The two main types of used car financing available through us at CarFinance 247 are Hire Purchase (HP) and Personal Contract Purchase (PCP).
Hire Purchase (HP) means you’re essentially hiring the car from the lender and won’t own it out-right until you’ve made all your repayments (including the Option to Purchase fee).
You can choose to pay a deposit upfront when you take out a hire purchase agreement, which could reduce how much you pay monthly and for how long.
Find out more about Hire Purchase
Personal contract purchase
A Personal Contract Purchase (PCP) also gives you the option to pay a deposit and reduce the cost of your monthly payments.
The big difference between a PCP and a HP finance deal is that, at the end of the fixed term, you’ll either hand the car back, use any positive equity as a deposit for your next vehicle, or buy it by paying the balloon payment.
There might also be a clause in your PCP agreement that means you may incur extra charges from your lender if you exceed an agreed maximum annual mileage or end up with any bumps and scrapes on the car.
Find out more about Personal Contract Purchases
Other used car financing options include:
With a personal loan you can borrow an amount of money over a fixed time and you will own the car as soon as the dealer receives the money for it.
The loan may be unsecured, which means you may be able to sell the car at any time. Double-check the terms of your agreement and make sure you continue your repayments, even if you do decide to sell.
While we don’t currently work with lenders that provide these loans, a guarantor loan could be an option if you have a poor credit rating or no credit rating at all.
This type of loan involves a third party, such as a willing friend or relative, to act as your guarantor. If you fail to meet a payment, the guarantor will need to make the payment on your behalf.
While a guarantor loan can help people with poor credit or no credit history get used car finance, they do usually come with a higher APR and your guarantor will be responsible for making repayments if you can’t, which is worth considering when looking at your options.