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Car finance explained: the difference between PCP, PCH and leasing

Car finance explained

Buying a car on finance has never been more popular among cash-strapped motorists, with as many as nine out of ten new car buyers now reportedly choosing credit over paying in full.

That’s according to figures provided by the Finance & Leasing Association (FLA) – the trade body for the motor finance industry – whose members report that 90.1 percent of their private, new car sales were made on credit in the 12 months to May 2019. 

So why the interest in buying on tick? Plummeting interest rates are partly to blame, as there’s virtually no incentive to save. So even an entry-level city car, such as the Skoda Citigo, with its starting price of just £8,890, is enough to make most bank balances buckle. 

Skoda Citigo

Compare that to the prospect of paying a more manageable £140 a month for a few years for that same car on interest-free credit, coupled with a mere £550 deposit, and it’s easy to see why this method of payment has boomed in popularity.

Which car finance option is right for you?

But once you’ve made the decision to spread the cost of your spanking new motor, you still have to decide which finance deal to choose. And there really is no catch-all credit type. Some deals are simply leases, and you’re expected to hand the car back at the end. While others will give you the option to own the car, after a fixed number of payments.

So make sure you know exactly what you’re agreeing to, and that you’ve understood the terms. The interest rate is key. Make sure you know exactly what it is, how that translates into an APR (Annual Percentage Rate) and how much more it means the car will cost you to buy the car on credit.

To help you cut through the jargon, here’s a quick guide to some of the most common finance options on the market:

Hire Purchase (HP)

Car finance hire purchase

Twenty years ago, this was Britain’s favourite way to pay for anything, from a cardie in a catalogue to your next dream motor. A hire purchase agreement simply involves spreading the cost over a fixed period – usually set from 12-months to five years. You’ll pay a fixed rate of interest during that time, but usually only a small deposit up front. If you want to keep the car at the end of the term, and it’s assumed you will, you’ll have to pay an admin fee to cover the cost of transferring ownership from the finance company to yourself. Up until that point, you are only the registered keeper, so you can’t modify the car in any way.

Conditional Sale

This agreement is actually the same as a Hire Purchase contract, except you will automatically own the car once the finance has been repaid in full, with no extra final payment.

Personal Contract Hire (PCH)

This is basically a lease, as there is no option to buy at the end. Your monthly payments are therefore going to be lower than those on an HP deal, but they will also be based on your predicted mileage, so expect to pay a penalty if you deviate from that. At the end of the term, you simply hand the car back.

Personal Contract Purchase (PCP)

Car finance PCP

The basic premise behind the PCP deal and its booming popularity is that you only pay for the car’s predicted depreciation during the term of your contract. So that’s the difference between the value of the car new, and its expected value when your deal ends – typically in three years’ time – which is often referred to as the Guaranteed Minimum Future Value (GMFV).

As most cars lose around 40 per cent of their list price during that period, a £10,000 car would be worth roughly £6,000 after 36 months. That leaves £4,000 to pay. Some of that is required upfront as a deposit, and the rest is due in installments, at a fixed interest rate, for the duration of the contract period. That means the monthly payments are kept relatively low. At the end of the deal, you’ll have the option to stump up the remaining £6,000 to buy the car in full; often referred to as the balloon payment. Or you may just decide to hand the car back, or swap it for another car and a fresh deal.

On that note, dealers will sometimes set the car’s GMFV deliberately low, so they can offer you a bonus chunk of equity when you come to settle up. But you’ll only be able to access this if you put it towards another finance deal. That’s how the dealer keeps you on its books, and why so many motorists go back to buy the same brand again and again. Let’s not forget, though, that it also means you’ve probably paid more in installments (and therefore interest) than you needed to in the first place.

Lease Agreement

This type of Conditional Sale is much the same as a PCP in that you’ll pay a deposit, some installments, and a balloon payment at the end. The big difference is that buying the car at the end is not optional – you have to ensure you have the funds to do that, and you ultimately therefore own the car at the end. You can settle the finance at any point during the term, however.

Personal Loan

Borrowing the money you need to buy a new car outright has its advantages, as you will immediately become the registered owner. You’re not bound by mileage restrictions either, and if you decide to upgrade the stereo or modify the car in any way, you can. But a loan is usually unsecured, so you can’t just hand it back to clear the debt. Instead, you’d have to sell the vehicle, and depreciation costs mean there would undoubtedly be a shortfall.

