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How car finance works

At Helpfulcarfinance.com there are many finance options available to you when arranging funding. For years customers have always lent toward Hire Purchase, this is still a cost effective way of purchasing your new car and owning it at the end, but this is not only the option available to you, you could take advantage of PCP Personal Contact Purchase or Personal Loan, for more information on all these products see below.

Hire Purchase (HP)

Hire purchase is an affordable way of purchasing your next car, the term of the agreement can be between 12 to 60 months and is fixed payment for the time of the loan see pros and cons below.

Pros:

  • Fixed payment for the length of the loan
  • 12 to 60 months term
  • You own the car at the end of the agreement
  • Can be settled at any point of the loan
  • Can make over payments to reduce term

Cons:

  • Car is owned by the finance company till your loan is paid in full
  • Car cannot be sold without loan being settled first

Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) is an affordable way of purchasing your next car, the term of the agreement can be between 12 to 48 months and is fixed monthly payment for the time of the loan see pros and cons below.

Pros:

  • Fixed Payment For the length of the loan
  • 12 to 48 months term
  • Can hand the car back at the end
  • Affordable way of driving a car
  • You can pay the loan off and own the car
  • Has a guaranteed future value (GFV)

Cons:

  • Mileage restriction
  • Can be charged an excess mileage charge
  • If the GFV is not paid at the end the car is handed back
  • Car must be serviced to manufacture guidelines
  • Will be charged for any damage above usual wear and tear

Personal loan

Personal loan is an affordable way of purchasing your next car, the term of the agreement can be between 12 to 60 months and is fixed payment for the time of the loan, this product is mainly used if you have negative equity carried forward from your old car, see pros and cons below.

Pros:

  • Fixed rate term
  • 12 to 60 months term
  • Can finance more than recommended retail
  • Funds not secured on car
  • Fixed monthly payment
  • Can be settled early

Cons:

  • Can finance more than car is worth
  • Can cause negative equity

Guarantor loan

Guarantor loans are mainly used when someone is applying for finance for the first time, and doesn't have much credit history. The loan will be in the purchasers name but a next of kin, Mum or Dad will guarantee the loan, this means if for any reason the loan is not paid the guarantor will be liable for the loan, you must remember that if any payments are missed it will not only affect the purchasers credit file but also the guarantors too. This is a great way of getting your son or daughter a credit file.

This is just a brief overview of the types of vehicle finance available and should help you feel a bit more informed about your options. No matter what type of finance you choose, remember that:

  • Your credit history will be affected if you fail to keep up the repayments
  • You should be 100% sure you can comfortably afford any loan repayments before you sign on the dotted line
  • You are free to settle any agreement early (a small fee may apply, typically one month's interest and/or an option to purchase fee)
  • If your circumstances change during the period of the agreement or you simply fancy a different car, you are not stuck. In most cases you can part-exchange the vehicle and the dealer assumes responsibility for the outstanding finance. Any equity in your vehicle can be used as a deposit towards your new car
Apply now

1. Get approval

Use our online form to get approved, it will take no longer than 3 minutes.

2. Find a car

Once approved, buy your car from our approved dealer scheme

3. Sign & collect

Sign the paperwork, collect your car and enjoy!

Apply now

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