All you need to know: Leasing or financing a used car
As we head into 2022 and the shortage of semiconductor chips continues to dramatically impact the worldwide supply of new cars, demand for used cars continues to rise and we have a massive stock waiting for you to browse and choose from.
Acquiring a car through finance is a popular, convenient and cost-effective way of attaining a vehicle. But most often, people associate leasing or financing with brand new cars, and many drivers forget that used cars can be leased just like new cars, making them excellent value for money.
Hippo Motor Finance and our sister brand Hippo Leasing specialise in offering lease deals and finance options for new cars as well as nearly new and used car leasing plus more traditional used car finance. This in itself is quite rare and it makes used car leasing or used car finance accessible to drivers from diverse credit backgrounds, offering them numerous benefits.
Benefits of used car finance
One of the more obvious benefits relates to value. When you get a new car, whether on a lease deal or on more traditional finance like Hire Purchase, there are a number of things you are effectively funding including the mark up at the dealership plus the VAT – which goes to the government, not to the dealer. VAT is the major factor here as it makes up 20% of the value wiped out right there. And it’s not uncommon for a vehicle to lose value between 20% to 35% in its first year and 50% over the first three years. Of course, if you lease or finance a used vehicle, its value is effectively “knocked out” of the vehicle to use an industry phrase. All of the above translates into lower monthly payments.
In the past, buying a used car came with a certain risk attached because the car might well have mechanical or less obvious issues. By and large, modern cars are much more reliable. Serious lease and finance companies like Hippo also have a warranty for every car that leaves the premises. Our Hippo Protect plan ensures that even if you face, normally very rare, faults or problems with the car; you are largely covered by the warranty.
Another major factor is how the nearly new or used car has been prepared. Beware of used cars that might just come straight from an auction into your hands. How can the dealer be sure that you have not got a car with rare issues? They cannot. At Hippo, we conduct a thorough 172-point pre-purchase check of the vehicle and we have fixed minimum standards in place so you can rest assured that any visible chips and dents, or fading paintwork, has been fixed. More importantly, we also go over the mechanics of the car in our state-of-the-art workshop. Hippo employs a dedicated team of mechanics and body shop specialists who take assessment and preparation of your car very seriously. This is imperative when you lease or buy a used vehicle.
Industry bodies like the BVRLA (British Vehicle Renting and Leasing Association) are there to protect you as consumers – and Hippo is a long term member of the BVRLA.
You don’t need to finance an old used car. The vast majority of our nearly new and used cars are less than three years old so you are not missing out on modern tech and reliability. Most actually still have the manufacturer’s warranty and, if not, we include an independently-managed and well-regarded three-month Platinum Warranty for free, which is easily extendable.
Quicker Delivery – The lead time for a used car is way quicker than a brand new car from the manufacturer. A brand new car can take weeks or even months to get to you, as these vehicles are built from scratch by the manufacturer. Whereas all used cars are already in stock, waiting to be delivered to you within 48 hours.
A Major differentiator for Hippo is that we have 900 real cars in stock and hundreds that list is always growing. We are also perfectly placed to source any vehicle that you are looking for, if we don’t have it in stock.
With a nationwide delivery option available, your chosen car can be delivered to your doorstep, no matter where in the UK you are.
Another important point to note is that Hippo Motor Finance offers no deposit car leasing and finance deals with all our lease cars. Why tie up capital in the vehicle? These are generally straightforward deals which allow you to keep the deposit money in your pocket, so no large sums paid up front with no deposit used car leasing and finance.
How to finance a used car
At Hippo Motor Finance, the main types of used and second-hand car finance we offer are PCP (Personal Contract Plan), PCH (Personal Contract Hire) and HP (Hire Purchase).
PCP deals are the most popular and flexible form of finance. You can choose if you want to pay off the vehicle at the end by paying an agreed “balloon payment” or you can choose to hand the car back.
PCH is the purest form of leasing. You will never own the car. Think of it as a long term rental service – you get to use the vehicle but never need to worry about depreciation and if you take out a maintenance contract you pretty much don’t have to think of anything apart from the insurance and putting fuel in the car.
HP is the most traditional form of finance. Agree a set amount of interest to pay over a set period (normally two to five years), pay a deposit (if you want zero deposit deals are also available on all our cars), pay the regular monthly payment and at the end…the car is yours to keep.
