When looking to buy a new car you have probably already decided on what make and model you’d prefer, what you’ll be using the car for, what colour you like, how many seats and doors and what optional extras you’d like.


What you may not have decided on is how you would like to fund your car and what the car finance options are on your car buying journey.


My Car Credit looks at the three most popular car finance options available to you:


HP (Hire Purchase)


Hire Purchase is the most common and popular type of car finance and very simply means that you make monthly repayments and usually a small admin or purchase fee at the end.


Your car loan is secured against the car, which is owned by the lender. Whilst you are paying, you effectively hire the car from the lender and once all payments have been made the vehicle becomes yours.


A HP agreement is perfect for those people:


• Who don’t want to or can’t pay cash

• Who’s budget and circumstances suit fixed monthly repayments

• Who have had problems getting credit

• Who want to own the car at the end

• Who’s disposable income might change (e.g. starting a family)


PCP (Personal Contract Purchase)


Similar to HP (Hire Purchase), PCP gives you the option to buy the vehicle at the end of the loan or hand the car back. If you decide to buy, you can pay a balloon payment for the balance on the value of the vehicle.


The value is fixed at the start of the agreement – this is also known as the GFV (Guaranteed Future Value). By fixing it at the start, you know and can budget for the balloon payment before you commit.


A PCP is perfect for people:


• Who are interested in a new or nearly-new car

• Who want lower monthly repayments

• Who want flexibility and options at the end of the agreement

• Who like to change their car regularly

• Who are confident that they can predict their mileage


Conditional Sale


Conditional sale is similar to Hire Purchase except that you don’t have to pay a fee at the end of the agreement, just monthly repayments.


Whilst you’re repaying the agreed amount of the car loan, you have possession and use of the vehicle but it continues to belong to the lender until you have made the final repayment, when the vehicle becomes yours.


A Conditional Sale is perfect for those people:


• Who would rather pay a bit more, spread the fixed repayments and avoid a large payment at the end

• Who want a choice of length of payment terms


Hopefully that has given you an insight into the car finance options available to you from My Car Credit. If there are still some terms you are unsure about, you can visit our own Car Finance Jargon Buster Guide.


Think you’re ready to apply?


You can access our handy car finance calculator here to work out your monthly repayments and see how much you can afford. Alternatively, go straight to our application form, which takes less than 3 minutes to complete.


We access our panel of over 25 lenders to issue instant online decisions and our best rate available for your credit profile. Importantly, applying for car finance with My Car Credit won’t affect your credit score as we only perform a soft search.