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Buying a new, or even a used, car can be easier than ever before now, but with constant increasing prices for vehicles its likely you may be needing to purchase using some sort of Finance Loan Agreement.  There are lots out there to confuse you, from vehicle manufacturers to small independent specialists.  With so many options, which one is for you?

To keep it simple there are a few terms you need to be familiar with and understand. HP and PCP are the most common options you might get offered when visiting a dealer.  HP meaning Hire Purchase usually means giving a deposit of 10% of the sale price, with the remaining amount broken down into manageable monthly payments across a term of agreed months, typically 3 to 7 years.  With this type of product once the payments have been collected you will then own the car outright and be free to do whatever you wish with it.  The finance companies are happy to provide you with a loan once you have passed all the necessary credit and identity checks, although bad credit may attract some higher interest rates.  Vehicle wise they don’t like to loan on vehicles over 8 years or 80,000 miles. They will also insist on the dealer selling the vehicle with some form of warranty.

Pro’s of HP

• You’ll own the car after you make all the repayments
• There are usually no restrictions on how far you can drive
• You might need to pay an Option to Purchase fee but there’s no big final balloon payment
• Agreements can last anything from 1 to 7 years

Con’s of HP

• Monthly payments might be higher than they would with other car loan options
• You can’t sell or modify the car during your agreement without the lender’s permission
• You won’t own the car until you’ve made all the payments
• The future value of your car isn’t guaranteed as it can be with PCP

However PCP, or Personal Contract Purchase, can be a slightly more luring concept, it is not always the most financially sensible option.  PCP normally consists of a low deposit, if any at all, then lower monthly payments again across a fixed monthly term, then at the end of say 3 years, you have the option to purchase the vehicle and own it outright.  This is called a ‘balloon payment’ and is normally a large figure bolted to the end of the contract.  If you add up the number of monthly payments plus the balloon at the end it will usually exceed the market value of a like for like vehicle, meaning you are in a negative equity position.  Balloon payments are based on a guaranteed future minimum value or GMFV.  Most of the time people disregard this and treat the system as a kind of long term rental, choosing to renew the vehicle every 3 or 4 years.  This has its benefits for saying busy business owners that need or use a car for work, or for people that like new cars and low monthly payments, but don’t want the hassle of owning a car.

Pro’s of PCP

• Monthly payments might be lower than they would with other car loan options
• You have options – you can pay the balloon payment and buy the car, give it back, or trade it in for a new one
• No surprises – your monthly payments are fixed
• You can access newer used cars
• Maintenance usually included in the monthly payment

Con’s of PCP

• You won’t own the car during your PCP loan period or when it ends, unless you pay the balloon payment
• You’ll be charged if you drive more miles than you agreed to or damage the car
• You might need a deposit
• If the GMFV is very close to the actual car value, you won’t have a lot of positive equity left to use in a new agreement

When it comes to selling a car on finance you need to understand a few things.  The car may well have your name on the v5c but that does not necessarily mean you are the owner, it just means you are the registered keeper.  Until the last payment of your finance has been paid the vehicle is still the property of the finance company and can be repossessed by them should you fail to keep up payments.  You will need to ask them for a settlement figure which they will calculate from your last payment to the end of the outstanding balance.  As a National Car Buying Company, we often get asked by our clients to appraise and purchase vehicles and when we tell them the true trade price on their cars they can easily find themselves owing more than the vehicle trade.  This in turn means they either continue to make monthly payments on time or pay the bit between the trade offer and the owed amount.   To illustrate CarZillo recently had a client that offered a Mercedes E320 and upon valuation, we were notified that Moto Novo had a financial interest and had provided a settlement figure of £12,459.  Based on the condition of the car our cap guide pricing structure recommended a trade value of £8,500 leaving the customer to pay an additional almost £4,000 right there and then to release them from the monthly payments that were holding them back from obtaining a mortgage at the time.

