Why your neighbour has a better car than you
On your street there might be a guy – let’s call him Derek – who you just can’t bring yourself to like. Derek seems like a nice enough bloke: he always says hi, and he knocked on your door that time your package got delivered to his house. In fact, if it came down to it, you’re pretty sure you could ask him to water your plants while you were on holiday.
But here’s the thing about Derek – he’s got a newer car than you. And it’s not that you resent him for it. It’s just that you know you have a better job than him. You know his mortgage is as steep as yours. And you know he’s got one more kid than you. So how is he doing it? Is he secretly Banksy? Does he breed and sell exotic guinea pigs? Did he win big on The Crystal Maze?
We can’t say for sure – but the answers to those questions are probably no. Chances are, he’s just taken the lead from thousands of other people in the UK, and found himself a flexible finance package. It’s not quite as rewarding as the rare guinea pig market, but if you do the same, you could have a car that reflects your true status among your neighbours. Many finance packages cover your service and maintenance too – so you’ll never have to worry about big garage bills again.
With that in mind, here are the three main types of finance, and the ins and outs of each one:
Personal Contract Plan (PCP)
Under a PCP agreement, you put down an initial deposit, followed by a series of monthly payments. At the end of your agreement, you’ll have the option to buy the car outright in exchange for a final sum. This final payment depends on a range of factors – including the size of your deposit, the cost of the car, and the interest rate.
PCPs are great if you’re looking for a flexible option, and like the idea of choosing how much you pay every month. Still, it’s important to bear in mind that you won’t own the car outright unless you decide to make your balloon payment.
If you choose Hire Purchase, you might have to pay a bit more each month, but you also get to own your car at the end of your agreement – without making a final balloon payment. So if you’re sure you’ll want to own your car at the end of your term, this might be the right option for you. Again, the size of your deposit and monthly payment will be determined by the cost of the car, the interest rate, and the length of your agreement.
Leasing (Personal Contract Hire)
This one’s simple – under a Personal Contract Hire, you’re essentially just renting the car long-term. You pay a sum upfront, then back that up with monthly payments until you choose to hand the car back. You won’t be given the chance to buy the car – but you will have been driving around on brand new wheels for a couple of years without forking out full price.
Whichever package you choose, here’s the important thing – you’ll have put Derek firmly back in his place.
Citygate offer a range of flexible finance packages – many of which cover your service and maintenance costs. Pop in and see us in any of our branches to find out more.