First things first! Car finance is a way to borrow money or lease a car through a loan, lease or hire agreement, allowing you to spread the cost over time instead of paying upfront.

The most common types of car finance agreement are Personal Contract Purchase (PCP), Hire Purchase (HP), Contract Hire and personal loan.

The payments you make over this period can depend on several factors – including the amount you need to borrow, the length of time you intend on keeping your car, as well as the type of agreement choose.

The main types are Personal Contract Purchase (PCP), Hire Purchase (HP), Contract Hire and personal loan. With so many options to choose from, it’s essential to understand their differences and why one might be a better fit for you than another.

Buying outright is usually cheaper overall, but finance makes it easier to afford a car by spreading the cost over time. Sometimes, you can drive off the forecourt without paying anything upfront!

Consider these questions:

• Do I want to own the car? If ownership is important to you, explore options like Hire Purchase (HP) or Personal Contract Purchase (PCP) – or even, buying outright.
• Can I afford the monthly repayments? Make sure to budget thoroughly to cover not just the monthly payments, but also additional costs like insurance.
• Can I afford a deposit? Most car finance options require a deposit, typically a percentage of the car's value.

Regardless, when you choose Perrys, we’ll always give you our best deal, working with our panel of lenders to secure it for you.

Personal Contract Purchase (PCP) lets you pay monthly for a car and gives you the choice to either return it, buy it or trade it in at the end of the term.

Hire Purchase (HP) splits the car’s full cost into fixed monthly payments, and once you’ve paid it off, you automatically own the car.

Financing an electric vehicle (EV) is similar to traditional car financing. Brand-new EVs can be expensive, and financing helps spread out the cost and avoid the initial upfront cost.

Think about the deposit, monthly payments and potential balloon payment (for Personal Contract Purchase Plans (PCP)), and don’t forget to factor in charging costs, including electricity rates and home charger installation. Your options for financing an EV include Hire Purchase (HP), PCP and car leasing contracts.

Yes, but it may be harder and more expensive, but youve come to the right place as we specialise in helping people with credit issues. We have some lenders available that offer car finance to people with poor credit histories.

Our 30-second eligibility checker gives a quick estimate of your chances of acceptance once you complete the full finance application. After deciding on the type of finance you want, fill out the application form with details like personal info, address history, employment, income, expenses and bank details. The application is then sent to our financial professionals and forwarded to a suitable lender for approval.

Once processed, you’ll receive an email with the outcome. Typically, you'll hear back in minutes, though it may take longer if the lender requests additional information.

The short answer is yes. But there’s more to the story.

Car finance is considered debt, and how you manage it can impact your mortgage application. Lenders review your financial history, and late payments may harm your credit score or affect your mortgage rates. However, if you keep up with payments, it shouldn’t be an issue. They also consider your monthly expenses, so car finance repayments could reduce the amount you can borrow for a mortgage. While having car finance won’t prevent you from getting a mortgage, it’s important to ensure you can afford both your car and mortgage payments. If you’re applying for a mortgage soon, reducing expenses can improve your chances.

The information in this article is for informational purposes only and is not intended to be personal financial advice. If you are looking for car finance, please contact your nearest Perrys dealer.

Often yes, especially for Personal Contract Purchase plans (PCP) and Hire Purchase (HP). And it’s not necessarily a bad thing as a larger deposit can lower your monthly payments.

That said, here at Perrys we do offer car finance with no deposit – subject to eligibility. You’ll be able to pick up your new car and drive away without paying any deposit upfront. The only thing you need to bear in mind is that if you choose this option you’ll need to pay more money in the long run to pay your car back, with either higher monthly repayments or a longer loan period.

Yes, but you might have to pay an early settlement fee depending on your agreement. Check your contract for details.

When your current agreement is coming to an end, there are different options around what you can do with your car. However, this will depend on what type of finance you have.

It’s good to thoroughly research every finance option and have a look at the processes from beginning to end in order to make sure you fully understand how much you owe and what the requirements are.

Personal Contract Purchase (PCP)

At the end of your PCP agreement, you have four options:

• Pay back the final payment (balloon payment) and keep the car. You don’t own the car until all payments are made.
• Refinance the final payment over a further period.
• Sell the car and use any money left over for a deposit on a newer car.
• Don’t pay the final payment and hand back the keys.

Lease Purchase (LP)

With Lease Purchase, you have two options at the end of the agreement:

• Pay back the final payment (balloon payment) and keep the car.
• Sell the car and use any surplus as a deposit on a newer car.

The final payment of your Lease Purchase is not guaranteed, which means your car could be worth less than the final payment. If this occurs, you will have to make up the difference even if you sell or part-exchange the car for a new one.

Hire Purchase (HP)

Hire Purchase is a finance plan that involves you paying a deposit and then continuing to pay off the value of the car in monthly instalments for a fixed term. The car doesn’t belong to you until you pay off all the finance. Once you have made the last payment, the car is yours to keep.

Contract Hire

When taking out personal Contract Hire finance you will need to place a deposit upfront; this ranges from three to six months worth of payments. You will then continue to pay fixed monthly payments for an agreed term.

At the end of your agreement, there is no need to sell the car or pay the balloon payment. You simply hand the car back.

