The Differences and Benefits of All the Types of Finance We Offer

According to the Financing & Leasing Association, the UK car finance industry is set to increase by 7% by the end of 2025. In fact, the sector is worth more than £110 billion.

Whether you’re looking to finance a vehicle for work or leisure, there are different contract styles available. However, many people often tell us that they find the choices confusing. In this article, we will explore the finance options we offer at Fast Car Finance and highlight the differences and benefits of each.

Finance Options Available From Fast Car Finance

We provide three popular forms of car finance which mean the perfect contract can be chosen based on available budget and the type of vehicle being purchased. It doesn’t matter if you come to us without knowing what option is best for you as our team can recommend the best financing agreement based on your situation. 

The main differences between all three options are:

• The amount you will pay per month
• The structure of your contract
• Length of agreement
• Flexibility

Below we have shared what these factors look like for each of the finance options.

Hire Purchase (HP)

Hire purchase is a form of car finance in which payments are made monthly until the full cost of the vehicle has been settled. There is also sometimes a small ‘option to purchase’ fee at the end of a deposit that is required at the start.This essentially means you are hiring the car and don’t have complete ownership until the final payment has been made. As a result, the amount you will pay per month will be higher.

Agreements are available in a choice of lengths but this will result in a higher price per month for shorter contracts. However, if you can afford to pay more and want to own the vehicle, this is a great option. The only potential downside for some customers is that flexibility is limited with this form of finance as the only way you can get out of a contract is either adding the remaining finance to a new contract or selling the vehicle and settling the outstanding amount. 

Therefore, if you are likely to want to change your car regularly, this is not the best option for you.

Personal Contract Purchase (PCP)

The next option is Personal Contract Purchase. This contract is ideal if you are likely to want to exchange the vehicle after a certain period of time as you are essentially only paying for the depreciation of the car per month. That does mean if you want to own the vehicle at the end of the contract, a balloon or balancing payment is required. 

The monthly payments will be lower but if you are planning on buying at the end of the contract, you should consider also saving the balloon payment as this can be a fair chunk of money.

Conditional Sale (CS)

Finally, we also offer the option to select a Conditional Sale agreement. Similar to a HP contract, the only difference is that this contract doesn’t require a deposit or agreed final payment. Instead, the finance covers the entire cost of the vehicle and full ownership is granted once all payments have been settled. 

If you are keen to go ahead with one of these finance agreements and have a vehicle in mind to purchase, we are ready to help you. Simply click here to get in touch with us.