Getting a car through finance is one of the most popular ways to purchase a vehicle. With finance, you’re able to spread the cost of the car over a set period, and it often provides a more flexible option for drivers who like to change cars more frequently compared to buying a vehicle outright.
At Prestige Cars Kent, we are proud to offer a variety of finance options to help make a car purchase easier.
Nearly all finance agreements, however, require some form of deposit - but what do you need to know about this and how much should you put down?
What types of finance options do we offer?
Personal Contract Purchase (PCP)
Personal Contract Purchase, more commonly referred to as PCP, is one of the most popular forms of car finance. With this method, you’ll pay an initial deposit, followed by regular monthly installments over an agreed period. A large portion of the vehicle’s value will be left at the end of that agreement period.
Once you reach the end of the agreement, you have three main options: buy the vehicle through a final ‘balloon’ payment, part-exchange the car or return the vehicle completely. It’s this flexibility that many drivers find appealing, but get in touch with the Prestige Cars Kent team today if you’d like to find out more.
Hire Purchase (HP)
Hire Purchase - or HP - is another very popular form of car finance. It’s similar in many ways to PCP; you’ll pay an initial deposit followed by regular monthly installments. However, these monthly payments are going towards the overall cost of the vehicle.
The key difference between HP and PCP is that with the former, once you’ve reached the end of the agreement, you’ll own the vehicle outright, once you’ve paid an ‘option to purchase’ fee.
Lease Purchase
Lease Purchase is the third finance option we’re able to offer here at Prestige Cars Kent. Again, with this method, you’ll pay an initial deposit followed by monthly installments over a fixed period. However, unlike PCP or HP, you’re not able to return the vehicle at the end.
Instead, you’ll need to settle the outstanding balance with a final payment or by arranging another finance agreement on the vehicle.
How much deposit should I put down?
You might have noticed that all of these methods require some form of deposit. But how much should you put down?
Higher Deposit, Lower Monthly Payments
You can put a larger deposit down, should you want to, and if so, you can bring down those monthly payments. However, tying up more cash into a finance agreement will mean you’ve got less money for other things in life. That said, putting down a larger deposit means you’ll spend less on interest for the loan as a whole, making the entire finance agreement cheaper.
Lower Deposit, Higher Monthly Payments
You can, of course, put down a smaller deposit. This will mean you’ll have to put less of your cash into an agreement and will also make it easier to start the finance policy in the first place, as you won’t have to save as much money to begin with.
However, a smaller deposit will mean that more of the vehicle’s total value will be left to pay off, meaning more interest as a result. Plus, a smaller deposit will mean that your monthly payments will be higher.
Zero Deposit
We also offer a zero deposit finance option, which is available on selected vehicles, allowing you to drive away without paying anything up front. This can be a particularly appealing choice if you would like to keep your savings safe.
Your monthly payments will be higher, as you are financing the full cost of the vehicle. However, if you have any questions, speak to the team to discuss whether this is the right option for you.
The amount of deposit that you’d like to put down really is down to you. However, with our expert knowledge of car finance, all the team here at Prestige Cars Kent are well-placed to assist and advise on the best policy for you. Get in touch today.