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Car Finance Expert Q&A

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Edwin Miles. Underwriting Manager

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Unsure what sort of loan to get for an Audi A4?

Hello, I have found a £35000, 2014 Audi A4 that I would like to purchase on finance, however I’ve never applied for finance before and am a little bit confused about the difference between a HP and PCP loan? I have had excellent credit for years, earn £35000pa, and only have a small mortgage left on my flat, so what sort of offering do you think would suit me best?

Posted by Henry T on


Thank you for your question Henry, and I hope this helps to clear up the difference between a HP and PCP loan.

Firstly, a Hire Purchase (HP) agreement. With a HP agreement, your loan is secured directly against the car, and you are contracted to pay your finance off with regular monthly instalments over a fixed period of time. Due to the length of contract and monthly repayments, this option is favourable for cars up to the value of £20000. If you haven’t saved a deposit, and wish to purchase a car to keep when the contact is finished, this is a good option.

The other secured option you have is a Personal Contract Purchase or PCP deal, which typically suits people like yourself with good credit. Once again you are agreeing to monthly payments over a period of time (typically 2/3 years), and when you reach the end of your agreement, you can opt to make a “balloon payment”, to buy the car outright, hand the car back to the dealer, or part exchange your vehicle for another PCP deal. The balloon payment will be based in the value of your vehicle at the end of your agreement. As you are after a newer car, this may be a good option for you, as you can keep your monthly repayments low and your options open, with the choice to upgrade your car after a few years.

With excellent credit and a good income I am sure we can find you a lender offering competitive finance rates. Please make an application, and if you are approved you can choose your new Audi from any reputable dealer in the UK.

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