conditional sale Archives

What is a Conditional Sale for a Car?

While prices have dropped a little in 2023, the average cost of a new small car in the UK sits at more than £21,000. Opt for larger models and RRP increases significantly. Combined with issues like inflated petrol prices and the cost of living crisis, this figure puts car ownership out of reach of most motorists. With many Brits feeling the pinch, it’s no wonder auto finance options like conditional sale have surged in popularity over recent years.

There’s plenty to learn when it comes to car finance and conditional sale is one of many terms you may recognise. But what is a conditional sale exactly and how can it help you secure the keys to your dream car? Read on as we dissect everything you need to know about conditional sales, including how agreements work, the benefits and what to expect when signing a contract.

Understanding the basics of conditional sale

What is a conditional sale and how can it help you own your own car? The term describes a popular finance model that allows you to spread the cost of car ownership over a set time period, usually between two to five years. It’s essentially a personal loan that’s secured against the vehicle and funded by a lender. The finance provider pays for the car outright and maintains legal ownership of the vehicle for the duration of the contract.

As the borrower, you make regular repayments to the lender which cover the total cost of the car, plus interest accrued over time. After making your final payment, ownership of the vehicle is transferred to you. The model is straightforward and transparent, making conditional sale a great option for Brits who like to keep things simple. It offers a direct route to ownership without complications like mileage limits, wear and tear penalties or options to return the car or renew the contract at the end of the agreement.

Whether you’re looking at compact urban commuters like the Ford Fiesta or spacious, family-friendly SUVs like the Hyundai Tucson, Conditional Sale can be used to finance a huge range of makes and models. This flexibility is another key benefit associated with conditional sales.

Conditional sale vs hire purchase

What is a conditional sale agreement and how does it compare to hire purchase? If you’re familiar with the car finance landscape, you may draw comparisons with conditional sale and hire purchase (HP). And you’d be absolutely right. Conditional sale and HP share similarities and work in almost the same way, though there’s one major difference.

When a HP agreement winds up, you’ll need to pay a modest “option to purchase” fee to assume legal ownership of the vehicle. In comparison, conditional sale sees you automatically assume ownership after the final payment is made.

How conditional sale works

Now we’ve covered what a conditional sale agreement is, here’s a step-by-step breakdown of how the process works:

Choose your make and model

Like other auto finance options, conditional sale starts with choosing your dream car. Whether it’s a fresh out the showroom model or a used gem with low mileage and a great service history, conditional sale offers the flexibility to choose a vehicle that suits your personal budget, lifestyle and driving preferences.

Agree on terms

When you’ve chosen your new set of wheels, it’s time to agree on the terms of your conditional sale contract. This includes the duration of the agreement, along with your interest rate.

Make your deposit

Most conditional sale agreements start with an initial deposit designed to offset the total cost of the car. Keep in mind that your deposit can also help bring down your monthly payments and reduce the total amount of interest paid over the duration of the agreement.

Pay monthly instalments

The remaining balance of your car loan, minus your initial deposit, is split into fixed monthly payments. These payments cover both the principal loan amount as well as interest. For many Brits, the sense of financial stability that comes with conditional sale contracts is a major benefit.

Claim ownership

Unlike some auto finance options where you may have to return the vehicle or make a balloon payment at the end of the contract, conditional sale is all about easy ownership. After the final payment is made, you’re officially the legal owner of the car.

Why choose conditional sale?

Knowing what a conditional sale is gives you a few clues as to why it’s so popular with British motorists. Here’s a closer look at some of the top benefits:

A road to ownership

Ownership is the end goal of conditional sale contracts. Your payments cover the cost of the car which means you’re continually working towards ownership. There are no mileage restrictions, hidden costs or headache-inducing calculations to navigate. Instead, simply make your final payment and drive away as the legal owner of the vehicle.

No balloon payments

For many motorists the concept of balloon payments used in models like PCP can be frustrating. In contrast, conditional sale distributes the total cost of the car evenly over a pre-determined time period. This can make budgeting more predictable and means you’ll enjoy full ownership at the end of the lease.

Mileage flexibility

Conditional sale liberates you from the mileage caps that typically accompany PCP agreements. You’re free to drive as much as you like without worrying about breaking the terms of your contract and incurring penalties.

