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In today’s expansive market, finding a new or used vehicle that matches all of your needs and requirements isn't always easy.
When it comes to purchasing your new URBAN, we aim to provide the latest funding solutions available across the marketplace.
Urban Automotive Ltd is a credit broker, not a lender and as such we work alongside some of the industry’s leading premium lenders, allowing us the flexibility to structure bespoke packages to suit individual needs and requirements for specialist and modified vehicles.
Whichever type of solution you choose, our policy is to treat customers fairly, in line with FCA regulations.
All Finance solutions are offered subject to status.
Our 4 most widely adopted agreement structures are as follows.
If you choose to pay for your URBAN with a Hire Purchase agreement, you will normally pay an initial deposit and then pay off the entire value of the car in monthly instalments. When all re-payments are made along including the option to purchase fee, the Hire Purchase agreement ends and you own the car.
Also known as Hire Purchase with a Balloon, Lease Purchase is an ideal way to fund your URBAN vehicle if you are aiming for lower monthly payments compared to a standard Hire Purchase deal.
To reduce your monthly instalments, a deferred final payment, or balloon, is offset to the end of the agreement. This allows you to pay a lump sum to purchase the car in full, if you choose to do so.
As with PCP, the amount of the deposit is flexible, typically between 10% – 50% of the car’s price. The deferred balloon is calculated on the estimated future resale value of the car.
The difference, plus the agreed interest, is repaid in equal instalments over a set period, usually between 1-4 years, with the final balloon payment.
1. At the end of your payment schedule, you have a number of options:
2. Purchase the car, by paying the deferred balloon
3. Part-exchange the car, using any equity towards your next vehicle
4. Sell the car privately, retaining any equity once the balloon has been paid
5. Refinance the final balloon payment
Personal Contract Purchase (PCP) is similar to a Hire Purchase agreement as you will usually pay an initial deposit, followed by monthly instalments.
The amount of the deposit is flexible, typically between 10% – 50% of the car’s price.
What makes PCP different is that it is a regulated agreement and your monthly instalments are paying off the depreciation of the car and not its entire value, over the course of the term.
When you reach the end of your agreement, there is a final, Guaranteed Future Value (GFV) payment that must be made if you want to keep the car.
At the start of your PCP contract, a Guaranteed Future Value (GFV) of the car is set based on agreement term and projected mileage per annum. This is the car's expected value when your contract ends.
For you, this means that the money you’re repaying is the difference between what the car is worth now and what it will be worth at the end of your contract (the depreciation) plus interest, which is calculated on the full value of the vehicle. You'll pay this difference off in monthly instalments.
Remember: you are still liable for the full amount of the vehicle if anything happens to the car or if you settle early.
This means lower monthly payments for you; however, you will need to pay a final payment at the end (the Guaranteed Future Value) if you wish to keep the car.
Once you reach the end of your payment schedule, you’ll have three options:
1. Buy the car by paying the final balloon payment (the Guaranteed Future Value).
2. Hand the car back - your finance company has already predicted the Guaranteed Future Value of the car, so handing the car back will settle the deal.
3. Part-exchange for a new car.
You can ordinarily settle your agreement early, however the finance company will require you to pay off the difference between what your car is worth now, and what you still owe (in the case of this being more than the vehicles value, this is called negative equity). On the other hand, you may find that at the end of your term your car is worth more than the Guaranteed Future Value, which means you’ll have some positive equity to contribute towards your next car.
Also commonly referred to as ‘car leasing’, business contract hire is popular with various types of fleets and is exclusive for companies. Business contract hire agreements allow a company to take on cars for a set period of time (usually between 12 months and four years) and pay via fixed monthly instalments.
The company taking out the agreement doesn’t own the vehicles however, so when the term of the contract is over, the cars are returned to the lease company.
It’s important to understand how your payments are determined.
The contract hire company will work out the ‘residual value’ of the vehicle – that is its value at the end of the contractual period once depreciation is taken into account. To estimate this value, the company will ask you to stick to a strict mileage limit while you drive the car, and exceeding this limit could see you penalised at the end of the term.
To determine your payments, the company will deduct the estimated residual value from the retail price of the car, leaving you pay the difference in monthly instalments.
There are many different pros and cons of contract hire, and what may suit one business won’t necessarily suit all