When I started looking into ways to finance my next car, I wanted to ensure I was making a decision that was both financially sound and flexible. That’s when I came across Aviva Car Finance. It was crucial for me to understand how it worked, its benefits, and how it compared to other financing options. In this article, I will walk you through everything I discovered about Aviva Car Finance, helping you make an informed decision if you’re considering this option for your car purchase.
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What is Aviva Car Finance?
Aviva Car Finance is a financial service offered by Aviva, one of the UK’s leading insurers. It provides a variety of financing options for individuals who want to purchase a new or used car. Whether you are looking to buy a car from a dealership or a private seller, Aviva Car Finance can offer you a loan tailored to your needs. What sets it apart from other financing options is that it provides straightforward terms, competitive interest rates, and flexibility in payment schedules.
Key Features of Aviva Car Finance
As I dug deeper, I found several key features that made Aviva Car Finance appealing:
- Loan Amounts: You can borrow between £1,000 and £25,000, depending on the car’s price and your financial situation.
- Flexible Loan Terms: Loan terms range from 12 months to 60 months. This flexibility allowed me to choose the repayment period that suited my budget.
- Competitive Interest Rates: Aviva Car Finance offers interest rates that can be as low as 3.9% APR, which is competitive compared to other lenders.
- Fixed Monthly Payments: With fixed monthly payments, I was able to know exactly how much I’d need to pay each month, making it easier to plan my finances.
- No Early Repayment Fees: This was a huge plus for me. If I had extra funds available, I could repay the loan early without incurring any penalties.
- Online Application: The process was fully online, meaning I could apply for the loan from the comfort of my home. The application process was simple and quick.
Types of Aviva Car Finance Plans
Aviva offers two main types of car finance plans: Personal Contract Purchase (PCP) and Hire Purchase (HP). Both of these options come with their own benefits, and I found each suited different types of buyers.
Personal Contract Purchase (PCP)
PCP is a popular car finance option. It allows you to have lower monthly payments, but it includes a balloon payment at the end of the term if you decide to keep the car. Here’s how it works:
- Monthly Payments: You pay a fixed amount each month for the duration of the term (typically 24 to 48 months).
- Optional Final Payment: At the end of the term, you have three choices:
- Pay the balloon payment and keep the car.
- Return the car to Aviva and walk away without any further payments (as long as you’ve kept the car in good condition and adhered to the mileage limit).
- Use any equity in the car as a deposit toward a new car.
Let me break it down further with an example:
| Car Price | Deposit | Loan Amount | Loan Term | Monthly Payment | Final Balloon Payment |
|---|---|---|---|---|---|
| £15,000 | £3,000 | £12,000 | 36 months | £250 | £4,500 |
In this example, if I chose the PCP plan, I would pay £250 a month for 36 months. After 36 months, I would have the option to pay the final £4,500 to own the car outright. If I didn’t want to keep the car, I could return it.
Hire Purchase (HP)
Hire Purchase (HP) is a straightforward finance option where you pay for the car over time. The major difference from PCP is that at the end of the term, you own the car outright—there’s no balloon payment. With HP, you are essentially paying for the entire car over the agreed period.
Here’s an example of how HP works:
| Car Price | Deposit | Loan Amount | Loan Term | Monthly Payment | Ownership |
|---|---|---|---|---|---|
| £15,000 | £3,000 | £12,000 | 36 months | £333.33 | Owned after final payment |
In this scenario, after 36 months, I would own the car completely. Each month, I would pay a fixed amount, and once the loan term ends, I wouldn’t have to worry about any further payments.
Interest Rates and Costs
The interest rate is an important factor in any financing plan. Aviva Car Finance offers competitive rates, but they vary based on your credit score and the loan term. Here’s a breakdown of typical rates:
| Loan Term | Interest Rate | APR Example |
|---|---|---|
| 12 – 24 months | 3.9% – 6.9% | 4.5% APR |
| 25 – 36 months | 4.9% – 7.9% | 5.5% APR |
| 37 – 60 months | 5.9% – 8.9% | 6.5% APR |
Example of Monthly Payments and Total Repayment
Let’s calculate how much I would pay for a £10,000 loan over 36 months with an interest rate of 5.5% APR:
- Loan Amount: £10,000
- Interest Rate: 5.5% APR
- Loan Term: 36 months
Using a simple loan calculator, I would pay approximately £301.56 each month. Over 36 months, the total amount repaid would be £10,849.12.
Aviva Car Finance Eligibility
To apply for Aviva Car Finance, there are a few eligibility criteria that I needed to meet:
- Age: You must be at least 18 years old.
- Income: I had to show proof of a regular income, whether through employment, self-employment, or another source.
- Credit History: Your credit score plays a role in the interest rate offered to you. A higher score typically results in a lower rate.
Comparison with Other Car Financing Options
I took some time to compare Aviva Car Finance with other car financing options, such as bank loans and dealership financing. Here’s a comparison table of the three:
| Financing Option | Loan Term | Interest Rate | Ownership | Early Repayment Fees |
|---|---|---|---|---|
| Aviva Car Finance | 12-60 months | 3.9% – 8.9% | PCP or HP | None |
| Bank Loan | 12-60 months | 5% – 10% | Full ownership | Varies |
| Dealership Finance | 12-60 months | 6% – 12% | PCP or HP | Possible penalties |
Benefits of Aviva Car Finance
One of the things that stood out to me was the range of benefits Aviva Car Finance offers:
- Competitive Interest Rates: With rates starting from as low as 3.9%, Aviva provides competitive deals compared to other lenders.
- Flexibility: Whether I preferred PCP or HP, I had the flexibility to choose the plan that suited me best.
- No Early Repayment Fees: Aviva’s approach to not charging for early repayment is a significant advantage. If I received a bonus or had extra funds, I could pay off my loan faster without any financial penalty.
Potential Downsides of Aviva Car Finance
Like any product, Aviva Car Finance comes with its potential drawbacks:
- Mileage Limits (for PCP): With a PCP agreement, there may be a mileage limit. If I exceeded the agreed mileage, I could incur additional charges.
- Depreciation: The car’s value depreciates over time, which means that, especially with PCP, you might owe more than the car is worth by the end of the loan term.
Conclusion
In conclusion, I found Aviva Car Finance to be a flexible and competitive option for financing a car. The ability to choose between PCP and HP, coupled with attractive interest rates and no early repayment fees, made it an appealing choice for many buyers. However, like any financial product, it’s important to consider the potential downsides, such as mileage restrictions with PCP or the possibility of owing more than the car’s worth.
By weighing these factors carefully and comparing different options, you can make an informed decision about whether Aviva Car Finance is the right choice for your car purchase.
