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With standard HP, you pay any agreed deposit, then repay the balance plus interest over an agreed term. The finance company owns the vehicle until all required payments, including any option-to-purchase fee, are made.

HP normally has no large balloon payment. Its monthly payments can be higher than PCP for the same car, deposit, rate and term because less debt is left until the end.

• Check the cash price, amount borrowed, APR, term, fees and total amount payable.
• You normally cover insurance, maintenance and running costs.
• Do not sell or modify a financed car without the lender’s permission.

Personal Contract Purchase leaves an agreed part of the car’s price until the end: the optional final payment, often called the balloon or Guaranteed Future Value. It is not an extra deposit. Interest is normally charged on the outstanding borrowing, including the deferred amount.

At the scheduled end, you can pay the balloon and any purchase fee to keep the car, return it under the agreement’s mileage and condition rules, or discuss part-exchange. A new agreement needs a new approval; spare equity is never guaranteed.

• A lower monthly payment does not necessarily mean a lower total cost.
• Budget for the balloon if ownership is your aim; refinancing is not guaranteed.
• Returning the car can bring excess-mileage, damage or other contractual charges.

Personal Contract Hire (PCH) is a long-term rental. You pay an initial rental and regular rentals for an agreed term and mileage. You return the car; the standard agreement has no purchase option.

Check maintenance, tyres, road tax, breakdown cover and insurance separately. Packages vary. Early exit may be expensive and needs a written quotation. Agree realistic mileage before signing, and check excess-mileage prices and fair-wear standards.

• You do not build an ownership stake through lease rentals.
• Servicing and condition requirements still apply.
• FL4U’s flexible leases can have a different structure from standard PCH. The written vehicle offer confirms the term, checks, deposit, upfront charges and inclusions.

Buying with your own savings means no car-finance interest and no monthly credit instalments. You own the vehicle, take its resale-value risk and pay for upkeep. Keep enough money available for emergencies.

A personal loan can fund an outright purchase, but it is still debt. You usually own the car immediately and repay the loan separately. Selling the vehicle does not cancel the loan. Compare the actual rate, total repayment, fees and affordability with other options.

• Check title and outstanding finance before paying a seller.
• A cheaper used car can reduce borrowing but may need a larger repair budget.
• Consider the money tied up in the car as well as the headline purchase price.

APR is an annualised measure of borrowing cost including interest and relevant compulsory credit charges. It is useful for comparing credit offers, but compare the amount, term and total payable too. A flat interest rate is calculated differently and cannot be compared directly with APR.

Representative APR is not a personal promise: the FCA definition uses an expectation that at least 51% of agreements resulting from the promotion receive that rate or better. Your offered APR may differ.

A longer term spreads repayment over more months. At the same positive interest rate it usually lowers each payment but increases total interest. Check the number of regular payments, when they start and any final payment separately.

• Total to own = deposit + all instalments + final payment + required fees, without counting fees twice.
• Ask whether optional products are included in the borrowing.
• Use the lender’s written quote for a real decision.

An HP or PCP deposit contributes towards the purchase price and reduces what you borrow. It is not normally money you get back when you return the car. Any part-exchange contribution depends on value after existing finance is settled.

A lease initial rental is an advance rental, usually non-refundable. A separate security deposit may be refundable under the agreement, after permitted deductions. Ask for each amount, purpose and refund condition in writing.

• On a 36-month 6+35 rental profile, the first payment equals six regular rentals, followed by 35 regular rentals.
• It does not mean six months of free driving.
• A larger initial payment can make the monthly figure look smaller. Compare total contract costs.

Ask the lender for a dated early-settlement figure. This is the amount needed to clear the agreement, with any applicable interest rebate and permitted charges. It is not simply the sum of every remaining instalment.

For a partial overpayment, ask how the lender will apply it: will it shorten the term, reduce the monthly instalment or change another amount? Ask for a revised schedule. Continue normal payments until the lender confirms the change.

• Compare the settlement amount with remaining scheduled payments and fees.
• Keep a buffer for essential bills and emergencies.
• Check any early-payment conditions and obtain written confirmation that the finance is cleared.

Equity is the realistic current sale value minus the lender’s current settlement figure. A £15,000 valuation and £12,000 settlement gives £3,000 positive equity before any sale costs. A £10,000 valuation with the same debt gives a £2,000 shortfall: negative equity.

A valuation is an estimate, not a guaranteed sale price. Depreciation, mileage, condition and market demand all affect it. Adding a shortfall to a new agreement increases the new borrowing and may increase cost.

• Get an up-to-date settlement figure and genuine purchase offers.
• Positive equity is not a cash refund just for returning a PCP car.
• At a scheduled PCP hand-back, the contract’s guaranteed-value arrangement can protect against a lower market value if its conditions are met; other charges can still apply.

For an eligible regulated HP or PCP agreement, voluntary termination can limit liability to 50% of the total amount payable, plus relevant arrears and liability for failing to take reasonable care. You can usually exercise it before paying 50% by paying the shortfall. Use the termination figure in the agreement; PCP’s balloon is included, so halfway through the months is not necessarily halfway through the money.

Voluntary surrender is different: a lender may sell the car and pursue a remaining shortfall. Standard PCH does not use the HP/PCP 50% termination rule.

• Do not simply stop paying or leave the car at a dealer.
• Contact the lender promptly if repayments become difficult.
• Use free, independent debt guidance before choosing an exit route.

Engine size describes the combined swept volume of its cylinders: 1,000 cubic centimetres (cc) is one litre. It is not the fuel-tank capacity. A larger engine can move more air and burn more fuel to make power, and often has higher fuel demand—but size alone cannot predict your bill.

Vehicle weight, gearing, aerodynamics, turbocharging, hybrid assistance, speed and driving conditions all matter. A small engine working hard in a heavy car is not always the most economical option. Compare the exact model’s official economy figures and realistic use.

• Power (kW or bhp) describes how quickly work can be done; torque (Nm) is turning force.
• Higher UK miles per gallon (MPG) means less fuel for the same distance.
• Lower litres per 100 km means better economy. UK and US gallons are different.

Petrol and diesel burn fuel in an engine. A conventional hybrid combines an engine with an electric motor and a battery charged by the car. A plug-in hybrid (PHEV) also accepts external charging; regular charging matters if you want to make the most of its electric capability.

A battery electric vehicle (BEV) uses electricity with no exhaust emissions while driving. Battery capacity is measured in kWh; motor power and charging power are measured in kW. Range changes with speed, weather, heating, load and battery condition.

• Check home or local charging access and the tariffs you would actually pay.
• The car and charger both limit charging speed; charging is not equally fast at every battery level.
• Compare insurance, servicing and tax as well as fuel or electricity.

Before buying, check the seller, VIN, vehicle details, MOT history, service records, mileage and outstanding finance. A V5C names the registered keeper; it is not proof of ownership. Inspect the car and arrange an appropriate test drive and insurance.

An MOT is a check of specified safety and environmental items at the time of the test, not a service or a guarantee of future reliability. You remain responsible for roadworthiness. Check lights, tyres, fluids and warning messages, following the manufacturer’s instructions.

• Budget for insurance, tax, servicing, tyres, repairs, breakdown cover, parking and depreciation.
• For most cars, minimum tyre tread is 1.6 mm across the central three-quarters and around the whole circumference; damage can make a tyre unsafe sooner.
• Check clean-air-zone rules, permitted use and any towing or driving-abroad restrictions.