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Choosing the right finance option for you is essential when purchasing a new or used Toyota car. That’s why we at RRG Toyota are delighted to provide you with full details on the two most popular options available: Personal Contract Purchase and Hire Purchase.
Personal Contract Purchase - or PCP - is one of the most cost effective means of investing in a new vehicle. You begin by paying a set deposit, followed by fixed monthly repayments over an agreed period of time. At the end of the term, you have the option to buy outright through an optional final payment or return the vehicle to the dealership.
What are the advantages of PCP?
Monthly instalments are often lower than other purchase schemes. This is due to the fact that you’re paying off the depreciation of the car - i.e. the difference between the purchase price and the Guaranteed Future Value at the end of the agreement
You have the flexibility to return the car to the dealership with nothing more to pay
Should the vehicle be worth more than the Guaranteed Future Value, you can use this equity as a deposit on a new car
What should you consider when opting for PCP?
That you’re happy to return the car after the leasing period
If you wish to buy outright, you will be required to pay a final balloon payment
Your annual mileage should not exceed the agreed amount, otherwise you will face additional charges
You will be unable to sell the vehicle without settling your agreement
You must service and maintain the vehicle according to the terms of the financing arrangement
Can I settle my PCP agreement early?
Settling early can be arranged by liaising with the financing company. They will provide you with a settlement figure, but you may also have to pay off the difference between what your vehicle is worth and what you owe. This is known as negative equity.
Arguably the most popular form of vehicle financing, Hire Purchase simply enables you to pay a deposit followed by fixed monthly instalments that pay off the remaining balance of the vehicle’s value. At the end of the agreement, you will be the outright owner of the vehicle.
What are the advantages of HP?
Spread the cost of purchasing over an agreed period of time
No mileage restrictions or obligations that you may find in other solutions
Complete ownership of the vehicle at the end of the agreement
What should you consider when opting for HP?
Monthly repayments may be higher in value compared to other purchasing plans
You cannot sell the vehicle until you have settled your agreement
You will not be the full owner until all repayments have been made
Insurance, servicing and maintenance need to be upheld according to the agreement terms
Can I settle my HP agreement early?
Yes. By contacting your finance company and requesting a settlement figure, you will be able pay off the remaining balance. However, you may also be required to pay the difference between what the car is worth and what you still owe - a difference known as negative equity.
Here at RRG Toyota, it’s our aim to help you get behind the wheel of one of our cars for the best price possible. Our sales advisors, therefore, will be able to provide answers to any questions you may have relating to financing packages and solutions. We’ll offer the support you need to make a fully informed decision and help ensure you’re driving away in a new or used Toyota in the most affordable manner possible.