Credit Card

Car finance credit card

The same advantages apply when you buy using a credit card. But you have the extra protection of Section 75 of the Consumer Credit Act (1974), which says that if even a portion of your car is bought using a credit card, then the credit provider is jointly liable for any breach of contract by the retailer. The sum has to be greater than £100, however, and can even apply to some other types of car finance. Although the criteria is quite strict, particularly with regard to the relationship between the credit provider and the supplier, so it’s worth checking whether your contract qualifies.

Car finance: final thoughts

If you’re feeling overwhelmed by all these options, you could simply take your lead from the hundreds of thousands of other new car buyers every year, and opt for a PCP. These are now by far the most popular car credit agreements, accounting for a staggering three out of four new car sales, according to the FLA. Its Finance Director, Adrian Dally, explained: “The PCP was introduced into the market by Ford, who brought it over from the States more than 20 years ago. But it’s been climbing up the ranks since then. Its success is due to both to price, and a cultural change in attitudes towards owning assets.”

Whichever product you choose, it’s worth remembering that, while you may have signed the paperwork at your local dealer, your contract is with the finance company. So if there’s a fault with the car itself, and not just the terms of the deal, then it’s the finance company that you have to approach.

The good news is that there’s often more security in buying on credit as you have stronger return rights. That includes the 14-day cooling off period outlined in the Consumer Rights Act (2015). So if you change your mind for any reason, the vehicle transfers back to the supplying dealer.

Guide to car finance

Beyond that, if you’re unhappy with the way a complaint is being handled, you also have the backing of the Financial Ombudsman. Its job is to arbitrate, judge and resolve your case, which is initially assessed by its investigators. If it thinks your complaint is justified, and the dealer still won’t play ball, the case can be referred to an Ombudsman – a higher ranking investigator whose verdict “is final, and legally-binding to both parties, should the consumer accept it,” a Financial Ombudsman spokeswoman explained.

It says car finance complaints are on the rise, too. “Most are about the quality of the vehicles or charges when handing it back: people say they’re unaware a ‘balloon payment’ is due. We also see complaints about charges for damage falling outside of ‘fair’ wear and tear, as well as problems about misrepresentation of the vehicle or the agreement used to buy it and the way agreements are administered.”

All the more reason to be sure you know exactly what you’re agreeing to, before you sign on the dotted line. But if you’re still in doubt, you can find lots more information about car finance at the FLA’s consumer advice site, or visit the Financial Ombudsman’s advice pages for more information about the complaints process.

How to get the best price for your PCP trade-in

How to get the best price for your PCP trade-in

Research shows that only 20 percent of people with a Personal Contract Purchase (PCP) deal actually go on to buy the car. Which means the vast majority either walk away at the end of the contract or decide to use the car as a trade-in against a new model.

In fact, getting a new car is the most common option for people at the end of a PCP deal. So how do you ensure that you get the best possible price for your trade-in vehicle? Read on to find out.

Beware the ‘minimum’ in GMFV

There are three parts to a PCP deal: the deposit, the monthly repayments and the final payment, which is often referred to as a ‘balloon’ payment.

The final payment is set by the finance company estimating what the car will be worth at the end of the contract. This is called the Guaranteed Minimum Future Value (GMFV) and it’s your first indication of what the car will be worth as a trade-in.

But it’s not set in stone, because a number of variables will dictate the final valuation.

Note the use of the word ‘minimum’. If the car drops in value, you’ll be protected against a potential loss – the finance company will take the hit. But it’s your responsibility to maintain the car to the terms set out in your PCP contract.

Failure to do so could mean that the price you get for the car drops below the ‘minimum’ agreed value.

Mileage limit

PCP mileage limit

Your first potential pitfall is the mileage limit you agreed to at the start of the PCP contract. Dealers tempt punters with low monthly payments based on strict mileage restrictions, so make sure you set a realistic limit.

A finance company will charge anything from 3p to 30p for every mileage you are over, so a few thousand miles could cost you a few hundred pounds. You have been warned.

If you think you’ll go over the mileage limit, it’s far better to negotiate a new deal before the contract than to wait until the end, as the penalty is likely to exceed that of a higher mileage cap.

Damage charges

PCP deal damage

Read the small print of your PCP contract and you may notice financial penalties for minor damage to the car. Remember, you don’t own the car unless you make the final payment, so the finance company expects you to take care of the vehicle on its behalf.

If the car requires light work to make it ready for sale, you’ll be expected to stump up the cash. This could include damage to the paintwork, kerbed alloy wheels and stains on the upholstery.

Wear and tear is fine – you don’t have to live with a concours-winning car – but anything beyond that could cost you dear.

