Finance Plans at Motorvogue
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Latest News: Suzuki celebrated some really good news at the 40th Anniversary of the What Car? awards last night with Ignis picking up the ‘True MPG’ Award as the most economical new car tested by the editorial team over the last year. The winning Ignis model was the two wheel drive SZ5 with SHVS (Smart Hybrid Vehicle by Suzuki) which recorded 59.6mpg in True MPG testing. The SZ5 ALLGRIP 4WD model was not far behind either recording 53.3mpg. Steve Huntingford, Editor of What Car? comments: “Nothing has surpassed its stellar average True MPG figure of 59.6mpg. Given the wide selection of hybrids, downsized turbocharged petrol engines and diesels we’ve tested this year that’s quite some achievement. Not only does the Ignis sip fuel but it doesn’t chuck out much Nox (Nitrous Oxide emissions), either. Considering Nox contributes to the formation of smog and acid rain, that’s worth celebrating”. Suzuki celebrated two further ‘Best Buy’ category wins at the awards too with Vitara awarded a ‘Best Buy’ accolade for the third consecutive year in the small SUV class. The 1.6-litre SZ4 model was comprehensively judged by the editorial team and announced again as the best overall model in its price bracket of less than £16,000. Commenting further, Steve Huntingford said: “Despite the arrival of competition from a number of manufacturers as well as Suzuki’s own Ignis, the Vitara remains our favourite budget SUV. In everyday driving, this version is capable of diesel beating economy and managed an inpressive 47.7mpg in our True MPG test. All in all, the Vitara makes for a very compelling small SUV”. Vitara remains very popular with customers in the UK with 11,900 sold in 2017 and is the best selling car in the range. Suzuki’s ALLGRIP four wheel drive technology is available as an option on SZ-T and SZ5 models and is standard equipment on the 1.4-litre Boosterjet S model. Celerio SZ2 was awarded a ‘Best Buy’ accolade for the second year running, this time it was recommended in the category at less than £9,500 with What Car? commenting: “All things considered, the Celerio is a serious amount of car for the cash, Suzuki throws in everything you would realistically need – even on entry level SZ2 trim - and it makes a well rounded City Car choice”

Finance Plans Explained at Motorvogue

From PCP to hire purchase, here's everything you need to know about financing your next car. 

Car finance might seem daunting, but in reality it's just a simple two-stage process.

The first stage is to decide on the type of car deal you want: loan, lease, hire purchase, or dealer finance. Then it's a simple matter of choosing the provider whose product best suits your needs.

Personal Contract Hire (PCH)

The word 'Hire' tells you what PCH is all about. Basically you're renting a car for (typically) two or three years, with an agreed mileage limit of (typically) 10,000 miles a year. There's no option to buy the car at the end of the contract; you just hand the keys back to the finance provider. In effect, your payments are only covering the car's depreciation.

While you're running it, you're responsible for the car's upkeep. On the plus side, the deposit is low (three or six months' rental is common), as are the fixed monthly repayments, and you can blunt the impact of repair bills by incorporating a maintenance element into the agreement. Check that a separate manufacturer servicing package won't be cheaper before you tick that box, however.

Cars that hold their value well are a good PCH option, because the difference in their new and three-year-old values will be smaller, so you'll repay a lower amount. Cars that plummet in value from new are a bad choice, because you'll repay a much larger amount.

Just as with PCP, you'll need to make sure the car is in good condition when you hand it back, or you could face additional fees as the finance firm cleans it up.

Go for PCH if you say yes to one or more of these statements:

You don't want to own a car, or suffer its depreciation
You like being able to change cars frequently
You like the idea of driving better cars than you could normally afford
You don't mind looking after cars

Personal Contract Purchase (PCP)

It's a bit like HP in that there's a deposit to pay, a fixed interest rate, and monthly repayments over a choice of lending terms, which are usually between 12 and 36 months.

Where PCP differs from HP is at the end of the term. Then you'll have three choices. You can:

  • Return the car to the supplier
  • Keep the car
  • Trade the car in against a replacement

The first option, returning the car, costs nothing, unless you've gone over an agreed mileage or failed to return it in good condition. In either case there'll be an excess to pay.

Keeping the car means making a final 'balloon' payment. This amount is the car's guaranteed future value, or GFV, which is set at the start of the agreement.

The GFV is based on various factors, including the length of the loan and the anticipated mileage as well as the car's projected retail value. If you exercise this final buying option, you can of course keep running the car, or you can sell it, pocketing any equity above the GFV that you've paid back to the lease company.

If you're trading the car in, any GFV equity can be used as a deposit towards the next one.

Just bear in mind that the GFV doesn't always contain a huge amount of equity at the end of the term - so when you're working out monthly costs, it's probably wise to factor in a few extra pounds per month that you can put away in preparation for the next deposit at the end of two or three years.

If the car has gone into negative equity – which can happen – you'll have to find all of that deposit if you want a further PCP. Shorter leases are more likely to come with more accurate GFVs and manufacturers are quite proactive in trying to get you out of a car early if they think there's scope to get you into a new one on a decent monthly rate; it's not uncommon dealers to call customers on three-year deals about a year early - because doing a new PCP keeps the buyer tied to that manufacturer for a further period of time.

Go for PCP if you say yes to one or more of these statements:

  • You want lower monthly repayments
  • You like the flexibility of options at the end of the agreement
  • You can confidently and accurately nominate your mileage

Hire Purchase

Under HP agreements, there's a deposit to pay – typically 10% – followed by fixed monthly payments. The car is owned by the HP company until the final payment – and any 'option to purchase' ownership-transfer fee – has been paid. Up to that point, the person making the payments has no legal right to sell the vehicle.

Nevertheless, some 'owners' do sell 'their' cars before the final payment. The good news for buyers of these 'non-paid-up' HP cars is that the law clearly protects private purchasers who buy without notice of any undischarged HP agreement.

No matter what the police or anyone else might tell you, you'll get a good title to the car if you buy an HP car under these circumstances. The finance company can take action against the seller if they wish, but it's not your problem.

The credit on an HP agreement is secured against the car, so it's like dealer finance in that the only the car can be seized in the event of a default. If you need to sell the car before the end of the agreement, you'll have to repay the outstanding debt first – and 'early settlement' fees may apply.

Go for HP if you say yes to one or more of these statements:

  • Eventual ownership is important to you
  • Your budget and circumstances suit fixed monthly repayments
  • Your disposable income is likely to decrease over the agreement term (eg if you're planning a family)
  • You like low-risk credit secured against the car only
  • You don't mind not owning the car until the debt is fully repaid
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Motorvogue (Northampton)Ltd is an Appointed Representative of Automotive Compliance Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA No 497010). Automotive Compliance Ltd’s permissions as a Principal Firm allows Motorvogue (Northampton)Ltd to act as a credit broker, not as lender, for the introduction to a limited number of finance providers and to act as an agent on behalf of the insurer for insurance mediation activities only.