Скачать или смотреть Financing A Car: HP vs PCP vs Cash | UK Buying Options

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Timestamps:
0:00 Intro
1:15 Hire Purchase
4:03 Personal Contract Purchase
9:35 Other Options
12:51 Picking up my new car
13:31 Final Words

HP
Under a Hire Purchase agreement, you, the buyer, will pay a deposit and then you will borrow the balance remaining which will then be paid off over an agreed duration, typically between 12 and 48 months.
Whilst you’re paying off the finance, the finance company still owns the car so until the last payment is made, you don’t own the car.
The amount you place as a deposit and the duration of the finance scheme will determine the size of your monthly payment, with the addition of any interest charged.
At the end of the HP scheme, you'll have paid the full price of the car, any interest due plus any additional purchase fees agreed to. The car now belongs to you.

Pros
You can spread the cost, meaning may be able to get a better car than if you had to pay it all upfront.
It's simple to arrange and understand.
It's flexible – with terms from 1-5yrs.
You would own the car once you’ve made all payments.
HP can be easier to get than a standard, unsecured loan for people with poor credit histories - as the car is used as security for the debt.

Cons
Monthly payments are higher than for PCP and leasing deals.
You don’t own the car until you make the final payment.
You cannot sell or modify the car over the contract term without the finance company’s permission.
If you fail to keep up payments, the finance company may take the car away.

PCP
Personal Contract Purchase a little different, because the amount borrowed is a lot less as a proportion of the cost of the car.
As with a HP scheme, your initial deposit influences the balance that remains to be paid – the difference is that this is offset by how much the car will be worth at the end of the agreement. Crucially, it means that a monthly PCP payment on a new car will be far lower than a typical HP payment on the same car.

Every PCP is built around a figure often called the guaranteed minimum future value (GMFV).
On a PCP you're effectively borrowing the difference between that figure and the price of the car – less the deposit you've placed.
Unlike HP, though, at the end of the PCP you won't have paid the entire cost of the car. The GMFV will still be outstanding. If you want to own the car outright, you'll need to pay an optional final payment, as it's typically known. Otherwise you can just return the car or use the resale value towards buying a new car - essentially swapping it onto a new PCP deal.

Pros
Monthly payments are generally lower than a personal loan or hire purchase.
You don’t need to worry about the future trade-in or resale value of the car, as the lender guarantees your car will be worth a minimum sum at the end of the deal.
Dealers will often throw in service and maintenance packages, warranties and insurance.

Cons
You won’t own the car during the contract period – and will only own it at the end if you pay the balloon payment.
Interest rates are generally higher on PCP than on personal loans.
If you go over the agreed mileage limit, the finance company can charge for every mile you are over, often around 10p per mile.
The future value is based on keeping the car in good condition. You’ll be charged extra to put right anything that’s not down to normal wear and tear.

Buy outright
This gives you most flexibility of negotiating, as this is where you simply pay for the car in cash in full and drive away. The car is yours, you’re free to do whatever you like with it. Short term you pay out a lot of money but you don’t pay any fees, interest or anything else dealerships will charge you for.

Personal Loan
Depending on your credit score, you could get a loan as the rates offered might be better than financing the car through a car dealer. For example your bank or companies like the AA will give you a loan for a car.

And remember, save money so that one day that money can save you. I’ll see you in the next video.

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Disclaimer
Just to make it clear, I am not a financial advisor. To get the best and most relevant information for your situation, please seek professional advice from a qualified financial advisor. My videos are for entertainment purposes only, and the ideas and topics covered are personal opinions. You are solely responsible for the financial decision you make. Thanks!

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