Customisation options

With full ownership, you have the freedom to modify your vehicle as you please. Whether it’s a unique paint job, upgraded tech or personalised accessories, the car is yours to customise.

Take the wheel with My Car Credit

Ready to get behind the wheel? My Car Credit can help you secure the best conditional sale deals, tailored to your personal needs. Our friendly team is here to answer all your questions about what a conditional sale is, provide guidance and ensure your road to car ownership is as smooth and stress-free as possible.

Looking for something different? At My Car Credit we specialise in matching clients with the best auto finance options for their needs. Every motorist is different which is why a one-size-fits-all approach never cuts it. Instead, we carefully assess every application to find the perfect match.

As well as conditional sale, we offer other popular car finance options like Hire Purchase (HP), Personal Contract Purchase (PCP) and Personal Contract Hire (PCH). It’s this open-minded approach, combined with access to a wide range of high street and non-traditional lenders, that gives us a competitive edge over other brokers.

Give us a call on 01246 458 810 to find out more or email us at enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

What is CS Car Finance?

When you’re shopping around for the right car finance agreement for you, you’ll come across plenty of jargon. As such, it’s easy to feel overwhelmed – but if this sounds like you, don’t panic!

At My Car Credit, we’re dedicated to helping you find the right car finance agreement for your unique needs. That’s why we’ve got a complete guide to car finance to help you secure a suitable deal for your circumstances.

Below, we’ll break down one specific kind of auto finance – conditional sale – into simple, digestible terms.

Similar to hire purchase (HP) car finance, conditional sale (CS) finance is an ideal agreement for motorists who want to own the car at the end of the term without facing extra conditions. Read on to find out the answer to: What is CS finance?

What is CS finance?

Conditional sale car finance – or CS car finance – is one type of auto finance agreement.

With CS car finance, you’ll benefit from affordable monthly payments and will own the vehicle in full once all your agreement’s conditions are fulfilled.

CS car finance is very similar to hire purchase (HP) car finance. However, to own the car at the end of an HP agreement, you have to pay a small ‘option to purchase’ fee. With conditional sale finance, provided that you’ve made all the monthly payments, the car is automatically yours at the end of the term – you won’t face a final fee.

How does conditional sale work?

Here’s a step-by-step breakdown of how CS finance works:

Choose your car. Shopping for a new, nearly-new or used car is one of the more fun parts of life. Don’t forget you can use My Car Credit’s one-stop shop of FCA-vetted dealers to find a nearly-new vehicle.
Speak to a lender about a conditional sale finance agreement.
Make your fixed monthly payments. Depending on the type of contract you agree with the lender, these payments typically extend over a period of time ranging from one to five years. A longer term means lower monthly repayments, but more interest overall.
No balloon payment. With CS finance, you’re the guaranteed car owner after you’ve made your final finance payment.

With CS finance, a deposit is optional and often flexible, depending on the lender. However, opting to make a deposit can reduce the amount left to pay per month, and the overall interest you owe.

Remember that your monthly payments will cover the full cost of the vehicle plus interest.

Who is CS finance best suited for?

CS car finance is particularly suitable for drivers who:

Want full ownership of the vehicle at the end of an agreement’s term.
Don’t want final balloon payments or mileage restrictions whilst using the car.
Value predictable budgeting – like My Car Credit’s other car finance agreements, CS finance breaks the cost of the vehicle into affordable monthly instalments, making budgeting easier.

CS car finance may also be a good fit for non-prime credit customers (subject to lender approval).

Pros and cons of CS finance

Pros	Cons
You own the car automatically	Monthly payments may be higher than PCP car finance
No balloon payment	Less flexible at the end of the term than PCP
Fixed payments help with budgeting	Ownership comes with maintenance costs
No mileage or condition charges	If you plan to switch your vehicle at the end of the term, CS may not be ideal

Is conditional sale right for you?

There are a few easy questions you can ask yourself to establish whether CS finance is right for you:

Do you want to own your car at the end of the term?
Do you prefer simple budgeting?
Do you want to avoid surprise charges?
Are you comfortable with standard monthly payments?

If the answer to these questions is ‘yes’, then conditional sale car finance may be right for you.

You can always check the affordability of a conditional sale agreement by using My Car Credit’s car finance calculator.

What is the difference between hire purchase (HP) and conditional sale (CS)?

Conditional sale (CS) car finance is often described as similar to hire purchase (HP) car finance.

