10/12/2023 0 Comments Car buy monthly payments![]() This is called the ‘guaranteed minimum future value’ or GMFV.Īt the end of a PCP deal you have three options: When you apply for a PCP finance plan, the finance company calculates a predicted minimum value for the car at the end of the agreement. Cars will lose value as soon as you drive them off the forecourt, though some lose a lot more than others. Your monthly payments will be based on the price of the car, the interest rate (APR) and how the car’s value is expected to drop over the course of your agreement.ĭepreciation is the key to understanding PCP finance. If you go for a PCP deal, you’ll pay a deposit (usually at least 10% of the car’s value - sometimes more) and then make a set number of monthly payments, which will – together with the deposit – pay off the car’s predicted depreciation over the course of the contract. PCP effectively sees a car’s depreciation paid off in monthly instalments over the course of a number of years – typically three or four. What for? Mostly new cars, some used cars, but not private sales How personal contract purchase works Who offers it? Car dealerships, car supermarkets and finance brokers Keep in mind though that buying in cash is always an option. This guide will go into detail on all these methods below so you can decide which is best for you. ![]() There are four main car finance options available to you, these are Personal Contract Purchase (by far the most popular scheme), Hire Purchase, Personal Contract Hire and a personal loan. What are the different car finance options available? Read on for all the details about car finance.Ĭheck out this handy video guide for the top 10 things you need to know about car finance… The best deal for you will depend on a number of factors including the interest rate being offered, how quickly an individual car is likely to depreciate, your budget, how long you want the financial contract to last, and whether you want to upgrade your car in a few years’ time, or have the option of owning the vehicle outright. As with any financial decision, it’s important to understand what you’re signing up to. There are four core options when it comes to financing: hire purchase, a personal contract purchase, personal leasing, or a personal loan. When you buy a new car from a dealer, broker or a car supermarket you’ll always have the option to pay in cash, but you’ll likely be offered a finance package, too. Read this car finance advice guide to help find the best option for you.Ī financial package that sees you pay off a car (or its depreciation) in monthly instalments is the most popular way in the UK to get a new car on your driveway - hardly surprising given even the most affordable models on the market cost around £14,000. Most new car purchases in the UK are funded by some kind of finance package.
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