Car finance explained

To understand which car finance product is right for you depends on how long you’re likely to keep the car, your current credit score and how much you can afford to repay on a monthly basis.

Find out more about each type of finance that we offer below.

What type of car finance is right for you?

Hire Purchase (HP)

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HP car finance is Zuto's most popular type of finance. As the title suggests, you hire the car from the finance company, taking responsibility for it and making monthly payments until you have paid the total amount owed. You are the registered keeper of the vehicle throughout the payment plan and then at the end of the repayment period, you have the option to take ownership of the car.

As you've paid off the cost of the car by this point, all you pay is a small admin fee. This could be anything from £1 - £299+.

How hire purchase (HP) works

Illustration of how hire purchase works

Benefits of Hire Purchase

  • Fixed monthly repayments over an agreed period
  • The choice to buy or return the car at the end

HP is good if:

  • You want fixed monthly repayments
  • You might like to own the vehicle long term

Calculate your finance

Personal Contract Plan (PCP)

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With PCP car finance you are only paying for part of the total amount due and have the choice to return the car at the end of your repayment period. You still pay monthly instalments to the finance company as with other forms of credit, but at the end of the repayment period, you can pay a lump sum, (commonly known as a balloon payment) which will be higher than the monthly repayments you have been making return your car.

PCP enables you to pay less each month for a car of the same value than you would with a traditional HP plan.

How Personal Contract Plan (PCP) works

Illustration of how PCP works

Benefits of PCP

  • No need to worry about depreciation
  • Lower monthly instalments for a better car

PCP is good if:

  • You like to change your car frequently
  • Are not bothered about owning a car outright

Calculate your finance

Personal Loan

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Personal loans - regularly referred to as car loans – are not secured on the vehicle you buy. You borrow the money from a finance provider and use it to buy the car you want and can afford. You then pay the finance provider back over an agreed period.

Typically, you need a good credit rating to get a personal loan with a good APR and you don’t get the same level of consumer protection as you do with CS, HP or PCP. Read more on your consumer protection here.

How a personal loan works

Illustration of how personal loan works

Benefits of a personal loan

  • Own your new car from the start
  • No restrictions on your car from lender

A personal loan is good if:

  • You have good credit
  • You wish to sell on/make modifications to your car
  • You want to buy an older or high-mileage vehicle

Calculate your finance

Fixed Sum Loan

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A fixed sum loan provides you with a fixed repayment plan and a fixed rate of interest and the car belongs to you from the start of the loan.  However, unlike a personal loan, you cannot sell or part with possession of the vehicle until the finance is settled.

Unlike a traditional personal loan, you have lender support should things go wrong with the vehicle within the first six months after purchase because the car is written into the finance agreement as an asset.

How fixed sum loans work

Illustration of how fixed sum loans work

Benefits of fixed sum loans

  • Different from a personal loan
  • Your car is named as asset in finance plan

A fixed sum loan is good if:

  • You want a fixed repayment plan
  • You want your car protected as a named asset

Calculate your finance

Conditional Sale

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With a conditional sale arrangement you commit to buying the car from the start. This means the vehicle is automatically yours once you’ve paid the final instalment of the finance plan.

Choose the car and Zuto will arrange for the payment of the vehicle. You’ll then hire the car from the finance company, taking responsibility for it and making monthly payments until you have paid the total amount owed.

How conditional sale works

Illustration of how conditional sale works

Benefits of a conditional sale

  • 12-60 month finance plans available
  • Optional deposit to reduce monthly repayments

Conditional Sale is good if:

  • You want fixed monthly repayments
  • You wish to own the car in the long term

Calculate your finance


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