HOW TO FINANCE YOUR PRE-OWNED CAR

Identify your monthly budget 

Before you start, it is important to work out how much you can afford to spend on monthly finance payments. It’s a good idea to take stock of your income, existing regular expenses, and anything else you’ll have to pay for during the car’s finance period.  

Personal vehicle finance explained 

1. Cash Purchase  

If you have the sum required to buy your preowned vehicle, then a cash purchase can be the simplest option. Paying immediately does away with a loan and there is no question of monthly payments or interest rates. Just be sure to leave some cash in your savings account for a rainy day.  

2. Personal Loan 

Buyers typically arrange personal a loan themselves, usually with their bank, and it is an effective way of financing a pre-owned car, because your only obligation is to pay back the finance provider. Unlike some other methods, a personal loan does include any limitations on mileage or terms of use relating to the car. They usually require collateral, which is often the buyer’s house; this means that, if you fail to repay the loan, the finance provider can repossess your home. Personal loans may also have higher interest rates than other, more specialised forms of vehicle finance.  

3. Personal Contract Hire (Leasing) 

You don’t own the car with personal contract hire (PCH), but it is typically the most affordable way to access a pre-owned vehicle. Hire is the key word, because PCH is effectively long-term rental. The low monthly fees do not add up towards eventually owning the car, as they can with PCP and HP (see below), and there is no option to buy the car at the end of the contract – you simply return it. PCH contracts typically come with mileage limits and customers are required to have the vehicle serviced on time.  

4. Personal Contract Purchase and Hire Purchase  

Personal Contract Purchase is one of the most common ways of financing cars in the UK and comprises fixed monthly payments over a set term based on the car’s Guaranteed Minimum Future Value (GMFV). PCPs usually come with mileage limits and maintenance stipulations, but the good thing about them is that they can be tailored to suit your circumstances. For example, you can choose to pay a larger deposit and have lower monthly repayments or vice versa. At the end of the term, you have the choice of making a balloon payment so that ownership of the car transfers to you, you can return the car to the dealer or you can use it as a deposit towards a new car on a fresh PCP. Hire purchase (HP) works in a similar way to PCP, but you simply own the car at the end of the contract. The monthly payments are higher, but there is no final balloon payment.  

Why finance your pre-owned car with ALFA ROMEO CERTIFIED? 

ALFA ROMEO CERTIFIED can provide tailored finance packages to suit pre-owned car buyers with a variety of different budgets, and our specialists can advise customers about the most appropriate type of motor finance for them.  

Our trade-in service for customers’ existing vehicles can also contribute towards financing. An expert appraisal at one of our network centres will provide a firm valuation for part exchanges.