How does car finance work?
What is car finance?
Car finance is the process of borrowing money from a lender to help fund the cost of buying a New or Used car.
As you would with a personal loan, the money is then paid back to the lender in monthly instalments over an agreed number of months, often with an option to buy the car at the end of the agreement or simply hand it back to the dealer and walk away completely.
Many drivers use car finance as a way of making buying a car more manageable if they can't afford to pay the total amount up front or don't want to buy the car outright.
Can I get car finance at Chapelhouse?
Yes, you may get car finance through Chapelhouse.
Although Chapelhouse isn't a lender, we can broker agreements with a financial institution for them to cover the cost of the car. We will then make sure that you get the best deal on your monthly repayments that suits all parties involved.
Even if you have a history of bad credit, there are some finance options that are available to you at Chapelhouse.
What different types of car finance are there?
There are different types of car finance packages that you can utilise. Here we're going to explain how each one works so that you can make an informed decision about which one is best suited to you, your circumstances and your wallet.
Personal Contract Purchase (PCP)
Taking out a PCP agreement is a popular choice with Chapelhouse customers. Once the plan of scheduled monthly repayments is complete, you are given the option of making one final payment, known as a balloon payment, to purchase the car outright.
Other options include taking out a new PCP deal on a different car or simply giving the car back to your finance provider.
Personal Contract Hire (PCH)
A PCH differs from a PCP as it doesn't give you the choice of buying the car at the end of the deal. PCH is strictly a programme of leasing a car from a dealer for a fixed amount of time, the rentals will include your Road Fund Licence.
Hire Purchase (HP)
HP can be considered a happy medium between a PCP and PCH. With a hire purchase, the size of your deposit on the car will typically affect the size of your monthly payments, there is no balloon payment at the end and as such you tend to end up with slightly higher monthly repayments.
Do I need to put down a deposit?
Often putting down a deposit on a car will keep your monthly repayments lower and reduce any interest payable. The larger the deposit, the lower the repayments. But it all depends on what you can afford up front. A smaller deposit could sometimes work in your favour.
However, Chapelhouse does have a selection of used cars on offer that have 5 years 0% APR with no interest and don't require to pay a deposit.
What is the right car finance deal for me?
Buying a new car and taking out car finance in one go can be quite overwhelming. You need to be sure that you're getting the right car for the right price. Whichever car finance package you decide to go for, the Chapelhouse Sales Teams will set out and explain in detail the full range of options you have, every step of the way.
Where car finance is involved, our Sales Executives aim to be as open, honest, and as helpful as possible, and 100% transparent from the start of the sales process right through until the end of your finance agreement.
You may accrue extra charges on your car finance deal if you exceed the agreed annual mileage or fail to have the car maintained and serviced by an authorised repairer in line with the manufacturers servicing requirements.
