This type of plan typically involves paying a deposit then low monthly instalments over a fixed period. At the end of this, you can either pay a lump sum (‘balloon payment’) to purchase the car outright, return the vehicle or sell it privately to pay off the remainder.
This will suit you if you prefer to change your car more frequently, and is based around a ‘minimum guaranteed future value’ (MGFV) for the car.
Be aware that: it’s important to stick to the agreed mileage limits and to keep the car in good condition to avoid penalties. You are hiring the car and will not own it until the balloon payment is made. It may be less cost-effective than CS if you plan to keep the car, however.
This is similar to PCP, again with low monthly payments, but there will be no option to buy the car. However, it is convenient and it’s easy to change the car. The type of car, length of contract and agreed mileage limits determine the overall leasing cost. Normally, you will have to pay up to three months’ rental in advance. Extras such as servicing may be included. Again, mileage limits may apply. Make sure you compare deals taking into account APR, the monthly payments over the loan period, and the total amount repayable, as well as any further ‘option to purchase’ and administration fees.
Reg Office: Victoria Road, Diss, Norfolk, IP22 4GS
Reg. Company Number: 2482580
VAT Reg. No. 720178263
Desira Group PLC is authorised and regulated by the Financial Conduct Authority. FRN : 687521. We are a Credit Broker not a Lender and can introduce you to a limited number of lenders. Desira Group PLC is an Appointed Representative of AutoProtect (MBI) Limited which is authorised and regulated by the Financial Conduct Authority for insurance distribution purposes; FRN: 312143. We typically receive a fixed commission calculated by reference to the vehicle model or amount you borrow, for introducing you to a lender but this does not affect the interest charged on the agreement, all of which are set by the lender. Our FCA permitted business is arranging General Insurance and Finance Products. You can check this on the FCA Register by visiting www.fca.org.uk