It’s in your interest to maintain the car to the highest standards, because the difference between the final payment and the car’s value can be used to reduce the deposit on the next car.

Service history

PCP deal service history

You’re required to maintain the vehicle to the manufacturer’s service schedule at the correct franchise dealership. Failure to do so will cost you hundreds, possibly thousands, of pounds at the end of the contract.

These points apply even if you decide to have the car back at the end of the PCP deal, so if you’re not comfortable with any of them, you might want to consider another form of financing your car.

For example, a personal loan means that you’re free from mileage and servicing restrictions, but at the mercy of potential depreciation disasters.

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How to save money when buying a new car

How to save money on a new car

Buying a new car can be a tricky business. Your mission is to get as much car for as little money as possible, while getting as much out of the seller as you can. Thankfully, there are plenty of ways you can save money, meaning you can buy a new car for less.

Our guide should arm you with all the tricks of the trade – and help you save money on your next car.

What you buy

How to save money on a new car

Downsize what you’re buying

The best way to save money on a new car is to be sure that the car you want is also the car you need. Is a Mercedes E-Class really necessary, or could you get just as much out of the smaller but still-cool C-Class? Is a Golf really a must-have motor, or could you live with a Polo and save a mint? 

Smaller cars don’t just come with a more modest price tag. They tend to be lighter, with smaller engines, increased fuel economy and lower CO2 emissions. So you’ll spend fewer pounds at the pumps. And if that doesn’t convince you, just think how much easier it’ll be to park if you live in town, or manoeuvre around those country lanes if you don’t.

You won’t necessarily have to forgo your luxuries either. That Polo can come with pretty well all the toys that the big E-Class does. Just tick the right boxes on the order form. Think long and hard about exactly why you’re getting that bigger pricier model.

How to save money on a new car

Buy an outgoing model

Look closely at the cars you’re considering. Different cars at different phases in the life cycles will have different deals on them. Could you save money by buying a car that’s near the end of its life on sale? Absolutely, because sales reps will offer the best deals on a model that is set to be replaced, or even just updated, so keep an eye on what cars are due out and when.

Consider a pre-registered car

Another way that dealers manage to hit sales targets is to buy unsold stock themselves, and register the cars in the dealer’s name. An interested buyer would then effectively become the second owner, which could impact slightly on the future resale price. You’ll also lose a small portion of your warranty, as the clock starts ticking on that manufacturer guarantee the moment the car is registered.

However, if you’re prepared to stomach these minor inconveniences, you could save thousands on the list price of what is technically a used car, but effectively still brand-new, with just a few miles on the clock.

Car showroom

Don’t be too picky

If you’re hoping to bag a bargain, it’s worth relaxing any wish-list you have about your dream car’s final specification. A pre-registered car, for example, is one you’ll be buying off the shelf, and will therefore already be specced-up by the dealer. Yet many franchises will have car parks full of unregistered stock, which they’ll be keen to shift to make more room. 

So while you might have wanted gold metallic paint and a sunroof, is it enough of a deal-breaker to turn down a blue version without the skylight, in order to save some serious money? Buying existing stock means you’ll get it sooner, too…

Car showroom

Haggle over extras

That said, you can use the absence of equipment as a great haggling point. If it doesn’t have adaptive cruise control, could it be a deal-breaker? As far as that salesman is concerned, it should be. Get them to lop money off at the last hurdle, to get that sale over the line.

Similarly, you can barter for service and care packages, as well as dealer-fitment extras. A set of floor mats, a boot liner or a European car kit are actually incredibly useful, and their cost can otherwise really add up.

So, ask the dealer to throw a few of these accessories in with the car. It’s an easy concession for the sales rep to make, if they want to seal the deal. And it has the added bonus of leaving you feeling slightly smug about your negotiation skills.

How to buy

New cars

Buy at the end of the month

All dealers have sales targets. They’re usually incentivised to sell a certain number of cars each month, and those deadlines tend to come at month-end. So if you’re prepared to time your new car shopping until a day or two before, staff will be much more open to negotiating a discount to get that vital last-minute sale.

Shop around

Don’t assume that all franchised dealers will price their new models exactly the same. Sometimes it’s worth travelling beyond your doorstep for a better deal. For instance, larger, out of town forecourts are likely to have a larger pool of stock floating around, which makes it easier to save money with a bargain.

Use online car brokers

If you really can’t stand the thought of haggling, let someone else do it for you. Online car brokers are meant to be experts in negotiating on your behalf. In reality, it’s the promise of attracting lots of new customers to dealers that enables the broker to get rock-bottom rates on your behalf.

