Types of Agreement
What different finance products do you offer?
There are 3 main finance products that we offer when someone is buying a new or used car, these are Hire Purchase (HP), Lease Purchase (HP with a balloon) and Personal Contract Purchase (PCP). We also offer Equity Release and Re-Financing for when someone already owns a vehicle and is looking to free up some capital or when an existing finance agreement is coming to the end of it’s term.
I want to pay the smallest deposit and have the lowest monthly payments - what is the best finance product for me?
The best option for this tends to be Lease Purchase or PCP. With a significant amount of the total repayment deferred to the end of the agreement this means there are lower monthly repayments for the duration of the agreement but with the final payment, known as a balloon payment, to pay off at the end of the agreement when you come to sell the car or trade the car in.
What are the benefits of choosing Hire Purchase over Lease Purchase or a PCP?
The main benefit of choosing Hire Purchase is that you are effectively paying off the amount borrowed more quickly which means you will be in a stronger equity position if you decide to sell the car. If you do keep the car for the full duration of the agreement this will result in you owning the car rather than having to pay a final balloon payment. Although the monthly payments tend to be higher you will likely pay less overall interest than you would with Lease Purchase or PCP as you are not deferring an amount of capital until the end of the agreement. One other benefit is that Hire Purchase does not have mileage restrictions which on a PCP agreement can lead to financial penalties.
What is the difference between Personal Contract Purchase (PCP) and Lease Purchase (HP with a Balloon)?
The main difference between PCP and Lease Purchase is that on a PCP there is a “Guaranteed Minimum Future Value” (GMFV) and therefore the final payment is optional. If the value of the car is less than the GMFV you can just hand the keys back to the dealer and not pay the final payment (subject to potential excess mileage charges) whereas with Lease Purchase you will either need to sell the car, part-exchange it, pay off the final balance to become the legal owner or there is also the option to re-finance the car.
Is Lease Purchase the same as Leasing a vehicle?
No - vehicle leasing, sometimes known as “Contract Hire”, is a very different type of agreement with the main difference being you do not have the option to sell the car or purchase the car at the end of the agreement, you have to return the vehicle.
What happens at the end of a PCP agreement?
At the end of the agreement you have three options:
1. Retain the car: simply pay the Guaranteed Future Value, and the car is yours.
2. Renew the car: choose another car, using any excess part exchange value that is above the Guaranteed Future Value towards your deposit.
3. Return the car: there’s nothing more to pay if the car is in good condition and within the agreed mileage terms.
Is it true PCP deals are better for brand new cars rather than used cars?
Attractive PCP deals are more common on brand new cars normally due to the fact that the manufacturers are prepared to subsidize the value with incentives such as deposit contributions or set high GMFVs (guaranteed minimum future values) in order to increase new car sales. Although PCP deals are available on used cars the GMFV tends to be markedly lower and therefore PCP deals are not as common on used cars.
What is the best product for prestige car finance?
We find that Lease Purchase is the most popular product when it comes to prestige vehicles. This is firstly due to the balloon payment offsetting the value of the car which results in lower monthly payments but also because it gives more flexibility around the length of the term and tends to put you in a position where it is easier to settle your finance early and change cars more regularly whereas PCP deals are preferable for people who intend to keep the car for the full length of the finance agreement.
How long does the process take?
We will start by taking your details for the finance proposal which can be done over the phone or via email and shouldn’t take longer than 10 minutes to fill out the form. Once we have your proposal details the process will usually take around 2 hours before the finance company make their decision on whether to lend the money. The process can take a little longer if any further information is requested by the lender. On average it takes 2 days from the proposal for the finance company to release the funds.
Do you carry out a credit search?
Once we have agreed the suitable product and you have decided you are happy to proceed, then we will apply to one of our lenders and at that stage a credit search will be carried out.
I have bad credit - can you still help?
Everyone’s circumstances are different, there is very often valid reasons why someone might have bad credit and so of course the finance companies will always take each case on their individual merits and see what is possible. We deal with an extensive panel of lenders and it will be based on the information you provide as to determining which lender is most suitable for your specific situation.
How does the approval process work?
The finance company will have a team of underwriters who will carry out checks and review the application before ultimately deciding whether they are happy to lend the money.
Can I sign my finance documents remotely?
It is predominantly based on the amount you are borrowing as to whether finance companies are happy to let you sign documents remotely. It can also vary depending on the type of agreement and which finance company is lending the money but there will be instances where the finance documents can be signed remotely.
How soon after I sign my finance documents can I get the car?
Once we have received the signed finance documents then we will submit these immediately to the finance company at which point they should release the funds within 24-48 hours and you’ll be free to take delivery of your new car. Please note that is very important that all your information is supplied in the correct format as otherwise this can cause delays.
What does APR mean and is it same as the interest rate?
APR stands for annual percentage rate. Whereas the “interest rate” is the actual cost of borrowing the money, an APR includes within it’s charge any additional costs and fees in arranging the loan.
