Conventional car loan
The most common way to finance the purchase of a car is by organising a loan from a bank, building society, finance company or arranged through a motor dealer. The duration of the payment period for a loan can vary, depending on the source of the money and the agreed timeframe. Typical payment periods from a finance company are between two and five years, however, banks can provide personal loans that can be paid off over a longer period of time. All automotive loans will have a fixed interest rate. There are two types of loan available, either secured or unsecured. With a secured loan, the finance company or bank will retain ownership of the car until the balance of the loan has been paid off. An unsecured loan means that the buyer is attached to the loan and not the car, meaning that ownership of the vehicle is retained from the beginning. Some unsecured loans can be more expensive and may have a higher interest rate than a secured loan.
Personal contract hire (PCH)
Personal contract hire means that the vehicle is rented for an agreed period of time. Monthly payments are made for the duration of the rental period and at the end of the lease the car will usually be taken back by the finance company and sold as a used car. In some cases, the finance company may agree to sell the car to the hirer for a final lump payment.
Personal contract purchase (PCP)
Personal contract purchase shares similarities with both hire purchase and personal contract hire. The buyer is able to purchase the car for the pre-agreed value once the hire period has ended, but also has the flexibility to return the car if preferred.
Hire purchase (HP)
Hire purchase allows the user to pay an initial deposit, followed by fixed monthly payments for the hire of the vehicle. At the end of the term, after paying an optional fee, the hirer can take ownership of the vehicle.
Lookers Car Finance on New Cars
At Lookers, as authorised retailers, we have a range of finance offers available across a wide selection of new cars from numerous brands. See our current list of new car offers available from our network of dealerships.
