Car Finance Explained

The following guide will help you decide the right finance for you and your car.

Entering into a car finance contract is an important decision, so you need to know what options are available, and that you fully understand how each option works.

Types of Car Finance

The three most popular finance contracts available are Personal Contract Purchase (PCP), Hire Purchase (HP) and Personal Contract Hire (PCH).

Type of Car Finance How it Works
Personal Contract Purchase (PCP) A Personal Contract Purchase (PCP) usually lasts 3-4 years, needs a deposit, and tends to have lower monthly payments than other forms of finance. It is the most flexible car finance with options available at the end of your contract to either; purchase the car, hand the car back, or part exchange.
Hire Purchase (HP) A Hire Purchase (HP) contract usually lasts 2-5 years, needs a deposit, and tends to have higher monthly payments. The car will be owned by you at the end of the contract, meaning it is the most straightforward option available.
Personal Contract Hire (PCH) A Personal Contract Hire (PCH) is a lease contract and usually lasts 3-4 years, needs an initial rental, and tends to have lower monthly payments. You have to hand the car back to the dealer at the end of your contract. PCH is often described as the most ‘stress-free’ car finance option available.

Top Tips When Considering Car Finance

  • Check your credit file before considering car finance
  • Make sure you can afford the agreed monthly payments
  • Make sure you fully understand the car finance you are entering into – make sure any questions you have are answered before you go ahead

We hope that this car finance guide was useful. If you still have questions, we’re on hand to help.

We currently have car finance offers available on a wide range of cars – take a look today.

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