What are the benefits of paying monthly for my car?
With fixed monthly payments you know exactly what you’re paying.
Greater security and peace of mind: if maintenance is included in your agreement, you won’t need to worry about the MOT, tyres or servicing costs – as you would if you bought a car outright. Bear in mind, your agreement may not include this automatically, so check if you can add optional maintenance to your monthly payments.
By committing to manageable monthly payments, you can avoid dipping into your savings to cover a large amount upfront. However, contributing a portion of the payment in cash can help reduce the total amount you need to borrow so consider what works best for you.
Types of car finance
There are many different types of finance out there, including car loans, hire purchase, personal contract purchase and personal contract hire. They all work slightly differently, so it's worth doing some research to make sure you choose the best product for you.
Paying monthly with a car loan
A car loan is a financing option where you borrow a lump sum of money to buy a car and repay it through monthly instalments, but you’ll own the vehicle from the start. While no upfront deposit is required, it’s important to note that the interest rate and monthly payments can be higher than with other car finance options.
Paying monthly with hire purchase
Hire purchase (HP) is where you make a regular monthly payment for a car with a fixed interest rate – meaning you know exactly how much you are paying every month. The deposit can be flexible or even not required at all. The car is owned by the lender until you pay the last monthly instalment and the option to purchase fee.
Paying monthly with personal contract purchase
Personal contract purchase (PCP) allows you to buy a car through fixed monthly instalments, like hire purchase. PCP tends to have lower monthly payments as you don't have to pay the car's total value. But should you decide to keep the car at the end of the agreement you will need to pay a substantial ‘balloon payment’ to purchase it outright.
Paying monthly with personal contract hire
Personal Contract Hire (PCH) is a flexible leasing option that lets you hire a car for a fixed term with manageable monthly payments and an upfront rental fee. You get full use of the vehicle during the lease, then simply return it at the end - there’s no option to buy, making it ideal if you prefer driving the latest models without long-term ownership.
Whether you’re after your dream car, thinking about switching to electric, or just need a bit more space in the boot, an Oodle Car Loan could help you cover the cost.