The finance team at CarZillo are well experienced at settling finance payments on any vehicle.  Once the representative is on-site with your vehicle it helps to have your settlement paperwork to hand, this will have your important agreement number on it.  You will have to ring the finance company and go through verification and security checks first as no other 3rd party can call and speak on your behalf.  Once through, you can make any outstanding balance payments to your account, or the car buyer will pay the outstanding amount.  This cannot be paid over the phone with a credit or debit card, this has to be done via BACS payment.

How To Sell Your Car

It’s a daunting experience having to sell your car and a lot of people don’t want any added pressure or stress, so here is my quick guide on how to sell your car.

When the time comes to upgrade the car it can be for many reasons, for some it may mean expanding family’s need more room or maybe a change in circumstances means it doesn’t make sense to own and run anymore what ever it is your going to need to sell it and get the most money for it.

Lets get the paperwork and legal bit out the way first, if your car has outstanding finance it means you don’t own the vehicle and if you were to sell it you must get your buyer to ‘settle the finance direct if you don’t you will still be liable for the monthly repayments and the finance company may reposes the vehicle from your buyer. All this information is publicly available through a HPI check at a cost of £20.00 CarZillo will always HPI check any vehicle offered to them which will highlight any finance, accident damage or if its wanted by the police.

Some vehicles may have been involved in insurance claims in the past and may have been categorised as total loss this means the insurer processed a claim against the vehicle, its common myth that people think you cant sell these vehicle’s on, this is not true. As the seller you have the duty to make clear the vehicles past when asked buy a buyer so best to tell them rather than they find out last minute and loose the sale. CarZillo settle hundreds of finance policy’s nationwide before purchasing their car.

Always make sure you have the V5c or logbook as its known this is where you will record the new owners details and inform the DVLA remember to post this recorded delivery or even process online.

You have checked the finance has been paid and you’ve found the log book, its time to run the car through the carwash, most street corners have evolved to having at least one hand car wash within close distance from your house and it’s the best £12 you can spend, the new buyer will be happy when they see a clean car and it also gives the appearance you care for your car. Its always worth checking the service history and if your vehicle hasn’t had a service in the last year or 3 it would look much better to the buyer if it had just been through a decent garage and had a fresh service and MOT. The first thing a buyer will look for is first impression they usually make a decision to buy or leave within the first few minutes of meeting you and looking at the car. Kerbed alloy wheels are a sign the driver was careless not to mention they will look ruined and make the vehicle look tatty so it’s a quick win to refurb the set usually costing around £250. Buyers hate damage on a vehicle as it means a costly trip to the Bodyshop and finding a decent painter that will do a decent job at a sensible price is hard to find, scuffs scratched dents and damage must all be repaired if your going to get the screen price.

Advertising your car for sale can be a long time consuming process, you have to clean, service, repair then photo describe and wait for some one to come round your house at unsociable hours only to tell you they have 4 more to look at or they will think about it. CarZillo was designed to speed up the whole car selling process from average 3 month sales down to 24 hours.

If you don’t fancy going through all the above preparation to get the best price for your car or simply just don’t have the time then use CarZillo’s car buying service to give you a free instant valuation, nationwide and we collect free of charge.

Buying your next car

So it wasn’t as hard as you though selling your old car was it ?

Now the old car has gone you will be itching to find the new wheels to put on the driveway so where do we start. In my experience over the last 15 years buying a new or used car has changed a lot and can be an overwhelming experience having to learn vast amounts of information not only about the vehicle but more importantly the seller.
I have broken it down into stages to make it easier to explain and digest so buckle up and hear my thoughts.

Stage 1:
The Search, there are literally thousands of makes models and specifications to choose from not to mention combinations, it helps to identify what you want the vehicle to do say for instance your family is expanding and you need room for 2 kids and a large boot for a pushchair you may narrow it down to large saloon or MPV this will help you to choose the manufacturer and eventually the model, lets take for instance your happy with a large saloon well there are two ends to the market a cheap end and an expensive one. Knowing your budget will help you understand which end your looking at. The cheaper end may lead you to a VW Passat and the other end may see you test driving a BMW or Mercedes. This method of choice reduction works for most categories and manufactures of vehicles.

