How Does New Car Finance Work?

Added: 08 November 2017

It can be an exciting and stressful time trying to afford a new car, however at W R Davies, we have hassle free finance options available for all potential new drivers to make getting a new car as quick and easy as possible. With our friendly and helpful team, we tailor finance deals to our customers with Hire Purchase, Personal Contract Hire, or Lease Purchase agreements available.

Car Purchase

Hire Purchase (HP)

Hire Purchase is a simple finance option for drivers who want to own their vehicle at the end of the term, and so have a fixed monthly repayment until the debt is paid off. This is perfect if you like low-risk credit and have plans over the agreement term that will mean your disposable income is set to decrease – for reasons like starting a family. Whilst there is a deposit – usually 10% of the cars cost – you have a fixed set monthly price for the rental period of 2 to 3 years.

Personal Contract Hire (PCH)

A very popular finance option, PCH allows you to rent a car for 2 to 3 years without owning the vehicle, with a pre-set mileage limit. As this is a hire option, you do not get the option to buy the car at the end of the term, so if you like to change cars frequently, then this is perfect for you – as long as you look after the car to save yourself additional fees at the end of the term. Ideal for those who know their annual mileage, the usual set mileage is 10,000 miles, this can be increased depending on your driving needs.

Lease Purchasing (LP)

Like the other finance options available, LP entails a deposit and fixed monthly payments for the vehicle, based on the expected annual mileage you will do and the length of the term. However, unlike other finance options, there is no option to return the vehicle at the end of the agreement, so a deferred one-off payment has to be made, either through a single payment or by a second finance agreement to allow you to pay the car off. This option is perfect if you have a lower monthly budget as repayments are lower than other finance options, so you can afford a car with a higher specification! At W R Davies, we strive to make sure every finance agreement is the best option for our customers, so you can afford to pay each month – stress free! With our simple system, you can enquire for a tailored quote online, just search the new car you want and we can get your finance agreement approved the very same day! This easy-to-use system allows you to adjust your requirements, based on your income, mileage and lifestyle.

W R Davies

Read more about our finance here!