A Guide to Types of Car Finance | Rooster
When it comes to financing a car, there are several options to consider, each with its own pros and cons. Understanding the different types of car finance can help you make an informed decision. Here's a guide to types of car finance to help you choose the best option for your budget and lifestyle.
Hire Purchase (HP)
With Hire Purchase, you spread the cost of the car over a fixed term, usually 1-5 years. You pay a deposit followed by monthly payments, and at the end of the term, you own the car outright. This is a good option if you want to eventually own the car but need a manageable payment plan. The downside is that it typically has higher monthly payments than other options, and you must commit to a fixed term.
Personal Contract Purchase (PCP)
PCP allows you to pay lower monthly payments, with the option to either make a final payment (balloon payment) and keep the car, or return the car and walk away. It’s ideal if you like to change cars every few years, but you need to be mindful of the car’s mileage and condition. With PCP, you’re essentially renting the car with the option to purchase it later, but you never own it unless you make the balloon payment.
Personal Loan
Taking out a personal loan to buy a car gives you full ownership right away. The advantage is you’re not tied into a contract with a dealership or lender, but the downside is that you need a good credit score to get the best rates. It’s a flexible option if you want full control over your car’s ownership, but the interest rates may vary based on your credit score.
Leasing (Car Hire)
Leasing is essentially a long-term rental agreement where you pay for the use of the car over a set period, typically 2-4 years. It’s great if you prefer a new car every few years but don’t want the responsibility of ownership. At the end of the lease, you return the car, so you don’t have to worry about its depreciation or resale value. However, there may be mileage restrictions and excess wear-and-tear charges.
Rooster Features to Make Your Car Finance Journey Easier
When you use Rooster, you get access to a variety of features that simplify car ownership. You can use the app to check car finance options, finance a car, or refinance an existing one. Plus, Rooster offers instant access to your numberplate, so you never have to worry about forgetting it. Don't forget, Rooster helps you book services and repairs for up to 50% less too, making it a great companion for your car finance journey.
Download the Rooster app today to manage your car finances and much more.