Ferrari 488 Spider

Finance, PCP or HP: research the best deals

Finance, PCP, hire purchase – the range of finance options can seem a bit daunting. If you’re not buying your car the good old-fashioned way (outright), it’s a realm of unknowns and potential savings. Pay attention to interest rates. Look at deposit contributions. Is a certain marque offering a good deal on scrappage? 

Play your cards close to your chest, and keep your budget to yourself. Give the salesman a ballpark and make them work for a rock-bottom price. 

Car showroom

Franchised dealers are likely to offer the lowest PCP rates – many even offer zero percent deals -– as the credit is usually supplied by the finance arm of the car manufacturer. Independent dealers outsource their credit contracts to banks and supermarkets, whose rates tend to be higher. In both cases, the bigger your deposit, and the better your credit rating, the more competitive the rate will be.

Don’t forget to compare the PCP cost with a simple bank loan, too. While the rates may be higher, the car is yours from the outset, with no restrictions on mileage or wear and tear to worry about.

Car showroom

Haggle on your trade-in

Sentiment is a great weapon in a car buyer’s arsenal if they’re trading in. “I can’t let it go for that”. “It’s worth more to me”. Both brilliant expressions that could get the dealer to give you more for yours, or make you pay less for theirs. Research your car’s value, and then push for more.

You could also consider selling your car privately first, as that’s likely to get you the best price, then using that extra cash on the deposit for your new car.

A new Maserati

3 in 10 car buyers in financial strife after buying a new car

car buyers

Are we putting too much of our hard-earned into the cars of our dreams? New research by AA Cars reveals as many as a third of car buyers have found themselves in financial strife after buying a car outright.

Half of that one-third had to take a dip into savings or money put aside for other things, while a third said they were left entirely without a cushion of cash. Talk about blowing your savings… Furthermore, a third said they actively cut back on expenditures such as gym memberships and nights out. A quarter even said their purchase meant sacrificing holidays.

Who is most likely to fall victim to whimsical spending? Why, it’s millennials (18-44-year-olds) of course.

Indeed, many young used car buyers said they regretted purchasing a car outright, and that doing so had led to financial issues down the line. This despite most being aware of the many financing options available.

As many as 48 percent of 18-24-year-old car buyers, 50 percent of 25-34 year-olds and 50 percent of 55-64 year-olds said they ran into trouble after buying a used car.

A new Hyundai

“Buying a car, whether used or new, is a big financial commitment,” said James Fairclough, CEO of AA Cars.

“Buying a car outright can be a great option for many, but you should be careful not to dedicate all your savings to one single purchase and potentially leave yourself short further down the line”.

“Before taking the leap and dipping into your hard-earned savings to buy your next car, it’s worth thinking about saving up more funds or shopping around to see if there are better-suited car finance deals to be had first.”

You will save money overall if you buy a car outright rather than finance it. It’s a simple matter of calculating interest – but regardless of how you buy a car, budgets have to be calculated carefully. What’s in the bank and what you can afford to spend should always be considered two very different things.

Read more:

McLaren

Pride of Britain: Four Brits in top ten financed luxury cars

McLaren

British marques are at the forefront of luxury car wish lists in Britain, according to JBR Capital, with four out of the top 10 most-financed prestige cars on their records hailing from the UK. The second most prolific was German, with three cars, including two 911s.

The list features everything from Ferrari, Lamborghini and Porsche, plus Nissan with the comparatively humble GT-R. Yet none manage to surpass the McLaren 570S and the Range Rover Vogue in their popularity among luxury car shoppers.

The Macca and the Range Rover represent a near-perfect two-car garage, with the big Rangie making for a lovely day-to-day ‘hack’ and the McLaren the ideal weekend wheels.

The Vogue is a relative steal to finance, too, at less than £1,000 per calendar month with a £7,900 deposit. The McLaren is rather more pricey, at over £1,800 per month with a near-£15,000 deposit contribution required. Still, that debunks any criticism that the Range Rover nears the top of the list for its comparatively low price alone.

Still, they both beat out modern era luxury car staples with the Audi R8 languishing in fourth, the Porsche 911 Turbo in seventh and the only Ferrari on the list – the 458 Spider – all the way back in tenth. The McLaren 720S and the Bentley Continental GT fortify Britain’s standing further down the list, at a respective eighth and sixth place.

