How Long Used Cars Can Be Financed For
November 30, 2017 at 9:36 AM
The first way in which a car purchase could potentially be financed is through a personal loan obtained from a bank or building society, which will typically allow you to spread the cost of payments from one to seven years. Choosing this option can mean that the monthly repayments will be relatively high; however, the main advantage is that you will own the used car from the very start and the total payable amount will tend to be lower than the other financing options.
Another way in which a used car can be purchased is through a credit card. An advantage of this method is that you will benefit from Section 75 protection; however, the monthly repayments (amount and length) will depend on your current credit card deal. This can be an advantage – particularly if you are able to obtain a 0% interest credit card deal. However, it is important to be aware that dealers will typically charge a percentage-based fee when payment is made using a credit card (potentially up to 3%).
Hire purchase is another type of finance which can be used to buy a used car. This is simple and involves paying an up-front deposit (which is usually around 10% of the car price) before making fixed monthly repayments. An important thing to remember is that the car will not belong to you until you have made the final payment: this means that if you miss any payments, the car might be repossessed. Hire purchase rates do tend to be better for new cars and hire purchase agreements are typically set up by the car dealership.
Personal Contract Purchase
Another popular method in which a used car purchase can be financed is through a Personal Contract Purchase (PCP) agreement. PCPs involve paying an initial deposit amount which is followed by subsequent monthly payments; however, PCPs are more complex agreements and the main difference is that as part of the agreement, you are only allowed to use the car until the end of the contract. When the contract expires, you would either need to give the keys back to the dealer; put the current value of the car towards a different car (and a new PCP) or purchase the car outright. The last option involves paying the current resale value, which is decided by the dealer and can range from a few hundred to several thousand pounds. Finally, you can put the car resale value towards a different used car. Another distinctive feature of PCPs is that they will almost always contain an annual mileage allowance and if you exceed this then additional charges will apply. Deposits of 10% are normally required and PCP terms will normally last up to 50 months, although three or four-year PCPs are most common.
If you are looking for a quality used car 4Front have a huge selection of top specification cars and motorhomes and we can arrange finance on your behalf which is normally arranged within the hour.