Personal Loan

Taking out a personal loan is one of the easiest ways to purchase a car. You can secure a personal loan through our finance team at Perrys or from your bank or building society. As soon as the money is put into your bank account, you can choose a car that fits your budget.

Using a personal loan means the car is yours from the moment you pay for it. There are no further payments that you need to make for the car other than the loan repayments to your lender.

Your credit score is very important and plays a key role in lenders’ decisions to offer you credit, as it shows how likely you are to repay the money that you are requesting to borrow.

Credit scores are calculated based on several factors:

• Length of credit history
• Number of open accounts
• Total levels of debt
• Repayment history
• New credit
• Types of credit

You can check your credit score for free on several companies’ websites. Experian, ClearScore and Equifax are three of the most popular credit score checkers. They allow you to check your score for free whenever you want and will notify you when your score changes.

It’s important to check your score at least once a year and always before you apply for credit, but tracking your score each month is also beneficial as this allows you to maintain and make any improvements.

If you have a low credit score, it’s not the end of the world – at Perrys we do offer car finance to drivers with poor scores. Talk to our team to find out more.

If you have a car on finance, like a PCP or lease, and are worried about your expenses, refinancing might help lower your monthly payments while keeping your car. Refinancing could be a good option if your financial situation has changed or if your credit score has improved since you took out the finance. However, it’s not without its downsides.

Benefits of refinancing:

• Own the car sooner: refinancing can help you own your car outright faster.
• Shorter repayment period: if you can afford higher monthly payments, refinancing can shorten the loan term and save on interest.

Disadvantages to consider:

• Higher overall interest: a longer loan term can mean paying more interest in total.
• Interest rate changes: rising rates could increase the cost of refinancing.
• Loss of protections: refinancing to an unsecured loan may strip away protections like the ability to return the car.

Ultimately, refinancing depends on your situation, so it's important to weigh the pros and cons before making a decision.

The best car finance option really depends on your personal circumstances. It’s important to consider your budget, how long you want to keep the car, and whether you prefer low monthly payments or full ownership. Check our latest finance offers today!

Yes, some manufacturers in the UK offer 0% finance deals, which means you could finance a car without paying any interest. However, these deals arent available often and come with conditions such as a larger deposit, a good credit score and sometimes limited model choices. If you find a deal and you qualify for 0% finance, it can be an excellent option because it means you won’t pay extra on top of the car’s price, but make sure to check the full terms before committing.

Yes. Making payments on time can improve your score, but missed payments can lower it.

Not usually. You must clear the finance first because the car technically belongs to the lender until the agreement ends.

In PCP, the balloon payment is a final lump sum you pay if you want to own the car at the end of the contract.

Hire Purchase (HP) and Personal Contract Purchase (PCP) are two of the most popular car finance options we offer at Perrys. The right choice for you depends on your needs and circumstances. To help, we’ve made a simple comparison below.

The main difference between HP and PCP is ownership. With HP, you’ll own the car once the finance term ends. With PCP, you have more options at the end: return the car, pay the final balloon payment to keep it, or trade it in for a new one. The choice is yours!

How do I know which is right for me?

• Choose PCP if you want lower monthly payments and the flexibility to change cars more often. It’s a great way to drive a newer car without stretching your budget.
• Choose HP if you want to own the car outright, with fixed monthly payments and no balloon payment at the end.

Deciding between the two comes down to how you want to approach car ownership.

Negative equity is generally a financial risk, as it means you owe more on your car loan than the vehicle is worth. While it’s sometimes unavoidable when purchasing a new car, understanding the long-term implications is crucial. In short, it’s generally not the end of the world, but it’s something to keep an eye on.

The amount of negative equity depends on factors like the initial loan amount, how quickly the car depreciates and any additional fees or interest. It could range from a small amount to several thousand pounds.

Negative debt-to-equity ratio is a different way of describing negative equity. It’s the gap between what your car’s worth and what you still owe on it.

Being in negative equity can make it tricky to sell or trade in your vehicle. It’s not always possible to avoid negative equity due to fluctuating car values, but there are actions you can take that might help manage it. So, if you’re finding that your monthly payments aren’t chipping away at the loan fast enough to keep up with the depreciation, it might be worth looking at making extra payments, extending the loan term, refinancing the loan or trading in the car.

Yes, it’s possible to use a new loan to cover your negative equity, which spreads the payments over a longer period. However, this extends your debt and could lead to higher monthly payments or a longer repayment term, increasing your total interest payments.

Yes, it’s possible. Some lenders allow the negative equity to be added to a new finance agreement, though this will increase the amount borrowed and may result in higher monthly payments or more interest.

Yes, you can – you’ll just need to roll the negative equity into your next deal or cover it upfront.

Yes, some dealerships may allow you to transfer negative equity into a new loan. While this allows you to spread out the balance, it could also raise your overall debt and monthly payments, so it’s essential to understand the financial implications.

Gap insurance can help cover some of it if your car’s written off or stolen and the insurance payout is less than your remaining loan balance. However, coverage varies, so check your policy terms or speak to your provider to confirm what’s included.

Only if you miss payments. Refinancing with negative equity is different to getting finance with poor credit.

A larger deposit can reduce the risk of negative equity by lowering the loan amount and narrowing the gap between the car’s value and the loan balance. However, be cautious when putting down a large deposit, as some finance agreements may not be as cost-effective in the long term.