Different Finance Methods Explained

Avatar Vehicles are a licensed credit broker and can offer any type of funding to both business and personal customers. We have relationships with many of the UK's biggest finance companies; in fact we have access to over 35 lenders. We can arrange funding for almost any type of car or commercial vehicle; we also regularly finance industrial equipment, agricultural machinery and construction plant. Whether you are an individual, sole trader or a national PLC Avatar can offer you a finance package that suits your needs.Many of us are feeling the pinch in the current economic climate; we could help you to save money each month by choosing the right finance option.

Hire Purchase

Probably the best known form of finance but not necessarily the most common these days. The client pays a deposit agreed with the lender and spreads the remaining balance over a fixed term, from one to five years. At the end of the term and after the final payment has been received the title of the goods are passed to you.

Contract Purchase

Contract Purchase is another method of funding where an individual or business finances a vehicle for a set period at a fixed monthly charge.

However, at the end of the contract, there is an optional balloon payment which the individual can pay to buy the vehicle; otherwise, they can choose to return the vehicle with nothing further to pay. The monthly charge is governed by the initial cost of the vehicle, the mileage covered, the period of the agreement and the estimated value of the vehicle at the end of the contract.

Basically, it is similar to Contract Hire, but with the benefit of allowing you the option to buy the car at the end, instead of having to hand it back. In reality, in our experience, the majority of people do hand it back and take a new one at the end of the contract. Again, servicing packages can be added to these contracts to give complete peace of mind and fixed costs.

Lease Purchase

Lease Purchase is essentially Hire Purchase with a final payment (Balloon) at the end of the term. This product reduces the monthly payments compared to Hire Purchase as you are not repaying the full capital cost of the vehicle. Instead, at the end of the agreement, you can make a final lump sum payment (or 'balloon') to own your car.At the end of the agreement you have the option to pay the final payment and acquire title, refinance the final payment, part exchange or sell the vehicle and retain the proceeds after paying the final payment. Please feel free to request a quote for your exact requirements or request a callback for help with our car finance calculator.