Car Finance Explained

This 60-second video explains how car finance works and why Solution Loans may be able to help you.

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You can also compare types of car finance and look at a real example of finance for a typical BMW model. It will help you understand the impact of the choice you make.

Video Transcript

If you need to replace your car or another vehicle then two popular forms of finance are hire purchase (“HP”), and personal contract purchase (“PCP”). Under both these options, the finance company owns the car while you make the regular payments. So, what’s the difference between the two?

With HP you are working towards final ownership of the car. With PCP you can delay the decision to own the car until the very end. In fact, with PCP there are 3 final outcomes to choose from:

  • Hand the car back with no further costs
  • Part exchange the car as part of a new PCP deal
  • Purchase the car outright with a final “balloon payment”

If you have no desire to ever own the car then a PCP arrangement could be the most cost-effective way of getting a new car. Also, keep in mind that choosing a car brand that depreciates more slowly could also help to keep your monthly costs down – after all what you’re really paying for is the depreciation of the car plus some interest. Discover more about car finance at Solution Loans today.

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For over a decade Solution Loans has helped people all over the UK find solutions to their personal finance problems.



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Our reputation is great. In fact we have scored 4.6 out of 5 based on 197 ratings & 30 user reviews for our car finance service.


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Written/Reviewed by: Amanda Gillam

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