Are your interest rates fixed?
The vast majority of the finance agreements we offer are on fixed rate agreements where the interest rate is fixed and you’ll know exactly how much interest you will pay over the course of the agreement. Variable rate agreements are possible and tend to be most attractive when interest rates are falling so are not as popular in the current economic climate.
Am I able to do an interest-only deal?
Yes it is possible to do an interest-only deal but it is totally driven by the size of the balloon payment that we are able to secure with the lender and you being in a position to put down the required amount of deposit.
Can I make over payments? What happens if I do?
Yes, you can pay off lump sum amounts during the agreement which will reduce the monthly payments and depending on the lender, this may affect your final balloon payment but more frequently simply reduces the monthly payments and the total amount of interest that is repaid.
Is there a minimum or a maximum amount you will lend?
As a rule of thumb you should expect to pay around 10-20% of the car’s value as a deposit to get a finance deal agreed by the finance company but there are occasions where they will allow less and there may be occasions where they will require a higher deposit.
Will I have a mileage restriction?
This will depend on the type of agreement that you get. In general if you go for a Hire Purchase agreement then there will be no mileage restrictions whereas a PCP where you have a guaranteed minimum future value you will more than likely have a restriction on the mileage you are allowed to do and if you exceed this you will get a financial penalty in the form of a pence per mile.
Are there any additional fees?
This depends on the lender but we will make sure any fees are made clear to you once we have a formal offer of terms from the lender and then it would be your decision should you not wish to proceed.
Are your loans regulated or unregulated? What is the difference?
We offer both regulated and unregulated agreements. Regulated agreements are regulated under the consumer credit act 1974 which gives consumers a certain level of protection. Unregulated agreements apply to entities such as limited companies and the protection is not as high. We endeavour to advise each client as to the specifics should they be signing an unregulated agreement. One of the other differences is that unregulated agreements do not need to be signed on trade premises.
What is a settlement figure?
A settlement figure is a calculation of the total amount of money you are still owing to the finance company in order to clear the finance. This will include an interest rebate as you are settling the agreement before the anticipated end date.
How do I request an early settlement figure?
You are able to request a settlement figure at any point during your agreement simply by calling up the finance company and quoting your agreement number and confirming your personal details. If you have agreed the deal through Elev8 Finance then we will be able to take care of this for you and provide a settlement figure at your request.
What happens if I settle early?
You are able to settle the finance early as long as you pay off the agreed amount of the settlement figure provided by the finance company. The amount will include any early settlement charges as set out in the original agreement. In a regulated deal the early settlement charge tends to be 58 days worth of interest whereas in an unregulated deal the amount of interest can tend to be higher so it’s important you are clear as to which agreement is suitable for you before signing the finance documentation.
If I am selling my car then who should settle the finance – myself or the person buying it?
If you are selling to a dealership then most of the time the dealership will settle the finance for you and pay you the balance. If you are selling privately then this can be a bit riskier so we would advise if possible to pay off the finance yourself first before selling the vehicle. If you are part-exchanging your vehicle for a new car then in some cases the finance company will “contra” the settlement and use any equity you have in the car as part of the deposit for the new finance agreement and the finance will effectively move from one car to the next. Motor dealers should be regulated by the Financial Conduct Authority so it is strongly advised that you should always check the dealers FCA number against the FCA register to ensure they are authorised to settle your car. www.register.fca.org.uk
Is the money lent by Elev8 Finance or by another finance company?
Elev8 Finance is a finance credit broker which means we act on behalf of the client to find the best finance deals out there across a variety of finance companies. Due to our relationships with them we do tend to get preferential terms but it is the finance companies such as Santander, Hitachi, Aldermore etc. who are actually lending the money.
If I take finance on the car does that mean I am the legal owner?
Whilst you will become the registered keeper of the vehicle, only when all payments under the agreement have been made, including any balloon payment, do you become the outright owner of the vehicle, until then the finance company remains the legal owner.
Are there any limitations on where I can buy my car?
The preference is that you are purchasing a car from a motor dealer as this gives added protection in the event the vehicle is not fit for purpose. We will consider some private sales but this is very much viewed on individual circumstances.
I have a part-exchange can I trade this in with you?
Being a finance brokerage we would not be able to take in a part-exchange ourselves but it is more than likely that dealership you are buying the car from will be able to facilitate a part-exchange and if not we have numerous contacts in the trade who will be able to help.
Do you finance classic cars?
Yes we do. Slightly different lending parameters apply and there are fewer lenders that operate in this area of the market but we most certainly can offer terms for these types of vehicle.
Do you finance people that don’t live in the UK?
We can only finance individuals that have a residence in the UK and a UK bank account.
What happens if my car is involved in an accident or declared a write-off?
Elev8 offers an insurance product that can be purchased at the point of sale to cover such an occurrence depending on the cost of the vehicle purchased.
- How do I get in touch with Elev8?