In This Blog

PCP or HP?

Interest Rates and APR

Fees and Charges

Restrictions and Limitations

Read the Fine Print


What to look out for in your finance agreement

Buying a car is a significant investment, and for many people, car finance is a popular way to make this investment. Car finance agreements allow you to spread the cost over some time, making it more affordable for most people. However, before you sign any car finance agreement, it’s crucial to read the fine print and understand the contract terms.

Here are five tips on what to look for in your car finance agreement to make sure you get the best deal:

PCP or HP? Understand your options.

Regarding car finance, there are two main options: Personal Contract Purchase (PCP) and Hire Purchase (HP). Personal Contract Purchase (PCP) is a popular choice for many people. It allows you to deposit and make monthly payments over a fixed term. At the end of the term, you can pay a balloon payment and keep the car, trade it in for a new one, or hand it back.

Hire Purchase (HP) is another available option. With Hire Purchase, you make monthly payments over a fixed term, and the car is yours at the end. The main difference between the two options is that you’re paying off the entire vehicle cost over the agreement term with HP. In contrast, with PCP, you only pay off a portion of the car’s value.

When deciding which option is best for you, it’s essential to understand the pros and cons of each. With PCP, you can change your car every few years, and the monthly payments are typically lower. However, with HP, you own the vehicle at the end of the agreement, and there are no mileage restrictions or penalties for exceeding the mileage limit.

Check the interest rate and APR.

The interest rate and APR (Annual Percentage Rate) are critical factors in any car finance agreement. The interest rate is the percentage of the loan amount you will pay in interest over the contract term. The APR includes the interest rate plus any other fees and charges.

It’s crucial to understand the total cost of the loan and compare it to other finance options before making a decision. A low-interest rate may look attractive, but it’s essential to consider any additional fees and charges that may be included. Some car finance agreements may offer 0% interest rates, but these often come with higher fees.

It’s also important to consider your credit score when looking at interest rates. A higher credit score often results in a lower interest rate, saving you a lot of money over the agreement term.

A man in a blue shirt looks towards his desktop which has a credit report on.

Understand any fees and charges.

Car finance agreements may come with additional fees and charges, such as an arrangement or early termination fee. It’s important to understand these fees and how they will affect the total cost of the loan.

Before signing the agreement, ask for a full breakdown of any fees and charges. Some car finance agreements may also require you to take out additional insurance policies, such as GAP insurance, which can also add to the total cost of the loan.

Check for any restrictions or limitations.

Some car finance agreements may come with restrictions or limitations. For example, there may be a mileage limit or restrictions on modifications you can make to the car. It’s essential to understand any conditions or limitations before signing the agreement.

If there are any restrictions or limitations that you’re not comfortable with, consider a different finance option. It’s also important to consider any potential penalties for exceeding the mileage limit or making unauthorized modifications to the car.

Read the fine print.

It’s crucial to read the fine print of any car finance agreement before signing it. This includes understanding the terms and conditions of the agreement, including the length of the contract, the total amount you’ll be paying, and any additional terms.

Ensure you understand what will happen if you miss a payment or want to end the agreement early. It’s also important to understand what will happen at the end of the agreement, whether you choose to keep the car, trade it in, or return it.

If you need clarification on any of the terms of the agreement, feel free to ask questions. A reputable car finance provider should be willing to explain any terms or conditions you need clarification on.


In conclusion, buying a car through a finance agreement can considerably reduce costs. However, it’s crucial to understand the contract terms and ensure you’re getting the best deal possible. By understanding your options, checking the interest rate and APR, understanding any fees and charges, checking for restrictions or limitations, and reading the fine print, you can make an informed decision and ensure that you’re getting a car finance agreement that works for you.

If you’re looking for a car finance option to suit your needs, we offer both PCP and HP options. You can apply online for a free soft search to see if you’re eligible.

To see if you’re eligible, apply here.

Representative Example

Rates from 12.9%

Representative example: borrowing £10,000 over 60 Months with a representative of 23.0% APR, an annual interest rate of 23.0% (fixed) and a deposit of £0.00, the amount payable would be 59 repayments of £269.58 per month, with one final repayment of £279.58 (which includes the option to purchase fee of £10.00), with a total cost of credit of £6,184.80 and a total amount payable of £16,184.80. Marsh Finance Limited are a lender, not a broker. 

Marsh Finance Limited are a lender, not a broker.

This is for illustrative purposes only and is not a quote or an offer of finance.