Spreading the cost of your new vehicle over a minimum term often makes your purchase much more affordable, however there is a lot to consider and it can be quite complex looking across the different funding options.
We have put together some videos to explain each of the different methods of car finance we offer here, plus some frequently asked questions to help you make your choice.
Car finance FAQs
Should I buy a car on finance?
There are certain benefits to buying a car on finance, but the decision should be totally dependent on your financial circumstances and your preferences.
When you take out a finance agreement, you are forming what is referred to as a ‘tri-party' agreement, meaning that yourself, the supplier and the finance company each has a vested interest in the car until your agreement ends, regardless of how big a deposit you've paid. This can be useful should you encounter any problems, as the finance company are inclined to rectify them.
Taking out a finance agreement as opposed to buying a car outright does mean you'll have monthly payments to take into consideration, as opposed to the one initial sum when buying.
It is extremely important that your decision is based on what you can realistically afford – don’t over stretch yourself!
What's the difference between PCP, HP and a personal loan?
To demonstrate the differences between the three types of car finance, we've listed each one's unique features below:
Unique features of PCP (Personal Contract Plan)
- You can easily swap to a new car at the end of your PCP agreement
- The monthly payments tend to be lower
- You can encounter additional charges for going over your mileage allowance or damage
- You don't own the car (unless you choose to buy it at the end of your agreement) - you're technically renting it
- If you want to keep the car at the end of your contract, you'll have to pay what's referred to as a “balloon payment”, or a “minimum guaranteed future value” – this is the remaining sum owed on your agreement
Unique features of HP (Hire Purchase)
- You own the car at the end of the agreement after the final payment
- You have a fixed rate of interest, and fixed payments for the duration of the agreement
Unique features of a personal loan
- You don't always need a deposit
- Personal loans for cars tend to be less easily available - you'll need a good credit history to obtain one
- You can't terminate the arrangement
- You'll need to visit the bank to arrange the loan
Can you apply for car finance to be in joint names?
No. If you're applying for car finance, it must be in your name only.
Can car finance be paid off early?
Yes – but you may have to pay a fee for early termination, depending on the lender.
Can car finance be transferred to another car?
In some cases, you can refinance and set up a new deal with another car – speak to us if you want to find out some more about this.
Will a car finance application have an impact on my credit rating?
Applying for car finance will require what's referred to as a ‘hard search' of your credit report. This is likely to show on your credit score, and if you have several hard searches on your report in quick succession, it can have a negative impact.
At Perrys Used Car Outlet, our pre-approval process lets you check whether or not you're likely to be eligible for car finance by conducting what's referred to as a 'soft search' of your credit report. This doesn't affect your credit score, as the trace it leaves on your report can't be seen by potential future lenders.
The pre-approval process simply helps you to work out what you're eligible for, without damaging your credit score.
Can I part exchange my current car?
Yes. To find out more about part exchanging your car, head to our part exchange page.
Can I get car finance if I have bad credit?
It’s not guaranteed; however, we work with a variety of lenders to find the right deals for our customers. We offer options for those who have had credit issues in the past so get in touch with us if you’d like to find out more.
Can you buy used cars on finance?
Yes – find out more about the different car finance options above.