Alan Milne Personal Finance Options.

Alan Milne, as part of the Bannerman group, are regulated by the FCA so, you can be confident that your investment is in safe hands.

Does financing a car seem daunting? Let Alan Milne help you. It's just a simple two-stage process.

The first stage is to decide on the type of car deal you want. Is it dealer personal loan, lease, or hire purchase?

Personal loan

Borrowing money from Alan Milne finance houses gives you instant ownership of a car.

The annual percentage rate (APR) is the easiest way to compare loans, and essential in working out how much a loan will cost you over its lifetime. Our APR % rates are always clearly mentioned.. The headline rate isn't necessarily what you'll get; it can vary, depending on your credit-worthiness.

It's tempting to go for longer loan periods, because that means smaller monthly payments. By doing this your interest repayment will be higher over the term of the agreement. We recommend that you be as disciplined as you can about keeping the loan term as short as you possibly can.

The downside of an unsecured personal loan is that any of your assets could be seized in the event of a default on the payments. With dealer finance, only the car is vulnerable to repossession.

Go for a personal loan if you say yes to one or more of these statements:

  • You don't have a deposit for a finance deal
  • You want to own the car outright
  • You plan to keep it for a while
  • You don't want the annual mileage restrictions

Hire purchase

After a bank loan, hire purchase (HP) is the simplest way to buy a car.

Under HP agreements, there's a deposit to pay, normally about 10%, followed by fixed monthly payments. The car is owned by our finance provider until the final payment and any 'option to purchase' ownership transfer fees have been paid. Up to that point, the person making the payments has no legal right to sell the vehicle.

The credit on an HP agreement is secured against the car, so the car can be seized in the event of a default. If you need to sell the car before the end of the agreement, you'll have to repay the outstanding debt first – and 'early settlement' fees may apply.

Go for HP if you say yes to one or more of these statements:

  • Eventual ownership is important to you
  • Your budget and circumstances suit fixed monthly repayments
  • Your disposable income is likely to decrease of the agreement term (eg. if you're planning a family)
  • You like low risk credit secured against the car only
  • You don't mind not owning the car until the debt is fully repaid

Personal contract purchase (PCP)

Personal Contract Purchase (PCP) was ranked as the most popular car-buying method in our dealership in Elgin.

It's a bit like HP in that there's a deposit to pay, a fixed interest rate, and monthly repayments over a choice of lending terms, which are usually between 12 and 42 months.

Where PCP differs from HP is at the end of the term. Then you'll have three choices. You can:

1) Return the car to the supplier

2) Keep the car

3) Trade the car in against a replacement

  • The first option, returning the car, costs nothing, unless you've gone over an agreed mileage or failed to return it in good condition. In either case there'll be an excess to pay.
  • Keeping the car means making a final payment. This amount is the car's guaranteed future value, or GFV, which is set at the very start of the agreement.The GFV is based on various factors. The length of the loan period and the anticipated mileage over the contract as well as the car's projected retail value. If you exercise this final buying option, you can of course keep running the car, or you can sell it, pocketing any equity above the GFV that you've paid back to the finance company.
  • If you're trading the car in to Alan Milne, any GFV equity can be used as a deposit towards the next purchase. If the car has gone into negative equity which can happen from time to time, you have no liability to make up the difference if you hand the car back to the finance house.

Shorter leases are more likely to come with more accurate GFVs.

Go for PCP if you say yes to one or more of these statements:

  • You want lower monthly repayments
  • You like the fexibility of options at the end of the agreement
  • You can confidently and accurately nominate your mileage

Personal contract hire (PCH)

Also referred to as personal leasing. The word 'Hire' tells you what PCH is all about. Basically you're renting a car for say two or three years, with an agreed mileage limit of say 10,000 miles a year. There's no option to buy the car at the end of the contract: you just hand the keys back to the finance provider. Effectively, your payments are covering the car's depreciation. This is a great way to buy a car if you want to control exactly your outgoings over a certain period of time. It’s just like a long term hire.

While you're running it, you're responsible for its upkeep. On the plus side, the deposit is low, as are the fixed monthly repayments, and you can reduce the impact of repair bills by incorporating a maintenance programme into the agreement.

Cars that hold their value well are a good PCH option, because the difference in their new and three-year-old values will be smaller, so you'll repay a lower amount. Cars that plummet in value from new are a bad choice, because you'll repay a much larger amount.

Go for PCH if you say yes to one or more of these statements:

  • You don't want to own a car, or suffer it depreciation
  • You like being able to change cars frequenty
  • You like the idea of driving better cars than you could normally afford
  • You don't mind looking after cars['jquery'], function ($) { var jQuery = $; });