How To Choose Between HP vs PCP Car Finance

When buying a car, there are two options for financing that often crop up when browsing. These are HP and PCP. What do they mean? What are the differences?

If financing a car is financially more appropriate for you, then it’s worth knowing what HP and PCP car financing is and which one to choose.

What is a PCP?

PCP is short for Personal Contract Purchase. It’s a secured loan which means you won’t become the owner until you pay the final balloon payment at the end of the agreement.

With PCP you get three choices; pay the balloon payment to owe the car, give the car back or enter into a new PCP agreement. 

What is a HP?

HP stands for Hire Purchase. This involves making an initial deposit and the remaining cost of the vehicle is divided into equal monthly payments. Once the last payment is made, you’ll then own the car outright.

Choosing between PCP vs HP

Which one is the best for you? It’s important to consider which one is more affordable for the budget that’s available. For some, a secured loan through a PCP gives more options, whereas a HP allows you to own the car outright without the balloon payment at the end of the agreement.

When shopping for used car finance in Wales, think about what’s available. Some deals may only offer one finance option, whereas others will offer both. Weigh up the positives and negatives that come with both and use this infographic to help make an informed decision for your next car purchase. 

Shopping for used car finance wales

Can You Avoid Getting Stung On Financing Your Family Car?

Buying a new family car is a big financial commitment – and it’s also an area where it’s very easy to get taken in by tricks and end up with something that seems like a good deal on the surface, but when you look into it, really isn’t – and that goes whether you are buying new or second-hand. Car dealerships and their salespeople are very skilled in persuasion techniques designed to get you to make a purchase. It’s also important to remember that most dealerships make their money on the sale of car financing, and not so much on the vehicle itself. So the ticket price may seem good, but it’s the specifics of the financing that you really need to pay attention to in order to avoid getting stung. So, how do you make sure that you are getting a genuinely good deal?

Can You Avoid Getting Stung On Financing Your Family Car? - stylish image of old beetle car
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Don’t Focus Too Much On Headline Price

The headline price is the figure that the car is on sale for. Now, this may seem like a good deal overall – you’ve done your research through a site like Parker’s, you understand what the make and model should be worth new or used, and it seems like the figure on the ticket is a fair deal. But the headline price of a car is arguably one of the least important factors here. Instead, you should focus on factors like whether the vehicle is really suitable for your circumstances and your needs. Are you buying more than you can afford? How much are the expected running costs for this model? Don’t get suckered into paying for an appearance or a badge. It’s more important to ensure that the car you’re getting is something that fits into your life and that you can afford without having to make sacrifices elsewhere.

Pay Attention To Financing Terms 

Even if we feel confident in negotiating with a salesperson on the headline price, we could still lose out if we don’t pay close attention to the terms of the car financing agreement. It may be worth considering going with a specialist lender like the Martin Brothers Motor Company, or you could go down the route of asking for a bank loan to fund your purchase. It’s hard because the financing isn’t as tangible at the headline price, but securing a lower Annual Percentage Rate (APR) could literally save you hundreds or thousands over the course of your financing deal. Consider whether there are any financial penalties for paying the loan off early if you can, and increase the deposit where possible so that you’re paying less on the financed side of the vehicle. Of course, if there is a 0% offer that is definitely worth considering. Otherwise look for a loan no longer than 36 months and aim for a 20 percent deposit. 

There are a lot of things to consider with a purchase of this scale, so make sure that you take your time, think through the depreciation of your car and it’s longer-term running costs and factor in the whole picture. It’s easy to get carried away, but if you stick to your principles and walk away with a good deal, you will have made a financial decision you can be proud of.


Tips For Financing Your Next Car

If you are looking to get a new car, then it can be a pretty big purchase. You have to budget for the car that you want, especially if you are planning to buy it outright in cash. There are other options when it comes to saving and buying a car, though, including getting the vehicle on finance. But one of the biggest mistakes that people make when it comes buying cars on finance is not taking into account the final price that you pay. If you’re buying something on a pretty high rate of interest, then you can end up paying quite a lot of money for it, and then after all of that the car might not seem like such a bargain after all.

Another important note to remember is that cars depreciate like crazy. So if you are thinking of buying a car as an investment or want to get a brand news one, then that is not always going to be a good route to go down. For example, looking into Audi used cars could be better for you financially than getting one brand new. So when you are looking for a new car and looking at how to finance it, you need to be looking at the total cost of the car once everything is paid, and not just if you can make the monthly repayments. Paying over the odds is never a good idea. With all of that in mind, here are some recommendations to be thinking about and planning for when it comes to the total cost of things.

