About payment?

30 March 2007

Q: Can you help finance my car purchase?
A: There is a finance agreement available for the purchase of your new car, called the Monthly Payment Plan, provided by Freeway, a Bank of Scotland Group Company (see below).

Q: What exactly is a Monthly Payment Plan?
A: The Monthly Payment Plan, also referred to as a Personal Contract Purchase, or PCP, is a finance option that enables you to defer a proportion of the cost of the car as a final payment at the end of the agreement. Known as the Guaranteed Future Value (GFV), it is based on the car's estimated value at the end of the agreement and helps to reduce your monthly payment.

The Monthly Payment Plan is a great way to finance your car purchase. The benefits that it brings include:

Lower monthly payments compared to a traditional hire purchase agreement (over the same period)

Fixed monthly payments from the outset - no nasty surprises

A Guaranteed Future Value (GFV) for your car at the end of the contract period - which could prevent you getting caught by negative equity

Q: How does a Monthly Payment Plan work?
A: There are a number of easy steps to organising your plan:

Choose your vehicle - including any manufacturer and dealer-fitted options.

Pay a deposit, agree how long you want to drive the car for and estimate what your annual mileage will be.

Based on this the Guaranteed Future Value (GFV) of the vehicle is calculated, payment of which is then offset to the end of the agreement.

Your monthly payments are calculated so that during the agreement you repay the cash price of the car less the deposit and the GFV, plus interest on the cash price (less the deposit).

Q: What happens at the end of the agreement?
A: If you choose to pay the Guaranteed Future Value at the end of the agreement, then you will own the vehicle. If you take the option to hand the car back and you have not exceeded the contracted mileage there will be nothing more to pay (subject to its return condition). However, if you exceed the agreed contract mileage there will be an excess mileage charge, payable at the cost per mile identified on your quote and agreement. Furthermore, you will be liable to pay for any accidental damage to the vehicle or excess wear and tear with regard to its age and mileage.

At the end of the agreement you will have three flexible options:

Choose another car (subject to status)
Pay the optional final payment (the Guaranteed Future Value or GFV) and keep the car
Hand the car back with nothing more to pay, subject to return conditions being met
 
Q: Do I have to pay a deposit?
A: You can pay a deposit of between 0% and 40% of the value of the car. Your monthly payments will be adjusted to reflect the deposit.

Q: What APR will I pay?
A: This will depend on the on-the-road (OTR) price of the vehicle and the length of the agreement. A typical example and the APR rates are shown in the Legal Information.

Q: Who owns the car?
A: Under the terms of a PCP, you are the registered keeper but the asset is owned by the financing company. However, if you wish to own or sell the car before the end of the contract term, you will have to settle the balance of the outstanding finance first. Alternatively if you opt to purchase the vehicle at the end of the agreement all ownership rights will transfer to you.

Q: When will I have to pay the balance of my deposit for my new car?
A: This is payable before the car is delivered. Subsequent payments are made in equal amounts of the life of the contract. Payments are made by Direct Debit.

Q: How do I pay for my deposit?
A: Your deposit can be made by cheque, bank draft, credit or debit card or bank transfer.

Q: What if I want to keep the car at the end of my PCP deal?
A: Personal Contract Purchase allows you the option to purchase the vehicle at the end of the term of your PCP agreement.

Q: What is the excess mileage charge?
A: If you exceed the agreed contract mileage, there will be an excess charge, which varies according to make, model and type of car and the agreement term and mileage. This charge will not exceed 23p per mile.

Q: Who provides these finance options?
A: The finance arrangements will be provided by Freeway, a Bank of Scotland Group company. You may want to read our important information section.

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