Different types of car finance available

Thinking about a new car? Make you sure know the different types of car finance available

It’s September, and the new car plate has been released! If you are thinking about getting yourself a new car, make sure you know the different types of finance available. We’ve created a quick guide covering some different types of finance options that may be available to you.

Hire Purchase is a type of car finance where you will generally pay a deposit (tends to be 10%), and are required to meet fixed monthly payments towards the value of the car.

  • Hire Purchase can help you get a car with a low initial deposit.
  • The car is only 100% yours after you make the last payment on it.

A Personal Contract Purchase also involves making an initial deposit followed by monthly payments, but you are covering the amount of depreciation against the car instead.

  • Tend to have lower monthly payments than with Hire Purchase deals.


  • Exceeding the mileage can usually result in additional charges.

Personal Contract Hire deals are where you pay a dealer a fixed monthly amount to use a car, with the likes of servicing and maintenance all included.

  • You don’t have to worry about the car depreciating in value.
  • The car is never yours as you give it back at the end of the term.

A Personal Loan allows you to borrow a certain amount of money to cover the cost of a car (doesn’t have to be for the whole cost of car) and repay it over a number of years.

  • It can covers the whole cost of the car, meaning you can own it straight away.
  • You may need to wait for funds to be paid into your bank account.

If you think a Personal Loan might be right for you, we provide loans  between £500 to £25,000, with a range of additional benefits to suit your needs. To learn more, visit www.serveandprotectcu.co.uk/borrow.

  • The information provided in this article is for guidance and educational purposes only. Police Credit Union Ltd. does not offer regulated financial advice. Please seek independent financial advice.

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