“Britain may not have won the World Cup this summer, but it’s on top of the automotive world. The ‘Made in Britain’ tag is still highly sought-after among our high net worth clients” said Darren Selig, executive chairman at JBR Capital.

“While you might expect wealthy owners to rush to Ferrari and Lamborghini dealers, it’s actually McLaren and Land Rover where we’ve had the most demand for finance packages so far this year.”

Read more: 

Car dealer sale to customers

Undercover PCP investigation exposes ‘reckless loans’

Car dealer sale to customers‘Ruthless’ salesmen are being accused of irresponsible lending after a newspaper reporter who said he was 24 and unemployed was offered a loan for a £15,000 Audi A1 – with no need to fork out for a deposit. Another reporter was offered a deal on a £15,000 Seat, again with no deposit.

The investigation by the Daily Mail accuses dealers of luring young drivers into “massive debt” with the no-deposit PCP deals. Reporters say drivers on low wages and poor credit ratings are still being accepted for loans – amid fears that irresponsible lending by car dealers is tempting people into “dangerously high levels of debt”.

There are worries that lending to people with no jobs or poor credit histories could, “in a chilling echo of the sub-prime mortgage crisis of 2007”, lead to a financial crash. UK motorists currently owe £58 billion on car finance, says the Bank of England, a figure that’s risen 15 percent in a year.

Both Vauxhall and Suzuki have since told the Daily Mail they will launch their own investigations into the conduct of their dealers: one Vauxhall dealer offered a £8600 loan to a person who suggested they had a bad credit rating.

In total, Daily Mail reporters visited 22 car dealers in England and Scotland. Each time, they posed as someone in their early 20s, either unemployed, on low earnings or having poor credit ratings. Half of the dealers offered “a brand new car without paying a penny up front”.

MPs and campaigners are now calling for “an urgent crackdown on the ‘reckless’ lending'” says the newspaper, while the Financial Conduct Authority is already running an investigation into ‘irresponsible lending’ in the car industry.

PCP popularity

Seven in 10 private new cars are now bought on PCP car finance schemes. They help lower monthly payments by deferring a payment until the end of the car loan; it’s usually called the ‘minimum guaranteed future value’, and is the expected retained value of the car at the end of the loan.

Buyers can either hand the car back with nothing to pay, settle the remaining loan amount or take out a loan on a new car – deals are often configured so a small amount of ‘equity’ remains in the loan to use as deposit for a new car.

Because monthly payments are lower, it’s easier for people to pass credit checks: providers generally offer loans of up to a quarter of take-home pay. That means someone earning £8,200 a year could theoretically get a loan on a £12,500 car, claims the Daily Mail.

Bank of England Governor Mark Carney recently warned that lenders seem to be ‘forgetting the lessons of the past’. James Darley of Fairer Finance concurred, telling the Daily Mail that “none of the lessons coming out of the 2008 financial crisis have been learned”.


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£200 car deals summer 2016

Best new cars for £200 a month: October 2016

£200 car deals summer 2016You can buy a new car for less than the cost of some mobile contracts, so it’s little wonder business is booming. With this in mind, we hunted down 40 of the best cars you can buy for less than £200 per month.

Please note these deals are indicative and correct at the time of preparation. In all cases, the mileage restrictions and length of contract may vary. In the majority of cases the deals are based on a Personal Contract Plan (PCP) agreements.

Images used are for illustrative purposes. Check manufacturer websites or local dealers for the latest offers.

Ford Fiesta Titanium: £169 a month

£200 car deals summer 2016

It’s the UK’s best-selling car and with deals like this it’s not hard to see why. Take out a three-year personal lease agreement on a new 1.0-litre Fiesta Titanium and you could be paying as little as £169 a month. You’ll need to pay an advance rental of £3,718, as well as being limited to 9,000 miles per annum.

Skoda Citigo Colour Edition: £149 a month

While £149/month on PCP isn’t anything to shout about, a tiny £149 deposit for a Skoda Citigo Colour Edition is definitely worth shouting from the rooftops. It might be a small car, but this is a huge deal – while a bigger deposit could bring down the monthly repayment. It’s one of our favourite city cars… what are you waiting for?

Skoda Yeti 1.2 Outdoor SE: £199 a month

We’ll stick with Skoda for a minute, because the excellent Yeti Outdoor SE 1.2 TSI is available for £199 a month. Skoda will contribute £1,000 to the deposit, but you’ll have to fork out £2,123.30. If you’re prepared to spend more on the deposit, you can drive away for £139 a month.

