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?
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:
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:
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
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:
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: