If you are looking to finance a car with another lender, then you could be offered a Hire Purchase, Personal Contract Purchase, personal loan or a lease.
A Hire Purchase (HP) is where you hire the car from the lender until you have paid off your debt, which is very similar to a Conditional Sale Agreement. Once you’ve finished paying the lender back, there is an option to buy the car outright. This is referred to as an ‘option to purchase’ fee and is usually around £100-£200. You’ll only own the vehicle outright once all repayments have been made and you’ve paid the option to purchase fee.
A Personal Contract Purchase (PCP) might be better suited to some as it gives you more flexibility at the end of your agreement, and the monthly repayments tend to be cheaper. It’s where you pay a deposit followed by monthly repayments for an agreed amount of time. At the end of this time period, you have the choice to either hand back the car or pay an amount to buy the vehicle outright. The cost to buy the vehicle is referred to as the Guaranteed Minimum Future Value fee and will vary depending on the make and model of the car.
You can also get a car on lease. What this simply means is you are renting the vehicle for an agreed period of time, but you will never have the option to purchase it. You pay a deposit, or a larger initial payment, followed by fixed payments over a set period of time.
You can compare the advantages and disadvantages of different types of finance such as car finance vs personal loan on our car finance explained page. This will help you understand what might be best for you.