When it comes to buying a car, one of the most common concerns people have is how to finance the purchase. Financing can seem complicated, with numerous options available, each offering different terms, conditions, and implications. If you’re looking to buy a car, Arnold Clark car finance is a choice that many people consider. In this article, I’ll break down everything you need to know about Arnold Clark car finance, including how it works, the benefits and drawbacks, and how it compares to other finance options. By the end of this guide, you should have a clear understanding of whether Arnold Clark car finance is the right option for you.
Table of Contents
What is Arnold Clark Car Finance?
Arnold Clark is one of the largest car dealership networks in the UK, offering a wide range of new and used cars. Arnold Clark car finance is their in-house financing option that allows you to spread the cost of your vehicle purchase over a period of time, usually between one and five years. This financing option is designed to make car buying more accessible for people who may not have the full amount upfront. It typically involves monthly payments, which can vary based on the length of the loan, the amount borrowed, and the interest rate.
The process of applying for Arnold Clark car finance is straightforward. You can apply online, over the phone, or in person at one of their dealerships. Once you’ve applied, Arnold Clark will assess your financial situation to determine your eligibility for finance. This is where they check your credit score, income, and other financial factors to decide what terms they can offer you.
Types of Arnold Clark Car Finance
Arnold Clark offers several types of car finance options, each with its own benefits and terms. The most common types of finance they offer include:
1. Personal Contract Purchase (PCP)
A Personal Contract Purchase (PCP) is one of the most popular options when financing a car. It works by offering lower monthly payments compared to other types of finance. With PCP, you pay for the car over a set period, and at the end of the term, you have three options: you can either pay a lump sum to own the car, return the car, or trade it in for a new one.
Key Features:
- Lower monthly payments compared to traditional loans.
- Flexible end-of-term options (buy, return, or trade in).
- You can choose the term length (usually 24 to 48 months).
Example:
Let’s say you’re looking to buy a car worth £20,000 with a 36-month PCP deal. The monthly payments are £300, and at the end of the term, you have the option to make a final “balloon payment” of £8,000 to own the car. If you don’t want to keep the car, you can return it or trade it in.
2. Hire Purchase (HP)
Hire Purchase (HP) is another popular option, but it works differently from PCP. With HP, you make fixed monthly payments for a set term, usually between 12 and 60 months. Once you’ve made the final payment, you own the car outright.
Key Features:
- Fixed monthly payments.
- You own the car outright at the end of the term.
- There are no balloon payments or options to return the car.
Example:
Imagine you’re purchasing a car worth £15,000 with a 48-month HP deal. Your monthly payments might be £350. At the end of the 48 months, you’ll own the car outright with no additional payments. The total cost of the car would be £16,800 (£350 x 48).
3. Personal Loan
Arnold Clark also offers personal loans for those who prefer not to use a PCP or HP plan. With a personal loan, you borrow the money to buy the car outright and then pay it back in fixed monthly installments. This option works well for people who want full ownership of the car from the start.
Key Features:
- You own the car immediately.
- Fixed monthly payments over the loan term.
- No mileage restrictions.
Example:
Let’s say you take out a personal loan for £12,000 at a 6% interest rate over 60 months. Your monthly payment might be around £230, and the total amount paid over the loan term would be £13,800.
Benefits of Arnold Clark Car Finance
There are several reasons why people choose Arnold Clark car finance over other financing options. Here are some of the key benefits:
1. Competitive Interest Rates
Arnold Clark offers competitive interest rates, making it an attractive option for those who want to keep their monthly payments low. The interest rate you receive will depend on your credit score, income, and other financial factors.
2. Flexibility
With Arnold Clark car finance, you can choose from a variety of finance options, including PCP, HP, and personal loans. This flexibility allows you to select the option that best suits your budget and preferences.
3. Easy Application Process
Applying for Arnold Clark car finance is a simple process, whether you apply online or in person. The online application is quick and straightforward, and you can often get a decision within minutes.
4. Wide Range of Cars
Arnold Clark offers a huge selection of new and used cars, so you’re likely to find something that fits your needs and budget. Whether you’re after a family car, a sports car, or a compact city car, there’s something for everyone.
5. Excellent Customer Support
Arnold Clark is known for its excellent customer service. Their staff are knowledgeable and can guide you through the entire car financing process, answering any questions you may have along the way.
Drawbacks of Arnold Clark Car Finance
While Arnold Clark car finance has many advantages, there are also some drawbacks to consider. Understanding these potential downsides will help you make an informed decision.
1. Interest Rates May Be Higher for Those with Poor Credit
If you have a poor credit score, you may be offered a higher interest rate. This means you could end up paying more over the life of the loan.
2. Mileage Restrictions (PCP)
If you choose a PCP deal, you may face mileage restrictions. If you exceed the agreed-upon mileage, you could be charged extra fees at the end of the term.
3. Balloon Payments (PCP)
With a PCP deal, you may be faced with a large final payment (balloon payment) at the end of the term. While this gives you lower monthly payments, it can be a shock if you’re not prepared for it.
4. Not Fully Transparent with Costs
Some customers report that the total cost of the car can be higher than expected due to additional charges, such as administration fees or early termination fees.
How Arnold Clark Car Finance Compares to Other Finance Options
Now that we’ve explored the main types of Arnold Clark car finance, let’s take a look at how it compares to other financing options in the market. Below is a comparison table to help illustrate the key differences.
| Feature | Arnold Clark PCP | Arnold Clark HP | Personal Loan | Bank Loan |
|---|---|---|---|---|
| Ownership | After final payment | After final payment | Immediate ownership | Immediate ownership |
| Monthly Payment | Lower | Higher | Fixed | Fixed |
| Final Payment (Balloon) | Yes | No | No | No |
| Mileage Restrictions | Yes | No | No | No |
| Interest Rates | Competitive | Competitive | Varies by credit score | Varies by credit score |
| Flexibility of Term Length | Yes | Yes | Yes | Yes |
| Risk of Negative Equity | Yes | No | No | No |
Example Calculations for Different Finance Options
To help you better understand the financial implications of different options, let’s look at an example of financing a £20,000 car over 5 years. We’ll assume an interest rate of 5% for each option.
PCP Example:
- Car Price: £20,000
- Term: 5 years
- Monthly Payment: £350
- Final Balloon Payment: £8,000
- Total Paid Over Term: £350 x 60 = £21,000
- If you choose to buy the car: £21,000 + £8,000 = £29,000
HP Example:
- Car Price: £20,000
- Term: 5 years
- Monthly Payment: £400
- Total Paid Over Term: £400 x 60 = £24,000
Personal Loan Example:
- Loan Amount: £20,000
- Term: 5 years
- Monthly Payment: £377
- Total Paid Over Term: £377 x 60 = £22,620
From these examples, you can see that while the PCP option may seem like it offers the lowest monthly payments, the balloon payment at the end can make it more expensive in the long run. Hire Purchase offers a more predictable cost, but it requires higher monthly payments. A personal loan is another option that allows you to own the car immediately but may come with higher monthly payments compared to PCP.
Conclusion
Arnold Clark car finance offers a range of options that can help make buying a car more affordable and accessible. Whether you choose PCP, HP, or a personal loan, it’s essential to carefully consider your budget, how long you want to keep the car, and whether you’re comfortable with the terms, such as interest rates and final payments. By weighing the pros and cons of each option, you can make an informed decision that best fits your needs.
If you’re unsure about which option is right for you, don’t hesitate to reach out to Arnold Clark for more information or speak to a financial advisor. With the right approach, car finance can be a great way to secure the vehicle you want without putting undue strain on your finances.
