Finance Type

Hire Purchase (HP) Lease Purchase (LP) Personal Contract Purchase (PCP) Balanced Payments
HP agreements involve a finance company (the creditor) purchasing a vehicle on behalf of the customer (the buyer), which allows the customer to pay for the vehicle in instalments.This enables the customer to pay a deposit and take immediate possession of the vehicle. Similar set up to HP but to reduce monthly payments, there is a larger payment or lump sum called a balloon at the back end of the agreement period.The balloon payment is based around an anticipated future value of the vehicle and helps to reduce monthly repayments. To reduce monthly payments, a Guaranteed Future Value balloon payment is made at the end of the agreement period.A PCP gives the customer the option at the end of the agreement to hand the vehicle back (to the lender) or take ownership of the vehicle. A balanced payments agreement is an agreement designed to offer customers the benefit of linking their interest repayments to LIBOR with the additional benefit of fixed monthly repayments.

Finance Type