Hyundai i20 Coupe 1.2 Sport: £189.23 a month

Hyundai i20 Coupe 1.2 Sport: £189.23 a month

Don’t get excited by the ‘Coupe’ – this is essentially just a three-door Hyundai i20. Still, the i20 is one of our favourite hatches, and you can pick one up for £189.23 a month over three years through Hyundai’s PCP scheme. You’ll need a fairly hefty £2,805 deposit, but your dealer will add another £1,500 to that.

Alfa Romeo Mito TwinAir: £169 a month

It might not be class-leading, but the Alfa Romeo is a quirky Italian alternative to the likes of the Ford Fiesta. Following a deposit of £1,235, you can buy a TwinAir Mito for £169 a month. Hand it back after two years, or stump up £3,882 and keep hold of it.

Citroen C4 Cactus: £179 a month

Until the new C3 arrives, the C4 Cactus is the only car available with Airbumps. What better reason to splash £179 a month on a Cactus? The C4 Cactus PureTech 82 Feel is available for £179 per month using Citroen’s Elect 4 Personal Lease programme.

Suzuki Vitara SZ4: £199 a month

Suzuki Vitara SZ4: £199 a month

Fancy a cut-price Range Rover Evoque? The Suzuki Vitara is a convincing(ish) alternative and right now the SZ-T with dual-tone paint could be yours for £199 a month. That’s through the firm’s contract hire scheme, following an initial rental of £1,194.

Volkswagen Polo Match 1.0: £139 a month

The Volkswagen Polo is showing its age, but it’s still an excellent supermini, and VW is keen to get people into its dealers. For £139 a month over four years on PCP, you can drive away a 1.0-litre Polo Match. You’ll need a £2,537.02 deposit.

Dacia Duster Ambiance SCE: £149 a month

It might not be the most stylish of crossovers, but where else can you get an SUV for £149 a month? That’s following a very reasonable £1,063 deposit, with your Dacia dealer contributing an extra £750 towards your Duster. Split over two years on PCP, you’ll pay interest at 7.9% APR.

MG GS Explore: £199 a month

MG GS Explore: £199 a month

The GS is one of the latest cars to hit the market – a crossover to designed to give MG a slice of the segment dominated by the Nissan Qashqai. It’s far from being the best in class, but it does offer good value for money. The entry-level MG GS Explore could be yours for £199 a month and £3,281.34 deposit.

Honda Jazz: £179 a month

Fancy something with all that Jazz? The all-new Honda Jazz 1.3 EX could be yours for £185 a month and a deposit of £3,685.16. As with all the PCP deals mentioned here, you’ll need to take into account the hefty final payment, but if you don’t want the Jazz at the end of three years, you can simply walk away.

Fiat Panda Easy: £139 a month

The mid-range Fiat Panda Easy features air conditioning, an MP3 player and a light in the boot. It’s yours for £139 a month after a deposit of just £139. Bargain.

Renault Zoe: £139 a month

Best £200 car deals summer 2016

This is one of our favourite new car deals. You can order an electric Renault Zoe Dynamique Nav for a deposit of £1,499 and 24 monthly payments of £139. The dealer will contribute £6,000 to the agreement, but you’ll have to spend at least £59 a month on battery hire.

MG3: £169 a month

The recently revised MG3 offers excellent value for money and whether you choose the 3Time, 3Form, 3Form Sport or 3Style, you won’t spend more than £200 a month. Our money would be on the top-spec 3Style at £169 per month and a deposit of £1,658.65. Personal contract plan is over 36 months and based on 10,000 miles per annum.

MINI Hatch: £169 a month

The MINI remains as popular as ever and it’s possible to order a MINI Cooper 3-door hatchback for £169 a month plus initial rental of £2,369. This is a Personal Contract Hire deal and other offers are available on MINI Select. Talk to your local MINI dealer for more details.

Skoda Octavia SE Sport: £165 a month

Skoda Octavia SE Sport: £165 a month

While the £4,876.90 deposit is a little on the high side, the Skoda Octavia is one of the most practical cars you can get for £200 per month. Right now, the Octavia SE Sport hatchback is available for £165 per month over 42 months. Stretch to £219 a month and your deposit drops to £2,662.90.

Toyota Aygo X-Play: £159 a month

While £159 a month for a Toyota Aygo isn’t necessarily anything to shout about, the tiny £36 deposit makes it within reach for most of us. That’s based on an X-Play, with DAB radio, Bluetooth and air-con as standard.

Mazda2 SE: £169 a month

The Mazda2 is really rather good and right now you can order one for £169 a month. The deposit is £2,311.12, but if you spend more you can bring the monthly fee down to £129. Even a zero deposit equates to just £233.20 a month.

