| When buying a new car, one outright payment isn't | | | | company can pay an pre-agreed sum (a balloon |
| always affordable and financing is a common and | | | | figure) and purchase the car. |
| easy solution. There was a time when even the | | | | An alternative method to keeping the car after the |
| mention of financing, car leasing or contract hire sent | | | | fixed term of payments is Lease Purchase. This |
| people running for cover to hide their money for fear | | | | method offers a flexible deposit and repayment |
| of high interest rates and exhaustive contracts. But is | | | | purchase and often carries a flexible percentage of |
| this still the case? | | | | the purchase price stored up for a final repayment. |
| As with most things, plenty of competition in the | | | | The future value is estimated on the value of the |
| financing market is beneficial to the consumer and the | | | | vehicle based on the annual mileage. |
| days of signing your earnings away for 5 years and | | | | A newer form of car financing on an individual - as |
| paying sky-high interest rates are long gone. There's | | | | opposed to company scale - is Personal Contract |
| also a wealth of choices out there depending for both | | | | Purchases (PCP). For those looking for lower monthly |
| personal and business users. So what are the choices | | | | payments this could be the answer as the cost of the |
| available? | | | | car is not spread over the loan period. Instead, when |
| First off the bat is Contract Hire. Contract hire is a | | | | the vehicle-loan period comes to an end you have a |
| method used by businesses to hire vehicles from a | | | | couple of choices. You can pay a balloon payment |
| provider for a set period of time, the provider retains | | | | and keep the car, part exchange it for another vehicle |
| ownership of the vehicles and the risks associated fall | | | | or, simply, hand it back to the dealer and walk away. |
| with them. When the contracted period is up, the | | | | If the idea of handing the car back to the dealer and |
| vehicle is returned to the licensing company. | | | | walking away sounds like the solution you're after, then |
| Finance leasing, again used primarily by businesses - | | | | Personal Contract Hire should appeal. With this method, |
| think commercial wagons and company cars - is one | | | | also known as personal leasing, the setup is a personal |
| where the monthly rental is based on how much the | | | | variation on the contract hire. This is a long-term rental |
| vehicle costs, the length of the lease and how much | | | | agreement with monthly payments for a car that you |
| the car will be worth in the future given the annual | | | | use and, at the end of the contract, return without any |
| mileage. | | | | further obligations. |
| For those companies looking to keep the vehicles after | | | | This is, of course, just a brief summary of the possible |
| the contracted time of a finance lease or contract hire | | | | approaches on financing your car, or even fleet of |
| is up, there's a Contract Purchase. Contract Purchase | | | | cars, and each has many more details and plenty of |
| works in the same way with monthly payments over | | | | companies willing to offer the best deal and advice on |
| a fixed period of time only, at the end of which, the | | | | said method. |