What are the Different Types of Car Financing

When it comes to car financing in UK, there are different options you can choose from. It may be confusing at some point but all you have to remember is go with the type of financing that will suit your circumstance, budget and needs.

Personal Contract Plan

When buying a car, one type of financing you can look into is the personal contract plan. With this type of plan, you are saved from paying the car in cash and monthly payments are also typically lower.

At the end of the term, when the difference between sale price and and price for resale has been paid, you can either:

  • trade the car
  • hand back the car to the dealer
  • or pay the resale place and keep the car

To know more about Personal Contract Plan, you can check out the Car Expert website for more information.

Personal Leasing

Another type of financing is personal leasing. For this type, however, the car will never belong to you. Instead you agree to pay a fixed monthly amount in exchange for a preset mileage and use of the car. Included in this plan is servicing and maintenance given that you don't exceed the specified mileage.

Terms for this type of car financing start from 12 up to 36 months.

Hire Purchase

Another ideal option to look into if you want to buy a car through financing is the “hire purchase” plan. For this type of financing, you start with a low deposit (usually 10%) then pay the rest through monthly installments. Repayment terms are pretty flexible starting from 12 months up to 60 months depending on your preference. Remember, however, that the loan is secure against your car which means you don’t own it until the final repayment is made.