Vauxhall Viva SE: £129 a month

Vauxhall Viva SE: £129 a month

Not to be confused with the much-loved family car of the 60s and 70s, the new Viva is Vauxhall’s budget car for the new millennium. You can drive away in a Vauxhall Viva SE in Solar Red paint for £125 per month, following a deposit of £1,995. This is based on 48 months and 8,000 miles per annum.

Audi A1: £199 a month

So, you want an Audi for £200 a month? We can just about squeeze you in, because the Audi A1 Sport 1.4 TFSI is available for £199 a month. The deposit is a not at all unreasonable £2,711.68 and your friendly Audi dealer will even chuck £750 into the pot. The optional final payment is just below £9,000.

Suzuki Swift Sport: £179 a month

Another PCP deal that could lead us into temptation. The Suzuki Swift Sport remains our junior hot hatch of choice and right now it’s available for £179 a month following a £2,439 deposit. Be warned: after 48 months you might be so in love with the car, you’ll need to find the £4,328 required for the final payment.

SEAT Ibiza SC : £199 a month

SEAT Ibiza SC : £199 a month

The feature-packed SEAT Ibiza SC FR 1.2 TSI offers 16-inch alloys, FR styling, sports seats and suspension, plus sat nav with Bluetooth. It could be yours for a £199 deposit and £199 per month across 48 months.

Suzuki Jimny: £195 a month

Admittedly, your choices are limited if you fancy an off-roader with genuine mud-plugging ability for £200 a month. Sure, the Suzuki Jimny might be a bit long in the tooth, but it can reach parts other cars in this feature cannot reach. Yours for £195 a month and a £2,119 deposit. Mileage is limited to 6,000 a year.

SsangYong Tivoli SE: £171.71 a month

The SsangYong Tivoli was one of the most surprising new cars of 2015, offering a terrific blend of specification and value. The Tivoli SE petrol is available for £171.71 a month, following a deposit £2,590. The diesel, meanwhile, will set you back £189.03 a month following a £2,860 deposit.

Suzuki Baleno 1.0: £179 a month

Suzuki Baleno 1.0: £179 a month

Yes, another Suzuki. The Baleno is one of the newest cars on the block, but that doesn’t mean you can’t drive away for less than £200 a month. There are a host of deals ranging from £179 a month and you’ll be able to enjoy the excellent 1.0-litre Boosterjet engine.

Ford Fiesta ST: £199 a month

How strong is your willpower? The best hot hatch you can buy is available for £199 a month over three years, but you’ll be restricted to 9,000 miles per annum. The problem is, with a Ford Fiesta ST sat in the garage, you’ll be forever tempted to go for yet another drive.

Skoda Fabia Colour Edition: £189 a month

Another great offer from Skoda. Take out a 42-month, 35,000-mile Solutions Personal Contract Plan and the Skoda Fabia Colour Edition 1.0 could be yours for £189 a month. The deposit is just £189, but if you’re prepared to spend £2,532.48, the monthly fee drops to £125.

Nissan Juke 1.2 N-Vision: £189 a month

Nissan Juke 1.2 N-Vision: £189 a month

We’re big fans of the funky Nissan Juke – but you’ll need a hefty £5,117.71 deposit. If you can stretch to that (or have a part-ex of that value), you can enjoy a Juke for £189 a month with 0% interest. That’s over three years.

Honda Civic 1.4 Sport: £189 a month

The Honda Civic 1.4 Sport is available with a £3,767.40 customer saving and a monthly payment of £189 over three years. The only catch is a £3,767.40 deposit, but the 30,000-mile restriction is generous.

Nissan Pulsar: £129 a month

If you’re looking for a hatchback with rear legroom that could shame a limo, look no further than the Nissan Pulsar. The Acenta DIG-T 115 is available for £129 a month, but the deposit is a hefty £4,315.80. That’s spread across three years.

Fiat 500 Pop: £159 a month

Fiat 500 Pop: £159 a month

The Fiat 500 was treated to a cosmetic overhaul in 2015 and its image remains as strong as ever. There are a number of offers available on the 500, with the Pop 1.2 available for £159 a month following a tempting £159 deposit.

DS 3: £189 a month

The DS 3 remains one of the most stylish superminis money can buy. Take out an Elect 3 contract and the DS 3 can be yours for £189 a month. The agreement is based on a three-year contract and a deposit of £2,845.

