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Finance Options at Lings Motor Group
At every Lings Motor Group store, we pride ourselves in offering a range of fully flexible finance options, helping you get the vehicle you're dreaming of.
Whether it be new or used, our sales executives are trained to help find you the right credit solution for your circumstances, while offering fantastic customer service along the journey.
It’s a simple process and all the paperwork can be completed quickly in the showroom, saving you time and avoiding unnecessary hassle.
Our video explains more about why financing through Lings Motor Group could benefit you.
What is Personal Contract Purchase (PCP)?
Personal Contract Purchase (PCP) is a finance product that allows you the opportunity to buy a new or a used vehicle.
It is similar to a Hire Purchase agreement as you will usually pay an initial deposit, followed by monthly instalments over a term typically between 18 to 48 months.
What makes PCP different to Hire Purchase (HP) is that your monthly instalments are paying off the depreciation of the car or motorcycle, and not its entire value, over the course of the term. Then, when you get to the end of your agreement, there is a final, balloon payment that must be made if you want to keep the car or motorcycle. The balloon payment is often referred to also as the Guaranteed Future Value (GFV).
How does PCP actually work?
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When you have chosen your vehicle, you will then agree your annual mileage and decide on the agreement term with one of our Business Managers.
We will then determine the Guaranteed Minimum Future Value (GMFV) of the vehicle at the end of the agreement and work out a deposit and monthly amount that works for you.
At the end of your agreement you will then have three options:
Return – Simply return the vehicle the back to us
Retain – Keep the car or motorcycle by paying the optional final payment
Renew – Trade it in for another vehicle
For a quotation, help, or advice contact us and ask to speak to one of our Business Managers.
What are the advantages of PCP?
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- Monthly payments on a car/motorcycle financed by PCP are usually lower than if your car/motorcycle is financed by a Hire Purchase agreement.
- If you decide not to buy the vehicle, you can simply walk away when you've made all the payments.
- Similar to PCH, you can drive away a new or used vehicle every few years (dependent on the chosen term) without worrying about selling it on.
- If your vehicle is worth more than the Guaranteed Future Value, then you can use that equity towards a deposit on a new car or motorcycle.
What should you consider when option for a PCP?
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- If you want to buy the car/motorcycle you will need to pay your final balloon payment (the Guaranteed Future Value).
- Similar to PCH, you will need to agree on a mileage allowance at the beginning of your contract and there may be excess mileage charges if you exceed this.
- You won’t be able to sell the car/motorcycle without settling the finance.
- You won’t own the car/motorcycle until you have made all of your repayments.
- You’ll need to keep the car/motorcycle properly insured, maintained and in your possession until the full value is paid off.
Can I settle my PCP agreement early?
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You can normally settle your agreement early by asking the finance company to provide you with a settlement figure. However, the finance company will require you to pay off the difference between what your car or motorcycle is worth, and what you still owe and there may be a difference which is known as negative equity. On the other hand, you may find that at the end of your term your car or motorcycle is worth more than the Guaranteed Future Value, which means you will have some positive equity to contribute towards your next vehicle.
What is Hire Purchase (HP)?
Hire Purchase is a way to finance buying a new or used vehicle. You will normally pay an initial deposit and will pay off the entire value of the car in monthly instalments. When all the payments are made, the Hire Purchase agreement ends, and you own the car outright.
What are the advantages of HP?
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- You’ll be able to drive away a car/motorcycle that you may not have managed to buy outright.
- Unlike a PCP or PCH contract, you won't need to estimate your mileage at the start of your Hire Purchase agreement, so you'll avoid excess mileage charges.
- Once you’ve made your final monthly payment, including the option to purchase fee, you'll have full ownership of the car or motorcycle.
What should you consider when opting for HP?
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- Monthly payments may be higher than some other finance options, such as PCP, as you're paying off the full value of the vehicle.
- You won’t be able to sell the vehicle without settling the finance.
- You won’t own the vehicle until you have made all of your repayments.
- You’ll need to keep the vehicle properly insured, maintained and in your possession until the full value is paid off.
Can I settle my HP agreement early?
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The short answer is yes, you can end your finance early. There are different provisions within each finance agreement that allows you to do just that. If you have got through two-thirds of the way through your finance agreement, the options to end the finance agreement early open up.
For a Hire Purchase agreement, there is an option of paying it off early through a settlement fee. A settlement fee covers the cost of any remaining unpaid instalments and interest payments remaining on the agreement. Once the settlement fee is paid, you take full ownership of the car or motorcycle early.
Under a Personal Contract Purchase agreement, you can also pay a settlement fee for bringing the agreement to an end early. After that, you can choose to hand the car/motorcycle back or you have a second option. Through a PCP agreement, you can take full ownership of the vehicle by paying off the remaining Guaranteed Minimum Future Value also known as a balloon payment.
