HP is a type of finance that sees you own the car at the end of your finance term. HP is a popular choice for those looking to spread their payments over a certain period and gain ownership of the car at the end of the term. Once you make the repayments, you will receive a statement of title from your finance provider and the car is yours to use, sell or trade-in for an alternative. A HP finance term usually lasts one to five years, with a deposit usually made at the start of the term, and repayments occurring to monthly to make up the rest of the amount owed. If HP sounds like the right option for you, take the time to read our top tips to securing the best HP deal for you.
Set Your Budget
Perhaps the most important tip of all, choose a car that suits your budget. It’s very easy to get drawn to a car out of your price range, that looks affordable due to spread payments. However, choosing a car that fits your price range is key, but how do you do this? Here at Marsh Finance, our free car finance calculator allows you to input your budget, credit score, and ideal loan term and view the expected monthly repayments. This figure can then be matched against thousands of vehicles via our exclusive car marketplace to find the best vehicle for you.
Credit Score Checks
Another important preparation tool for getting the best deal is ensuring your credit score is as strong as possible. As stronger credit score makes you more appealing to loan providers who will likely offer you more favourable terms as you are deemed more reliable with repayments. Before applying for HP finance, check there are no errors on your credit file, and if your score isn’t where you want it to be, take some time to improve it before applying. We have put together some of our top tips to improve your credit score here. In short, we recommend you make sure all payments are on time, keep your credit card balances below 30% of your available credit limit and regularly check your credit file to see if any changes are needed.
Shop Around
Don’t be afraid to approach multiple providers to get the best deal. The deal you are offered may look good on the surface, but after taking time to read through and compare, an alternative option may be more appealing. Don’t be scared to look for alternatives, it may just save you a lot of money. This leads on to a key point: make sure the deal meets your needs, whether that be lower repayments or a shorter term. If the deal proposed doesn’t meet these standards, look elsewhere.
Take Into Account Hidden Costs
Aside from the costs on the surface, owning a car brings with it additional charges that you may not have taken into account. We explore this conundrum in a separate piece, which you can find here. Don’t just view a car at face value, consider additional costs like petrol and maintenance, and factor this into the overall budget.
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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.