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FINANCE EXPLAINED

The pros and cons to all available finance products

HIRE PURCHASE

  • Hire Purchase (HP) is a secured loan finance agreement against your vehicle.

  • Spread the cost of the vehicle in a series of monthly payments.

  • Once you have made your final payment, you will own the vehicle outright.

  • Your monthly payments will include the cost of the vehicle plus the interest.

  • Some lenders may charge an administration or documentation fee.

  • The loan is secured against the vehicle.

  • The vehicle can be repossessed if payments are not kept up.

  • The finance company is the legal owner until the agreement is paid in full.

  • Non-payment can negatively affect your credit rating.

  • To lower the monthly payments, you might have the option to add a balloon payment at the end of the agreement. This is often referred to as a lease purchase or hire purchase with balloon.

PERSONAL CONTRACT PURCHASE

  • PCP (Personal Contract Purchase) is a secured loan agreement against your vehicle.

  • The difference between HP and PCP is that the value of the vehicle at the end of the finance agreement is calculated at the start and deducted from your monthly repayments.

  • Generally, PCP monthly repayments are lower than Hire Purchase.

  • PCP finance agreements gives you the flexibility to decide whether you want to own the car outright at the end of your agreement.

  • You can either pay the future value payment (sometimes referred to as the ‘balloon payment’) or return the vehicle to the lender.

  • Charges, mileage and other terms and conditions may apply.

  • Any fees on the agreement are charged by the lender.

  • As a broker, we do not charge any fees to you for our service.

  • Non-payment can negatively affect your credit rating.

  • The vehicle is not legally yours.

  • If you cancel your contract early, it could be expensive.

  • The vehicle can be repossessed if payments are not kept up.

FINANCE LEASE

  • Finance Lease gives business customers use of an asset of newer, higher specification than the could otherwise buy outright

  • The cost of the asset is paid by monthly instalments rather than a large upfront investment

  • The cost is spread over a period of time and paid by fixed monthly instalments that will not increase – even if bank interest rates rise

  • Tax advantages – VAT is payable on the rentals, not the purchase price, while rentals may be offset against taxable profit (special rules apply to cars)

  • Claim up to 100% of the VAT on commercial vehicles, and 50% on cars (subject to being VAT registered)

  • Flexible repayment structures are available, tailored to match your company’s cash flow

  • The agreement is secured against the asset: therefore if you don’t pay, the asset may be repossessed

  • Non-payment can negatively affect the credit rating of both the business and the guarantor

  • The finance company are the legal owners of the asset, and you will not own it

  • The asset is not protected if you or your company are made bankrupt

CONTRACT HIRE

  • Often the cheapest way to access the newest, safest cars or vans

  • Delivery, breakdown, warranty, and road tax are all included in the price

  • Payment plans can be flexible to your needs with you choosing how much you want to pay upfront and per month

  • No unexpected expenses caused by breakdowns or MOT

  • No big payment at the end of contract, you simply hand the vehicle back to the finance company

  • You can’t end your contract early even if your circumstances change

  • There is no option to own the vehicle at the end of the agreement

  • Financial penalties for exceeding mileage limit and excessive wear and tear

  • The vehicle can be repossessed if payments are not kept up.

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Which option is right for me?

Choosing Hire Purchase (HP) or Personal Contract Purchase (PCP) all depends on if you would like to own the vehicle once you have made all your finance payments. If you do, then a HP agreement is most likely the best option for you.

 

If you like to change your vehicle every few years, then you are likely to be better suited to the PCP option. Depending on the value, some vehicles won’t have a PCP option. If you have any queries, please call our Finance Executives who will be happy to discuss your options.

What criteria should I consider?

When lenders consider financing a vehicle, they look at a few factors such as age, mileage and value.

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Most lenders will generally only finance vehicles that are less than 10 years old and have done less than 100,000 miles. When you are deciding how long to repay the finance for, you can usually choose a period of between 24 and 60 months. If a vehicle is older, some lenders may offer a shorter repayment term.

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Van Finance Bridgend, South Wales

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Hawkstone Motor Finance is a trading style of Hawkstone Farley Group Ltd, a company registered in England and Wales at Principality House, Brackla Industrial Estate, Bridgend, CF31 2BB with Company Registration Number 13836301. Hawkstone Farley Group Ltd is authorised and regulated by the Financial Conduct Authority (FRN: 987531). We act as a credit broker not a lender. We can introduce you to a limited number of lenders who may be able to offer you finance facilities for your purchase. You will make no payment to us for the introduction to our panel of lenders, typically we may receive a commission from the lender if you decide to enter into an agreement with them. You may ask us for details of such payments. Commission arrangements can be based on a percentage of the balance financed which means we will be paid a commission for introducing you to the lender. This will be a percentage of the amount that you borrow. This means the more you borrow, the more we will be paid. The commission will be the same no matter the interest rate that you pay. If you ask us, we will tell you in good time before the agreement is made the amount of any commission we will earn from the lender. Some lenders opt for a flat fee commission model. We will be paid a commission for introducing you to the lender. This will be a flat fee amount. This means the commission will be the same no matter how much you borrow or the interest rate that you pay. If you ask us, we will tell you in good time before the agreement is made the amount of commission we will earn from the lender.

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Representative example: cash price and borrowing £10,000 over 5 years with a representative APR of 10.9% and a Fixed Rate of 5.73%, and a deposit of £0.00, the amount payable would be £214.40 per month, with a total cost of credit of £2,864.00 and a total amount payable of £12,864.00. Option to purchase fee applicable of £1.00

Office Opening Hours

Monday 09:00 - 17:00

Tuesday 09:00 - 17:00

Wednesday 09:00 - 17:00

Thursday 09:00 - 17:00

Friday 09:00 - 17:00

Saturday Closed

Sunday Closed

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