The trick comes in recognising what is the best form of finance for you…and you only!
What is the best way to finance a used car?
So, we know how each finance plan differs, but which is best suited to you?
If you are after low monthly payments, then the choice is between PCP and PCH. These two have their own differences If you are not sure if you will want to keep the car at the end of the finance period and expect to do a regular amount of miles every year, the flexibility of PCP could well be right for you.
With PCP, you are effectively paying the difference between the cost price of the vehicle and what the finance company thinks it will be worth at the end of the agreed period. It has the added advantage of you not needing to take a risk on the value of the car at the end of this period – if the value has dropped unexpectedly – it’s not your ‘problem’ as you have a guaranteed minimum value.
If, on the other hand, the model that you chose is in demand and values have held well then you might actually have some decent value in the car and you can choose to pay the balloon payment or use this additional equity (value you have in the car) towards a deposit on another, new deal.
A straightforward lease or PCH is fantastic for those who don’t care about ever owning the vehicle and prefer to regularly upgrade every few years. With PCH you use the car, pay for the use, hand it back and get a new one. These contracts are very popular with those under 30 who often prefer renting versus buying, it’s also getting more popular with small businesses and those who used to automatically go for PCP or HP. The advantage is you are able to change cars every contract term, ensuring you drive a car that is as young as possible for your monthly budget.
HP is often the best for those who like to have something to show for their payments at the end of the agreement period as you will own the vehicle outright once you have made all of your payments.
The monthly payment will likely be more than for PCP or PCH when you compare the same vehicle but if you expect to do a lot of mileage or want to own the vehicle at the end, then a hire purchase agreement is likely to be the best choice for you.
This form of finance can be a smart option for used car finance as you still get a good, solid car but the monthly payment will be reduced to reflect the drop in cost you get from buying a nearly new or used car. As you are buying the car in instalments, there is also no need to estimate your annual mileage, so there is also no excess mileage charge either, unlike PCP or PCH.
How to finance a used car with Hippo Motor Finance
Ordinarily, when looking for a used car lease you will have to look for a car yourself, and then look for a way to finance it. Thankfully, you can save precious time and energy with Hippo Finance.
We merge these two tasks together, by having our vehicles in stock and also being a finance broker. We have 900 used and nearly new cars in stock at Hippo Leasing and finance plus another 600 cars we have bought and on the way to us including a number of prized demo models. We also have close relationships with all the major lenders through Hippo Motor Finance, successfully dealing with all kind of credit – in fact, we have a proven panel of 14 leading lenders.
Simply let us know how much you can afford, and we’ll work out the best finance option that suits you plus offer you a range of cars that suit your needs from our huge selection of assessed, prepped and warranted cars. – Used car leasing and finance could not be easier than the below four easy steps
1. Apply for car finance
You can apply online or over the phone, it’s a quick process where we’ll take some simple details such as employment information and your address in order to provide the best car finance option at the best rate for your personal circumstances. Please remember that we use soft search in the first instance to protect your credit rating so it’s easy to do and you are protected.
2. Get accepted
We deal with all kinds of financial backgrounds and credit, approving many when they have been turned away elsewhere. Equally, we have a huge panel of 14 proven lenders including the leading Prime lenders so you won’t miss out on a good deal. We will work closely with yourself to ensure you’re kept up to date with the decision from the lenders through your dedicated, helpful and knowledgeable account manager or we can do most of the work via email if you prefer.
3. Choose your car
We’ll give you suggestions for the ideal car for you, your personal needs and your budget. If you’ve already seen a car you like and we don’t have it, let us know and we’ll source an identical car for you or simply produce it from our in stock cars. The car is prepped to the highest standards meaning that you can get effortless finance and car choice in one place!
4. Have your car delivered or collect
Once you’ve been approved and you’ve signed for your car, you can choose to collect it or you can get it delivered to your front door. If you are local to the Lancashire area or don’t mind making the journey, you can come to our state of the art showroom near Blackburn and drive it away the same day. If you don’t have the time or are too far, we can deliver anywhere in the UK.
Hippo Motor Finance can find the right used car finance deal for your unique needs, so why not see what we can do for you and your circumstances? Apply for car finance today or give us a call on 01254 956 777 to discuss the best options for your used car finance deal.