Car Finance
April 30, 2020

People in their life have many dreams, aspirations, and goals. The means of taking care and fulfilling this need is considerably less in amount and number.

Essential things to have to bring a well-rounded living are a house and a vehicle primarily. Other things come after these two preferences only.

Every year the prime car makers in the world launch various cars under various budgets for the masses. This list includes companies like Bentley, Honda, Jaguar, Ford, Mini, Mercedes, Aston Martin, and many others. 

However, the scheme for purchasing cars in the UK is a costly affair.

The total cash amounts, taxation, and other fees, along with its running cost, also become a hefty amount not easily afforded by many people. Financing of these cars is to be well thought out, and doing it using cash is very meagre. It is affordable and feasible in the long run.


Various types of car finances give the flexibility of making a small number of payments and gain ownership of the car over the long haul.

Many people prefer to get a high-end luxury car via car funding as this exorbitant transaction will be paid off over the number of forwarding years.

Making use of time efficiently and smartly, various lenders offer car finance at a very profitable proposition. Additionally, the borrowers after a certain period get the option to gain ownership of the car or return it.

By returning it, a new and latest car can be purchased again, without much hassle. 

There are majorly four types of car finance in the UK, namely:

Auto loans: These are secured loans for the duration of 1 to 7 years with the collateral of the car itself for the loan amount repayment.

Personal loans: Another simple loan but unsecured enabling to gain full rights over the vehicle in case of nil default in repayments.

In this, guarantor personal loans are also present, which warrants the requirement of a co-signor when the borrower has a low credit score and bad credit history. 

Besides, Car Finance: There are two types of contracts with initial deposits and regular small amount payment system. 


There are two types of car finance as listed below:

Personal contract purchase (PCP)

It involves the initial deposit along with monthly payments spanning over 2-5 years. A large lump sum amount is to be paid at the end of the contract, which is the predicted worth of the car for the future. 

The initial deposit amount is very affordable, which is equal to the amount of its depreciation, and this PCP can use for purchasing use cars as well. 

If at the end of this contract, the choice of car preference changes to a new model of car, then it can be given back to the car company. In turn, no money back will be received in any manner.

The option for part-exchange the car for a newer version is available. 

Hire Purchase (HP)

Hire purchase facilitates monthly payments along with the initial deposit amounts of 10% of the total cost for owning the car. 

After all the payments are made, the ownerships and legal rights of the car get the borrower name. 

People who are struggling to make their ends meet having to their records some poor credit history can make use of bad credit car finance.

All loan transactions are undertaken on the website of the lenders, and the application is processed swiftly not to waste time in unnecessary formalities.  


Voluntary termination is the process of cancellation of car finance agreement or PCP with certain conditions that the borrower to fulfil.

  • The first condition is that the borrower should have paid minimum 50% of the total funding amount including interest and other fees.
  • The second condition is that no damage and wear and tear to the car should have occurred.

For the cancellation to be processed, the car should be in good condition worth using. For this, the borrower will have to pay a purchase fee.


Before signing of the car finance agreement, these factors should be considered, carefully:

  • Reading the whole contract carefully before putting one’s signature 
  • The company in case of defaults gives affordability and options
  • Best deal in terms of the repayment schedule and APR rates.
  • APR rates and its comparison with many lending companies and car dealers. Usually, a big deposit warrants only a small rate of APR.
  • Beware of payment protection insurance (PPI) 
  • Car running costs 

Search for best car finance deals suiting your affordability and later stages financial capacity. Besides, you can use some websites that can mention the perfect deals offered. 

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