Here at CarFinance 247, we work with a panel of lenders who offer a range of different finance options. Even so, there are two main types of car finance: Hire Purchase (HP) and Personal Contract Purchase (PCP).
With Hire Purchase (HP) you’ll essentially hire the car from the lender during your agreement and won’t own it outright until you’ve finished making all your repayments (including the Option to Purchase fee).
As you’ll own the car at the end of your agreement, monthly payments can be higher than with other options but there are typically no mileage restrictions and you can choose to pay a deposit upfront, which could reduce the amount you pay each month.
Find out more about HP Car Finance
Personal Contract Purchase
A Personal Contract Purchase (PCP) deal differs from HP because it gives you options. At the end of your PCP agreement, you can choose to hand the car back, use any positive equity as a deposit in a new deal, or buy the car by paying the balloon payment.
Unlike HP, you may also be subject to restrictions. You’ll need to agree a set mileage and you might face additional charges if you exceed this annual limit or end up with any bumps or scrapes on the car.
Find out more about PCP Car Finance
Used car finance options also include:
With a personal car loan, you can borrow money for a fixed time period, and you’ll own the car as soon as you pay the dealer. If the loan is unsecured, you’ll be able to do whatever you like with the car – modify it, sell it, or take an epic roadtrip! Double-check the terms of your agreement though and make sure you continue to make payments, even if you do decide to sell.
While we don’t currently work with lenders that can provide a guarantor loan, this could be an option if you have a poor credit rating or no credit history.
This type of loan requires a third party – usually a close friend or family member – to act as your guarantor. If you fail to make a payment, the guarantor will have to pay it on your behalf.
While guarantor loans can help people with bad credit get car finance, they can also come with a higher APR and your guarantor will be responsible for your debt, if you fall behind on payments.