Jeep Renegade: £175 a month

The Jeep Renegade is an increasingly common sight on Britain’s roads, and with finance offers like this it’s no surprise. Buy a Renegade 1.4 Longitude on a PCP deal and it’s yours for £175 a month. Jeep will contribute £1,500, leaving you to find £6,442 for the deposit. In two years time, you can decide whether to spend £9,528 to keep the Jeep, give it back or exchange it for a new PCP deal.

Volkswagen Golf Match: £199 a month

Volkswagen Golf Match: £199 a month

Despite everything Volkswagen went through in 2015, the Golf is still in demand. You can buy a Golf Match 1.4 TSI for £199 a month, based on a four-year agreement and after a £4,265 deposit.

Smart Fortwo Passion: £129 a month

The really tempting thing about this deal is the £0 deposit. Let’s face it, you’re probably not going to cover huge miles in a Smart Fortwo, so the 7,000-mile per annum restriction is no big deal. After four years, hand it back, or stump up £4,420 to buy it outright.

Brexit new car sales threat

Brexit threat to new car sales – but used car market will thrive

Brexit new car sales threatBrexit will boost the used car market as the weaker pound leads car manufacturers to scale back sales-boosting incentives for new car sales, predicts a Glasgow car finance expert.

The automotive Brexit loser is thus set to be new car sales, believes Startline Motor Finance CEOP Paul Burgess.

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The weaker pound will make it hard for car makers to offer such tempting finance deals on new cars, he says. The unfavourable exchange rate will start to chip away at margins and car makers will also find borrowing money is more expensive.

“Bearing this in mind, we don’t see how they can continue to offer the kind of headline deals that have kept the new car market on the boil. Something has to give.”

From new cars to used

Cue the used car market: the strength of new car sales over the past few years means used cars are entering oversupply conditions, which is weakening prices – making them better value than they have been in several years.

This will open up the differential between new and used car sales once again. It’s been narrowing in recent years thanks to the strength of new car deals but this will now undergo realignment.

Burgess says trading conditions will start to replicate those after the economic crisis of 2007-2008, and dealers should use this to reassure customers at a time when confidence will be falling.

Brexit should not mean people will stop buying cars, he states. It’s just that they’re more likely to start buying used ones instead of new…

Honda Fireblade

Buy a Honda Fireblade for £99 a month

Honda FirebladeHonda is offering its high-performance Fireblade Black Edition superbike on finance for £99 a month, in a three-year, 5.9% APR PCP deal.

The offer is for the 16MY Black Edition special and is open to those who can find a £2,614 deposit for the £12,199 superbike, which Honda dealers will bolster with a £1,000 contribution.

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The 36 monthly payments are based on the rider covering 4,000 miles a year (it’s 7p a mile extra if you do more), with a final payment of £6,329.

The Black Edition was revealed at the opening round of the British Superbike Championship earlier this year, and now Honda BSB rider Jason O’Halloran has scored a victory on his CBR1000RR Fireblade at Snetterton, Honda reckons it’s a good time to roll out the special offer deal for the summer.

Black Edition extras include a 27mm higher smoked screen, Gilles brake lever and Galfer front wavy discs. It also gets a colour-matched seat cowl and carbon fibre hugger. Not bad for £99 a month, particularly when compared to what £99 a month will buy you in the car world.

Basic Suzuki Swift or a monster-performance Honda Fireblade? You decide…

2014 MINI Hatch 3dr

Car finance deals must be fair urges BMW loans boss

2014 MINI Hatch 3drCar finance deals must be scrupulously transparent and fair if the industry is to continue meeting customers’ expectations, the head of BMW Group Financial Services has urged.

Spencer Halil, general manager of group brands at BMW Group Financial Services, said the car finance sector must learn from the recent critical investigation into the practices of some energy market price comparison sites.

Some were found, reports BMW GB’s car finance division, to be hiding the best deals from customers “as part of marketing relationships with the suppliers”. Technically compliant, but far from fair in customers’ eyes.

“Customers expect transparency and fairness. If products are hidden, hard to find our explained poorly, then these expectations will not be met,” said Halil.

“This is especially the case when more expensive alternatives are promoted to deliver higher commission payments.”

Rather than letting such practices slip in, the car industry should get its house in order, said Halil. Do as BMW Group has recently done, he said: simplify pricing structures, cap rates and use the same structure across all dealers.

BMW Group’s working towards price transparency in the car finance sector: time for the broader industry to follow suit, it urges – because it’s in everyone’s interests to ensure car finance deals are known as fair and sound rather than hidden or weighted…