Tips For Financing Your Next Car - credit agreements image


Understand Your Credit Score

If you’re planning on getting a new car then it is a good idea to check your credit score as you decide what it is that you want to be doing on the finance side of things. You certainly need to check it before you go down the route of a car financing loan. You need to know your score as you will need to check the kind of rate that you’ll be offered. If you have a pretty bad credit rating, unlike getting a mortgage or a credit card, you are likely to still be offered a loan, as the bank can easily take and sell on the car if you are unable to make payments. But the chances are that you’ll pay over the odds if you do have a bad credit score. So just something to think about; if your score is low, then the decision could be to not go down the finance route in order to not pay more than you have to.

Keep the Term Short

Having a loan on a pretty short term can mean that you get monthly repayments that are higher, but the interest rates can be lower. And reducing the interest, is what you want to do if you are ever borrowing money; as it keeps saying, don’t pay more than you have to. So the longer that you have to pay back the loan, the more that you will pay overall. It can be tempting to make the term longer, but really, keeping the term short is what you want to do.


Teaching Your Kids About Car Finance

Kids grow up so fast, sometimes too fast – especially when they start talking about getting their first car. Kids may not realise the financial implications of getting a car, but you do. Teaching them from a young age will help them understand what responsibilities they will need to take on when they get one, even if you agree to cover the cost until the leave for university. Having a car will be one of the first major financial responsibilities your child can have, and it’s important to prepare them right for it.

Have them save towards the car

Teaching Your Kids About Car Finance - toy car image

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One way to teach kids about car finance is to make them save towards any car they plan to have in the future. Whether this is through saving their allowance or getting them to take on a part-time job, it’s important that they realise that saving is a key part of getting the things that they want, rather than relying on borrowing/credit to get there faster. One way to get them to learn is to teach them about cutting household expenses and other costs which could help them to make the savings they need.

Show them the bigger picture

As well as the cost of a car, children will need to know about the other costs that come with it including fuel costs, repairs, maintenance, and insurance. These costs annually can amount to as much as the car itself if their first car is an older car, and they will need to learn how to work and save to be able to afford all of these things, and not just the car itself. If you want to take it further, you can talk to them about pricing up the cost of accidents, why they might need to hire a personal injury lawyer and the costs associated with parking fines and speeding tickets. The message her is that a car isn’t just a single item, there are many other responsibilities that come with it.

Don’t stop at now

For most kids, a first car will be more of a run-around, a second-hand car which will teach them responsibility as well as helping them to learn to budget. This could teach them more about car finance and responsibility than getting them a brand new car would. In the future, your kids will need to earn money in order to afford a nice new car, and learning all about the different finance options, including leasing, will help them understand for when that time comes.

Even if you’ve done all you can to put them off the idea of owning a car for the meantime, it’s a subject that will keep coming up as they get older. Helping kids find ways of saving for a car will make the end reward much sweeter for them, and will make them appreciate their car more because they bought it with their own money. There’ll be tough lessons to learn, but you can certainly guide them from a young age.

Help Your Friends In Times Of Need

Friends are an important part of the structure of our lives. Some friends can even be closer to us than a lot of family members, especially if we connect with those friends on a level which cannot be replicated. Friends can help us out when we are in dire straits and need an extra helping hand, financially, socially and with personal issues. Friends are people we can reach out to when situations have occurred in our lives which we feel too embarrassed or awkward to speak about those situations with family.

We all know a friend who we can call and they will pick up immediately. We all know a friend who, even if we have not seen them for a while, can connect with immediately upon seeing them again. People like these enable us to live happier lives and also allow us to be the people who we want to be without trying too hard to be someone we are not. In short, friends are a great addition to have in our lives.

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So, when our friends are in troublesome situations of their own, we may feel more inclined to help them out if they have helped us when we were in need. Some friends may not ask you directly for help, but if you know a friend well and have a good relationship with them, they may not need to say anything and we will know something is wrong.

Helping a friend can include financial solutions, advice, guidance and the ability to be there when they need us. For example, if they are short of money for whatever reason and need to pay off a bill, you could lend them the money. If they have not got a great knowledge of cars, and you tend to know more about that subject than they do, speak to them about the best car finance deals that you know of. If they are going through family issues, provide them with an outlet to talk about the problem and be there for them if you sense they are feeling in need of some company.

Some friends can be people we have known for a long time – say, since school, college or university – while other friends can be people we have known for a short amount of time but connect with on a level which is reciprocated and appreciated.

Help your friends in times of need - friendship image

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Allowing ourselves to branch out and meet new people is a great way of developing social relationships with people. If an acquaintance asks you to go for a coffee, a walk or even to a bar for a few drinks you may not feel that inclined to say yes but you should really take any opportunity to meet as many many, and new, people that you can. You never know, you may meet your new best friend after deciding to join them for a drink on a whim. Surrounding yourself with like minded people is a good way of developing your social circle and well being.