Halifax car finance (A guide)

In this brief blog, we are going to discuss the Halifax car finance.

Halifax car finance

Halifax bank is a division of Bank of Scotland PLC and they offer car finance. The key things you need to know about this are:

• If you are looking for Halifax car finance you can use the Halifax car finance calculator to see what the potential rates could be here. You can also make your application form here.
• You can get an online quote without Halifax  carrying out any credit searches on you
• The whole application process happens online and you can then go on to manage your account online
• You can get a Halifax car finance on either a new car or a used car
• You can get a great rate of 3.4% APR Representative when you borrow between £7000 – £25,000. Other rates are available for other borrowing amounts.
• Once you are approved Haliax will pay the dealer directly
• You can only buy from a range of approved dealerships
• You have to make a fixed monthly repayment towards your Halifax car finance
•  To be able to apply for a Halifax car finance you will need to: Have held your Halifax bank account for no less than  3 months, live in the United kingdom and are over 18 years of age, be registered for online banking.
• There are no hidden charges such as early repayment fees or charges
• If you have any issue with your vehicle then Halfax will work with the dealer to sort it out for you as per your consumer rights under section 75 of the consumer credit act.
• If you have a Halifax car finance already then you can manage your account from here.
• You should read the Halifax good condition guide if you plan to return your car.

Types of Halifax car finance

With the Halifax car finance you have two options:

A Personal Contract Purchase ( PCP)

A Hire Purchase (HP)

What is PCP Car Finance? A breakdown

A PCP loan is a special car finance loan product that allows you to buy a car by paying in bits. You won’t own the car until the final payment is made.

So what’s involved in a PCP Car finance loan ?

The amount you borrow: The amount you borrow is based on what the lender assumes will be the future value of the car. They subtract this from the car’s current price to ascertain the depreciation and this is the amount you actually borrow and pay interest on.

The deposit: This is the amount the dealer will want upfront. This amount is subtracted from how much you have to borrow

Balloon or final payment: The balloon or final payment is the deferred value of the car or the minimum future value which you will have the option to pay in order to own the car at the end of your loan.

How does PCP Car Finance work ?

To explain this we will use an example.

Let’s assume a 

Car price of £10,000

Loan term of 3 years

Deposit of £1,000

And future value (after 3 years ) of £4,000

Depreciation = £6,000

So you will be borrowing £6,000(depreciation) –  £1,000(deposit) = £5,000 plus interest

What are your options at the end of the PCP car finance loan ?

So you have 3 options

Option 1: Return the car to the Lender or dealer	You can return the car at no cost. Well except any mileage or others costs as per your agreement
Option 2: Get another car	If at the end of your deal your car is worth more than your balloon or final payment this is called equity. You can use this as a deposit in a new car. This doesn’t have to be a new PCP  deal.
Option 3 : Buy the car	Pay the balloon or final payment and own the car. Watch out for lender admin fees.

Are there any costs associated at the end of PCP car finance if I trade-in or hand the car back?

Yes, in some cases you may face charges. Here are the two common charges.

• Mileage charges; This is pretty simple. At the beginning of your PCP car finance you will have agreed a mileage allowance with the Lender or dealer.If you go over this mileage allowance you will have to pay a fee per mile which is stipulated in your agreement.
• Damage charges.Wear and tear is normal but any dents or dings or serious damage will have to be repaired.It’s is best getting this done yourself before you hand the car in as the lender will likely charge or quote you a higher amount than you could find elsewhere.

What are the specific terms of the Halifax PCP car finance?

You will be charged extra fees if you return your car and it has exceeded the maximum agreed mileage or if it is not in good condition (fair wear and tear accepted).

APR	7.4% APR
Total Amount of Credit	£13,000
Annual interest rate (fixed)	7.14%
Agreement Duration	48 months
Monthly payments	47 x £251.60
Optional final payment of	1 x £3,602
Total amount payable	£15,427.20 (Includes £10 Purchase Fee)

What is hire purchase: A breakdown

There are 3 main options of buying a car though finance, A PCP car finance, a personal loan and a hire purchase.

A hire purchase as the name suggests, is a loan product where you hire the car in its full value over the term of your  agreement. At the end of your agreement you end up owning the car with no more payments to make except for the option to purchase fee.

It is worth noting that the car still belongs to the lender until the end of the loan and this means that if you fail to keep off your repayments the car me be repossessed.

Hire purchase loans are known to be more expensive than other loan options such as PCP because there is no deferred future value so you are paying off the entire value of the cr over the term. It is worth always comparing products and the flexibility each brings.

How does Hire purchase work?

You will typically pay a deposit and then an agreed monthly payment over the term of the loan plus interest.

My Hire purchase is about to end, what next ?

At the end of your Hire purchase agreement the lender will transfer ownership of the car to you. You usually have to pay an option to purchase fee for this. Usually between £200- £400

What is the Voluntary termination?

You can return the car to the lender and get out of the agreement if you have paid half of your outstanding debt. You don’t necessarily have to wait till the midpoint in payments you can do this at any point. This is due to a clause in the consumer credit act.

Remember you will have to bring the car in without dents or dings so the lender does not incur any further charges on you.

Notes: If you decide to end the agreement early, make sure to get everything in writing and keep a copy so the lender does not claim that you have  defaulted on your payments.

What are the specific terms of the Halifax Hire purchase car finance?

There isn’t really much that is specific toHalifax than its rates below:

Representative APR	3.4% APR
Total Amount of Credit	£13,000
Annual interest rate (fixed)	3.31%
Agreement Duration	48 months
Monthly payments	48 x £289.75
Total amount payable	£13,908 (Includes £10 Purchase Fee)

In this brief blog, we discussed the Halifax car finance. If you have any comments or questions, please let us know.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.