motorist has the option of handing back the vehicle without incurring any additional financial cost, part exchanging it for a another car under a new PCP deal or purchase it outright with a final ‘bal-loon’ payment. The size of the balloon payment is made clear at the start of the leasing agreement.
------
▶️ ON OUR WEBSITE & "MONEY MATTERS" BLOG
- Car Finance: https://www.solution-loans.co.uk/car-finance/
- How to Buy a Used Car using car finance: https://www.solution-loans.co.uk/blog/buy-used-car-using-car-finance/
- 6 reasons why people use car finance: https://www.solution-loans.co.uk/blog/6-reasons-why-people-use-car-finance/
- Why young drivers are leasing cars: https://www.solution-loans.co.uk/blog/younger-drivers-car-leasing-not-buying/
------
▶️ SOCIAL
Like us on Facebook: https://www.facebook.com/SolutionLoanUK
Follow us on Twitter: https://twitter.com/solutionloansuk
Follow us on Instagram: https://www.instagram.com/solutionloans/
Website: https://www.solution-loans.co.uk/
Subscribe to our YouTube channel: http://bit.ly/solutionloansYT
------
▶️ VIDEO TRANSCRIPT
If you’re looking for a new car, there are a myriad of ways to finance it - from bank loans, to finance packages offered by the dealership, to hire purchase agreements. In recent years there has been a huge growth in the number of Hire Purchase (HP) and Personal Contract Plans (PCP). Both of them allow people who would not otherwise be able to afford a new car to drive the vehicle of their choice for a series of monthly payments regardless of their credit history.
Under HP, a motorist chooses their new vehicle and it is bought from the dealership by the finance company. The lender then owns the car and the motorist hires it by making a series of monthly payments. Once the final monthly payment is made, the lender transfers ownership of the vehicle to the motorist who is then free to keep it or sell it. HP is generally more expensive than PCP be-cause the motorist will eventually own the vehicle while under PCP the motorist has to make a final ‘balloon’ payment to gain ownership of the car.
A PCP is a leasing arrangement between the borrower and the finance company. The motorist chooses a new vehicle and the lender then buys it from the dealership. The motorist will decide how big a deposit he or she can afford and then the vehicle is leased back in return for a series of monthly payments. The size of the initial deposit will increase or reduce the size of the monthly payments.
At the end of the leasing agreement - provided all the monthly payments have been made - the motorist has the option of handing back the vehicle without incurring any additional financial cost, part exchanging it for a another car under a new PCP deal or purchase it outright with a final ‘bal-loon’ payment. The size of the balloon payment is made clear at the start of the leasing agreement.