There are some likenesses between these two car finance agreements, but they also differ in key ways. Being able to distinguish between the two will help you understand which type of agreement might be better for your motoring needs.

Ownership timing

With HP finance, you’ll usually need to pay an ‘option to purchase’ fee at the end of your agreement in order to fully own the car.

Alternatively, you’re automatically the vehicle’s owner after you’ve made the final monthly payment of a CS agreement. In other words, unlike with HP, you won’t face an additional fee.

Agreement structure

With both HP and CS agreements, you’ll be paying for the full cost of the vehicle over time, plus any interest, via affordable monthly instalments.

Deposit & term

The deposit and term of both CS and HP car finance are very similar. You’ll benefit from an optional deposit and flexible repayment term with both.

End-of-term simplicity

If you prefer simplicity at the end of your car finance agreement, CS is likely best for you compared to HP.

With CS, there’s no need to make a final decision or payment to secure vehicle ownership.

Who it’s best for

If you know that you want to own the car outright at the end of your car finance agreement and avoid any mileage restrictions and end-of-agreement admin, CS car finance might be right for you.

HP car finance is also suitable for drivers looking to own their vehicle but want to delay a guaranteed commitment to do so until the final payment.

Apply for conditional sale car finance with My Car Credit

Now that you know the answer to ‘what is CS finance’, you can decide if it’s the right choice for your car financing needs. At My Car Credit, our goal has always been to make securing online car finance as simple and accessible as possible. As part of the UK’s largest motor finance broker, we combine award-winning technology with a broad lender panel to improve your chances of being accepted for the right car finance agreement for your needs.

Our initial credit check is only a soft search. As such, it won’t leave a mark on your credit report, but will give us a sense of your circumstances and borrower profile.

Use our online application form to kickstart your conditional sale car finance journey with My Car Credit today. A simplified application process will give you a no-obligation quote in mere minutes, putting you in the driver’s seat as speedily as possible.

Frequently asked questions

Do I need a deposit for CS car finance?

Any deposit for CS car finance is optional, depending on lender flexibility. That said, if you do pay an initial deposit, this can reduce both your monthly repayments and any interest you owe on a CS car finance agreement.

Is CS better than HP?

If you’re looking for simplicity at the end of your finance agreement and know that you want to own the vehicle in full, CS car finance might be a more suitable agreement compared to HP.

What’s the difference between CS and leasing?

With a leasing agreement – also known as personal contract hire (PCH) car finance – you’re essentially renting the vehicle for a set period of time. At the end of the term, you’ll hand the car back. Alternatively, with CS car finance, you’re guaranteed to own the vehicle at the end of the agreement.

What happens if I want to end my CS early?

Cancelling a car finance agreement early is known as voluntary termination. It is possible to secure voluntary termination on CS car finance, but you’ll need to notify the lender in writing and have paid at least half of the total amount payable under the agreement.

Can I get CS finance with bad credit?

My Car Credit offers CS finance even to drivers with poor credit by looking at each case individually and without judgement. Be aware that poor credit history can result in higher monthly payments and interest rates.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Advantages and Disadvantages of PCP Car Finance

Can I Give My Car Back to the Finance Company?

What is the Oldest Car a Bank Will Finance?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car finance options conditional sale CS Car Finance hire purchase Jan24

HP, Conditional, PCP: The Lowdown on Car Finance Options

Customer calculates car finance monthly payments

With so many car finance options, choosing the best one can seem both daunting and overwhelming. My Car Credit takes the mystery out of it all by helping you understand how each car finance option works, how much it will really cost you and which option best suits your finances.

Car Finance in a Nutshell

Car finance allows you to become the owner of a car where you are unable to pay for your car upfront.
You make affordable monthly payments directly to the agreed lender of your car finance.
You will become the owner of the vehicle once you have paid the agreed amount in full.

Hire Purchase (HP)

Hire Purchase is the most common 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.

Great 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)

Personal Contract Purchase (PCP)

Personal Contract Purchase is similar to Hire Purchase except that you have the option to buy the vehicle at the end of the loan or hand it back.

If you decide to buy, you pay a balloon payment for the balance on the value of the vehicle. The value is fixed at the start of the agreement – the Guaranteed Future Value – so that you know and can budget for the balloon payment before you commit.

Great for those people:

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