![]() (Bear in mind that if you want to buy the car at the end of the agreement, the total cost will usually be higher than with HP).Īs with HP, you can use the vehicle during the agreement but it still belongs to the lender. This means that the monthly repayments are usually smaller. Rather than borrowing a loan equal to the total cost of the car, as you do with HP, your PCP loan covers only the estimated depreciation of the vehicle, any fees and interest charged for hiring. Personal contract purchase (or PCP for short) is another popular type of car finance.Īlthough Oodle do not currently offer this type of finance, it is helpful to understand for comparative purposes. If you do fall behind on your payments, your lender may choose to repossess the vehicle until you’ve paid in full. Needless to say, if you can’t afford to keep up with your repayments then you shouldn’t apply for finance. Although you have full use of the vehicle for the duration of the contract, the HP vehicle remains the property of the finance provider until such time as the agreement has been paid in full along with any fees including the option to purchase. ![]() Today, HP is one of the most affordable methods of buying a car. Remember the interest is spread throughout the lifetime of the loan so you will pay more for the car in the long term.īecause HP enables customers to spread the costs, hire purchase finance makes it possible for many people to afford higher spec vehicles than their budget may have otherwise allowed. You then make fixed monthly repayments over a pre-agreed term until the loan is paid off, at which point the car is yours, once you pay the option-to-purchase fee. Thanks to its fixed repayment terms, spread out over a number of years, hire purchase (also known as HP) is one of the most popular types of car finance in the UK.Įssentially it works like this: you take out a loan equal to the total value of the car, minus an initial deposit. ![]()
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