How to finance a used car
24/04/2024
Not everyone has the means to purchase a car outright, which is where financing comes into play. For many, financing is the key to acquiring the vehicle they desire. While financing is more commonly associated with new cars, it's also a viable option for purchasing a used car, offering affordable monthly payments through our finance service.
If you're unsure whether financing is right for you, here's a breakdown of how to finance a used car:
Can I Afford a Finance Package? If buying a car outright isn't feasible, consider determining how much you can afford to allocate per month. Factor in interest, especially for longer financing periods, and incorporate the monthly payments into your budget to enjoy immediate access to the car while paying it off over time.
Can I Choose Different Finance Options? Similar to new car purchases, there are various financing options available for used cars. You can opt for a Personal Contract Purchase (PCP), Hire Purchase (HP), or apply for a personal loan to buy the car outright and repay the loan in installments. Each option has its own benefits and considerations, so choose one that aligns with your preferences and financial situation.
Different Types of Finance:
Hire Purchase (HP): With HP, you'll pay a deposit, usually around 10% of the car's value, followed by monthly installments, including interest. Once the agreement is complete, and all payments are made, you'll own the car. However, ensure timely payments to avoid potential repercussions, and review the terms and conditions to understand any limitations.
Personal Contract Purchase (PCP): PCP involves lower monthly payments compared to HP. At the end of the contract, you have the option to return the car, make a final balloon payment to own it, or sell it privately to settle the remaining balance. Adhering to the agreed mileage limit and maintaining the car's condition are essential considerations.
Personal Contract Hire (PCH): PCH offers lower monthly costs than HP agreements, but you don't own the car at the end of the contract. The initial payment is typically higher, and terms vary based on the car type, contract duration, and mileage limit. PCH suits those who prefer regular car changes or don't wish to own a vehicle, with options to return the car before the contract ends for an additional fee.
When exploring these financing options, be mindful of factors such as APR interest, additional fees, and mileage limits, ensuring you select a plan that aligns with your needs and preferences.
