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.
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 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.