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Car Finance
The finance specialists at Bellinger in Wantage & Didcot are always ready to help and give advice regarding our breadth of finance options available for all our customers. Through discussions we will find out your specific needs, and so our specialist dealership team members will then be able to arrange a perfectly tailored finance package to suit you and your requirements.
The benefits that come with a dealership finance package extend beyond added security. When compared to a personal loan, you will have a shorter term, as well as lower monthly payments. Choosing a finance option with us means that documents can be completed quickly and easily, eliminating unnecessary paperwork altogether and thus making the buying process as smooth and simple as possible. Let us help you acquire a piece of history.
What is Personal Contract Purchase (PCP)?
Personal Contract Purchase (PCP) is a finance product that allows you the opportunity to buy a new or a used vehicle.
It is similar to a Hire Purchase agreement as you will usually pay an initial deposit, followed by monthly instalments over a term typically between 18 to 48 months.
What makes PCP different to Hire Purchase (HP) is that your monthly instalments are paying off the depreciation of the vehicle, not its entire value, over the course of the term. Then, when you get to the end of your agreement, there is a final, balloon payment that must be made if you want to keep the vehicle. The balloon payment is often referred to also as the Guaranteed Future Value (GFV).
How does PCP actually work?
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When you have chosen your vehicle, you will then agree your annual mileage and decide on the agreement term with one of our Retail Managers.
We will then determine the Guaranteed Minimum Future Value (GMFV) of the vehicle at the end of the agreement and work out a deposit and monthly amount that works for you.
At the end of your agreement you will then have three options:
Return – Simply return the vehicle the back to the finance company
Retain – Keep the car by paying the optional final payment
Renew – Trade it in for another car
For a quotation, help, or advice contact us and ask to speak to one of our Retail Managers.
What are the advantages of PCP?
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- Monthly payments on a vehicle financed by PCP are usually lower than if your vehicle is financed by a Hire Purchase agreement.
- If you decide not to buy the vehicle, you can simply walk away when you've made all the payments.
- Similar to PCH, you can drive away a new or used vehicle every few years (dependent on the chosen term) without worrying about selling it on.
- If your vehicle is worth more than the Guaranteed Future Value then you can use that equity towards a deposit on a new vehicle.
What should you consider when option for a PCP?
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- If you want to buy the vehicle you will need to pay your final balloon payment (the Guaranteed Future Value).
- Similar to PCH, you will need to agree on a mileage allowance at the beginning of your contract and there may be excess mileage charges if you exceed this.
- You won’t be able to sell the vehicle without settling the finance.
- You won’t own the vehicle until you have made all of your repayments.
- You’ll need to keep the vehicle properly insured, maintained and in your possession until the full value is paid off.
Can I settle my PCP agreement early?
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You can normally settle your agreement early by asking the finance company to provide you with a settlement figure. However, the finance company will require you to pay off the difference between what your vehicle is worth and what you still owe. There may be a difference which is known as negative equity. On the other hand, you may find that at the end of your term your vehicle is worth more than the Guaranteed Future Value, which means you will have some positive equity to contribute towards your next vehicle.
What is Hire Purchase (HP)?
Hire Purchase is a way to finance buying a new or used vehicle. You will normally pay an initial deposit and will pay off the entire value of the vehicle in monthly instalments. When all the payments are made, the Hire Purchase agreement ends, and you own the vehicle outright.
What are the advantages of HP?
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- You’ll be able to drive away a vehicle that you may not have managed to buy outright.
- Unlike a PCP or PCH contract, you won't need to estimate your mileage at the start of your Hire Purchase agreement, so you'll avoid excess mileage charges.
- Once you’ve made your final monthly payment, including the option to purchase fee, you'll have full ownership of the vehicle.
What should you consider when opting for HP?
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- Monthly payments may be higher than some other finance options, such as PCP, as you're paying off the full value of the vehicle.
- You won’t be able to sell the vehicle without settling the finance.
- You won’t own the vehicle until you have made all of your repayments.
- You’ll need to keep the vehicle properly insured, maintained and in your possession until the full value is paid off.
Can I settle my HP agreement early?
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The short answer is yes, you can end your finance early. There are different provisions within each finance agreement that allow you to do just that. If you have paid two-thirds or more of your finance agreement, the options to end the finance agreement early open up.
For a Hire Purchase agreement, there is an option of paying it off early through a settlement fee. A settlement fee covers the cost of any remaining unpaid instalments and interest payments remaining on the agreement. Once the settlement fee is paid, you take full ownership of the vehicle early.
Under a Personal Contract Purchase agreement, you can also pay a settlement fee for bringing the agreement to an end early. After that, you can choose to hand the vehicle back or you have a second option. Through a PCP agreement, you can take full ownership of the vehicle by paying off the remaining Guaranteed Minimum Future Value also known as a balloon payment.
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