Stage 2:
Research Now that you have an idea of what type make and model your looking for its time to get searching online, our extensive study of the used car market tells us we spend on average 11 hours researching vehicles online and usually only driving to a dealership to inspect and pay. I always recommend looking for cars on websites like Autotrader and E-Bay as this is where most decent dealers will advertise all there stock. This is where it pays to spend time as a customer its not unusual to know more about the vehicle your interested in buying than the seller does. With all the information at our fingertips these days its not hard to spot a decent motor from a wrongon. Make sure that your chosen dealer has a good website with everything written clearly and always google search them, you don’t want to get home with your new car and find out the dealer is always in court for selling moody motors, and decent dealer will pride themselves on good quality feedback usually displayed on google or Feefo. Don’t forget to run a HPI check this will highlight any discrepancies with mileage and if its been wrapped round a lamppost by previous owners.

Stage 3:
Finance and collection, now you like the car and you like the dealer its time to make a deal, car dealers are not all hard work to deal with instead they will try their best to get you into the car according to your budget. Understanding finance isn’t that hard if the dealer keeps it simple, say the screen price is £10,500 its always worth offering a bid but don’t expect it to be thousands in the used market as there just isn’t bundles of mark-up on them offering £10,000 is fair and not insulting to the dealer, if they excepted your offer then you would need to arrange finance with them usually acting as a broker on your behalf giving you a breakdown of the proposed figures. You must understand there are a few common options such as PCP (personal contract purchase) and HP (Hire purchase) PCP is like a rental agreement meaning you would leave a sizeable deposit of around 2 or 3 thousand leaving the rest of the balance spread across monthly repayments of a term lasting 3 years and on the end date of 3 years you would return the vehicle back to the dealer in the same condition you received it in and walk away or take out new finance on another vehicle. Hp is sometimes a better option it’s the same as buying a new mobile phone you agree to pay a deposit usually 10% of sale price then the rest spread across a term of 2 – 5 years and once last payment has been made you own the car to do what you like with.

Stage 4:
Driveaway, yep that’s it you done it chose it, researched it, financed it and now its sitting on your driveway.

Shopping online and staying safe

The revolution of the internet is here to stay and growing everyday, it has changed the way we buy cars forever making it easy for us to buy it now and have it delivered. But it does have its pitfalls..

The internet is full of scams if your not careful you could easy find yourself handing over lots of your hard earned money for a lemon of a vehicle here are some of my tips for staying safe online and buying your next car safely.

Always HPI check a vehicle your interested in buying it takes a couple of minutes and costs £20.00 this will tell you the vehicles past like how many owners? or if it has a mileage discrepancy this will also be the first signs something is wrong. Be careful to check the not so obvious details like make model fuel and colour these can be easily overlooked yet so obvious.

Alarm bells should be ringing when a seller doesn’t answer a phone or only requests contact via email and claims to be living abroad these scams are the most obvious on eBay. The HPI check should show if a vehicle has outstanding finance this is another common type of scam online today, sellers will often have a vehicle that they may have bought on finance and decided they couldn’t afford it or dont want it anymore so try to sell it to you, this is one to avoid when a seller says they will settle the finance after you pay them when really the seller should disclose they have outstanding finance right from the beginning and are willing to let you pay the finance company direct.

Once you have done all you can digitally make sure you physically inspect and check the vehicle over as private car dealers are usually the worst, take a mechanic with you or pay for an independent inspection, dont agree to meet up at night in a rural location instead try to meet at the sellers home address or business address somewhere you can find them if it all goes turbo. Check the vin numbers against the log book making sure they all match up.If its been in a nasty accident make sure the seller tells you all about it making sure its been repaired correctly, thousands of vehicles are written off in the UK each year and are returned back to the roads using stolen parts or with very shoddy workman ship.

Avoid scams
Make sure you HPI check the vehicle
Meet in a safe mutual location
Dont carry large sums of cash
Ask questions about the history
Check all the paperwork
Never pay without seeing