Your dream car broken into small affordable amounts
Capital Car Finance specialise in three main methods of regulated finance, namely Personal Contract Purchase [PCP], Lease Purchase [LP] and traditional Hire Purchase [HP].
All these finance products will assist you in buying a highest specification car for a lower monthly outlay and are available for all cars up to 5 years old. Please find more detailed information below, this should give you a better understanding of how all these car finance products work.
Our car finance deals are based on either PCP [Personal Contract Purchase], LP [Lease Purchase] or HP [Hire Purchase] car finance schemes, all of which are designed to save you a considerable amount of money compared to using dealer finance.
We specialise in the prestige car finance market, as our finance providers have favourable finance terms available for this sector, so if you are buying brands such as Audi, BMW, Mercedes or Land Rover, we should be able to offer you a fantastic deal!
Our Representative APR [Annual Percentage Rate] which is the total charge for the loan including interest, is much lower than the majority of UK providers and is currently set at just 5.9% APR for our PCP product, this means that the majority of our customers are approved at this rate [hence representative].
The APR you are offered upon acceptance however may differ slightly depending on your credit history and personal circumstances, this is now the same for every broker and dealer in the UK as new laws were brought in by the FCA in January 2021.
Each loan application is assessed by our lender on an individual basis, so it’s always a good idea to check your credit history first prior to making an application with us.
However, to give comfort, the maximum APR we currently offer is still only at 11.9% APR, which is still far lower than the national average for this type of finance product.
Lease Purchase
Low Payment Plan (LPP)
Lease Purchase is sometimes referred to as Hire Purchase with a balloon and is structured in a similar way PCP, however unlike PCP there is no guarantee offered at the end of the agreement, customer can defer a capital lump sum amount until the end of the agreement, this is known as the Residual Value.
Personal Contract Purchase
(PCP)
PCP is one of the best ways to purchase a new or used car today, it allows customers to purchase a car of their choice at a very attractive fixed monthly finance payment, with the benefit of a low initial deposit outlay and a guaranteed minimum future value (GMFV) at the end of the agreement.
Hire Purchase (HP)
Hire Purchase (HP) is very similar to borrowing a sum of money from a bank and paying it back over a fixed period of time, with interest.
Hire Purchase is a type of secured loan which are often preferred over alternative (unsecured) loans because they allow a greater borrowing limit.
The term “secured loan” means exactly that, a loan that the lender can secure against an asset (in this case, the vehicle).
HP gives you additional rights over those of a personal loan and is only available through dealers that have passed the stringent approval process of the finance companies.
Contract Hire & Leasing
Contract Hire and Leasing is basically a long-term rental agreement and can include service and maintenance, breakdown cover and a replacement vehicle and in most cases, includes the road fund licence for the duration. Your monthly payments will be subject to VAT though as its a rental product, if you are a VAT registered business you can reclaim this back from HMRC on your VAT return (100% for commercial vehicles and 50% for cars).
The monthly rental is calculated from the length of contract and the estimated miles driven. At the end of the period the vehicle is returned to the contract hire company as the leasing company always owns the vehicle. It is treated as “off balance sheet funding” in a company’s accounts.
PCP car finance is particularly useful if you are a company car driver opting out of the company car scheme (Cash for Car), because you can use your company car allowance or mileage reclaims to fund your monthly PCP payments and avoid paying excessive company car taxes.
Capital Car Finance has the benefit of offering both low interest rates for PCP, together with generous GMFV’s making cars that would normally just be a dream, become a reality.
Personal Contract Purchase provides the benefits of driving a higher specification vehicle for a lower monthly payment. Unlike the traditional car purchase plan, this is achieved by deferring a percentage of the total cost of the vehicle until the end of the contract which is known as the GMFV, then at the end of the agreement the customer has three options:-
Option 1
Return the vehicle to the finance company and if you have not exceeded the agreed mileage, there is nothing more to pay.
Option 2
You may keep the vehicle and simply pay off or refinance the outstanding Guaranteed Minimum Future Value payment.
Option 3
You can part-exchange your vehicle and if the trade-in value is greater than the GMFV, the difference is yours to keep.
The customer will normally benefit from a slightly lower finance rate with a Lease Purchase product as there is no guarantee offered at the end of the agreement, the deferred capital lump sum amount at the end of the agreement is known as the Residual Value (RV), and this has to be paid by the customer for outright ownership. Deposits for Lease Purchase are flexible and are normally a minimum of 10% and a maximum of 50% of the total vehicle price, repayment periods are taken over 3 or 4 years typically.
The Residual Value (RV) (sometimes called the balloon) at the end of the agreement reduces the regular monthly payments accordingly, thus making vehicles that traditionally have a strong Residual Value (RV) more suitable for this type of product as they make repayments far more affordable.
The Residual Values (RV) is calculated and set at the beginning of the agreement and although this is not payable until the end. At the end of the agreement, there are realistically two options, 1. Pay off the residual value in cash or settlement by part-exchange or 2. Some lenders will allow the residual value to be spread over a secondary period and be refinanced again.
- Lower deposits available.
- Cost effective rentals due to residual values.
- No tie to mileage contract.
- No lock in and settlement can be made at any stage of the agreement.