Accept Car Finance provide a wide range of car finance deals so that customers can find the vehicle of their dreams, and they come in numerous forms depending what the client feels would be best for their personal and financial circumstances. But for a newbie, what exactly is car finance? Here, we’ll explain it in more detail.

A car finance plan is essentially a long-term agreement for fixed monthly payments on a motor. Even for the cheapest, most affordable cars, few people are going to pay cash-in-hand on the spot for the model while they’re in the showroom, and as you can imagine, this would be even less likely for a car that is top of the range and at the highest price (after all, how many people carry tens of thousands of pounds with them wherever they go?). A finance plan allows the customer to pay a certain amount on a monthly basis, perhaps with a deposit in advance too, and this continues right up until the end of the plan.

The idea of car finance is to create a payment system that is fair to the customer. Let’s say that the average total cost of a vehicle is £10,000. Now, depending on what your earnings are, it could be that you can afford to cover the entire payments within two years. Maybe it would be fairer to you if the plan ran for three years. Or maybe it would be four, five or even six. Add to that the aforementioned deposit payment option (which could offset your monthly payments by spending one larger lump sum at the beginning), and factors which could bring the overall cost down (such as the age and mileage of a car), and you begin to realise that there is no set price for each model, which dictates that everybody’s method of paying for the car would be different, hence the benefit of having finance plans.

Now, as you may be aware, there are several different layouts to a car finance plan. PCP, Personal Contract Purchase, acts as a loan with you not paying the car’s full value, and not owning the car outright, along with a deposit of roughly 10%. PCH, Personal Contract Hire, provides lower monthly payments but also without eventual ownership of the car (which is why this plan is a “hire”). HP, Hire Purchase, is very similar to PCH except that it includes a deposit amount, and that you will own the car come the end of the deal. Finally, there is PL, for Personal Loan, which allows you to loan money from a bank, building society or another finance company, as well as a lower deposit and full ownership of the car. As you can see, each plan has its pros and cons, and only you will be able to truly decide which plan is best for you.

These are the basic details of car finance that we have outlined, and you can learn more by visiting our calculator page here: