This handy guide has been put together to give you an overview of the different ways you can finance your car purchase with AMT. We cover a summary of how each finance option works, plus the features, benefits and further considerations for each type of finance arrangement.
There are three ways to finance your purchase. They are personal contract purchase, hire purchase and lease purchase. We’ve provided a summary of each finance option so you can make an informed choice.
We find that this is the most popular finance agreement with our customers. With a personal contract purchase you pay an agreed amount each month, then at the end of the contract you have three options;
1. To pay a sum to purchase the vehicle. This is known as a ‘balloon payment’ which is a large final payment
2. Return the vehicle
3. End the contract and take out a new personal contract plan agreement for a new car
As with all finance agreements, you will need to pass a credit check in order to get the finance agreement in place. This relies upon you having a good credit history. A PCP contract typically lasts three to five years. As part of the contract, you agree a mileage limit for the term, then pay a deposit upfront, which is typically about 10% of the purchase price to secure the vehicle.
You won’t own the vehicle at the end of the agreement but you can choose to buy it by paying a final payment also known as a ‘balloon payment’, which is normally a few thousand pounds. You will know what the balloon payment is going to be upfront as it’s agreed at the beginning of the contract. You can also choose to end the deal without buying the car outright.
A hire purchase (HP) plan is a very popular and flexible way for people to acquire the vehicle they want immediately and to take ownership of it once the value has been fully repaid. Hire purchase is similar to a bank loan that is secured against the value of the car, as once the repayments have been completed you will own the vehicle.
You will pay a deposit to secure the vehicle – typically 10% of the vehicle’s price – and then your repayments will be calculated based on this figure, the remaining value of the vehicle and the length of the repayment term. Once all the repayments have been completed, you will become the legal owner of the vehicle.
A lease purchase can be the ideal option for people who would like to own a vehicle but who can’t afford a large capital outlay upfront to do so. Unlike a PCP agreement, a lease purchase agreement does not include maintenance. The monthly cost that you pay is the difference between the retail value and the depreciation of the vehicle plus interest. This type of finance arrangement is therefore ideal for vehicles that hold their value.
As part of your contract, you pay monthly instalments which cover the difference between the value of the car at the start and the end of the contract. When the lease purchase ends you have two options: you can either make the balloon payment and take ownership of the vehicle, or you can choose to part exchange your vehicle. With part exchange, you make the balloon payment then lease a newer car.
Here at AMT, we can arrange your car finance in-house to make sure that buying a car with us is as straight-forward as possible. If you’re looking to finance your next car purchase, then let us know and one of our team can take you through the different finance options available to you.
Contact us or call us on:0113 831 3108