Personal Vehicle Leasing Finance Options – the most frequently asked questions answered.

Personal Vehicle Leasing Finance Options – the most frequently asked questions answered.

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Personal Vehicle Leasing Finance Options – the most frequently asked questions answered.

We recently looked at the vehicle leasing options open to businesses. Today we’re taking a look at the options open for your own personal vehicle.

There are three main options and in this article we’re going to look at two of them Hire Purchase (HP) agreements and Personal Contract Hire (PCH). We will look at the third option in more detail in the next article – so please keep an eye out for that.

Hire Purchase Agreements

What are they?

Hire Purchase (HP) agreements let you place an initial amount and then fixed monthly payments to complete the purchase of a vehicle.

So will I own the car?

Yes, once all the payments are made, ownership of the vehicle transfers over to you.

What are the main benefits of this type of agreement?

A Hire Purchase agreement is an incredibly affordable way for you to own your own vehicle – particularly if you are looking to keep a vehicle over a longer period.

Owning the vehicle means you can do what you want with it once it becomes yours.

What are my obligations in looking after the vehicle?

Your responsibility for the vehicle is to make sure;

· It is fully insured

· The vehicle is well maintained and serviced and kept in a roadworthy condition.

· To keep up your monthly payments otherwise the vehicle could be repossessed.

What are the main considerations for a Hire Purchase agreement?

You would have to be committed to the vehicle as you will not be able to hand the vehicle back at the end of the agreement. Nor will you be able to sell the vehicle WHILST you are paying for it unless you made an early settlement.

Personal Contract Hire

With a Personal Contract Hire (PCH) Agreement, there are many similarities to Business Contract Hire that we discussed last week.

Will I own the vehicle?

No. The vehicle will not belong to you at any point during the agreement. At the end of the agreement you will hand the vehicle back.

How does the agreement work?

A PCH agreement is normally a 2-5 fixed term agreement with an initial rental and monthly rentals– including VAT thereafter

What are the benefits of a PCH agreement?

There are a number of benefits in choosing a Personal Contract Hire agreement. These include;

· You can choose the length of agreement to suit your needs.

· You may be able to reschedule the mileage limits in the agreement as required.

· You need not worry about depreciation or disposal values.

· You can include a Maintenance package if you choose

· You should benefit from funders buyer power

What are my obligations in looking after the vehicle?

As with a Personal Contract Purchase agreement – you must ensure the vehicle is;

· Fully insured

· Maintained and serviced.

· Any parking fines/congestion charges are paid.

Are there any additional charges I could be liable for?

As with the busines contract hire agreements where you hand a vehicle back, with a Personal Contract Hire agreement, you may face additional costs in relation to;

· Refurbishment to the condition of the vehicle.

· You may be charged additional mileage charges at a pence-per-mile if you exceed the mileage set-out in your agreement.

· Replacement of items which may be lost – e.g. spare keys, locking wheelnuts.

In conclusion

These 2 finance options are a large part of the reason why so many newer vehicles are on the road today. They make obtaining a new vehicle extremely affordable – and offer a great deal of flexibility.

There is also another option that I mentioned before, but it’s worth spending time on this option in it’s own right. There will be a post on this site about this next week – so make sure you sign-up below for updates.

In terms of whether Hire Purchase or Personal Contract Hire is best for you though, it really does come down to your own personal circumstances and needs.

If you have any questions about either of these options – or if you would like to discuss your options – please don’t hesitate to get in touch either using the form below, or in the comments on this post.

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