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What to look out for on your car finance agreement

If you’ve found the right car for you, have your car finance agreement sorted, and are ready to sign on the dotted line, you might be feeling a little overwhelmed about the amount of paperwork floating around.

To make sure you’re completely clear regarding your responsibilities as part of the agreement, and to ensure the details on the contract are the same as you specified, here’s a few things to doublecheck prior to signing the contract.

Is your annual mileage correct?

Whether you’re leasing a brand new car, or arranging a hire purchase or PCP deal on a used car, you will have to state your annual mileage as part of your contract.

With the cars depreciation linked to wear and tear, checking the annual mileage is correct will ensure that you’re not paying too much per month (or vice versa) on your car deal. By overestimating your mileage you’re likely to be paying more per month than you need to, but if you’ve underestimated then you’re going to be charged mileage excess at the end of your contract.

Many people overestimate their mileage to be on the safe side, with the most popular rental profile being 10k miles per year, but in 2019 the average motorist drove just 7,400 miles. 

Car condition agreement

As part of your contract, it will state the condition the car needs to be returned in at the end of the agreement.

It is likely whoever you entered into an agreement with will be a member of the British Vehicle Rental and Leasing Association (BVRLA), and so will follow their Fair Wear and Tear guidelines when inspecting the vehicle at the end of the contract. 

To ensure that your leased car meets the “fair wear and tear” policy, the BVRLA recommends that you conduct the following checks ahead of returning the car to the provider:

Payment schedule

Double check the initial payment/deposit is the same as you agreed and the monthly payment amount thereafter is what you’re expecting. The monthly payment will be fixed to an agreed date (usually the first working day or last working day of the month) but this can be specified otherwise while signing the paperwork if you receive your salary at different times. Agreeing suitable payments terms will ensure you can budget more accurately and know exactly when payments are coming in and going out.

Understand any listed charges

Depending on the type of finance agreement you’ve entered with your vehicle, whether PCP or HP, it could come with an annual percentage rate (APR) applied on top of the monthly price of the car. The APR that you receive varies from lender to lender, but they are required to explain what that will be before you sign an agreement. Similarly, there will be an option to purchase fee or a balloon payment at the end of the term to purchase the car outright.

Representative Example of Credit

We expect more than 51% of our customers to achieve this rate.

Loan Amount Total Cost of Credit Representative APR 60 Monthly Payments Deposit Amount Loan Term Total Amount Payable
£7,500 £3831 19.1% APR £188.85 £0 60 Months £11,331

All offers are subject to change at any time, you must be 18 or over and finance is subject to status, vehicle availability and terms and conditions apply. We can introduce you to a limited number of finance companies, a commission may be received. Failure to maintain payments may result in termination of your agreement and the vehicle being returned, this could affect your credit rating and make it more difficult to obtain credit in the future. All prices correct at time of publication.

We purchase a wide variety of vehicles from all over the country to ensure the best quality and value for our customers, all of our cars go through a thorough inspection process and if they do not meet our standards we do not sell them. We endeavour to inform our customers (where possible) the provenance of the vehicle they are buying and as such we will always inform you if the vehicle has previously been either an ex fleet or hire car. Should your vehicle be an ex hire/fleet car please do not be concerned as we would never value this vehicle differently when you come to part exchange it and there is no difference to the CAP valuation either.

You should try and estimate the distance you will travel as accurately as possible to try and avoid excess mileage charges at the end of your contract.

All pictures and/or photos and car descriptions on this site are for illustration and reference purposes only and are not necessarily the vehicle on offer. All offers are subject to change at any time and are subject to finance approval and vehicle availability. All prices correct at time of publication. E & OE.

Hippo Vehicle Solutions t/a Hippo Motor Finance is authorised and regulated by the Financial Conduct Authority. FRN 658076. We are a Credit Broker not a Lender and can introduce you to a limited number of lenders. Subject to status and to UK residents only (excl. the Channel Islands). Individuals must be 18 or over. Guarantees and indemnities may be required. We typically receive a fixed commission calculated by reference to the vehicle model, product or amount you borrow, for introducing you to a lender but this does not affect the interest charged on the agreement, all of which are set by the lender. Images for illustrative purposes only. Hippo Vehicle Solutions t/a Hippo Motor Finance is an Appointed Representative of AutoProtect (MBI) Limited for insurance distribution purposes. AutoProtect (MBI) Limited is authorised and regulated by the Financial Conduct Authority. Its firm reference number is 312143. You can check this at www.fca.org.uk

We endeavour to ensure that all information including the specifications and finance availability are accurate. Whilst we make every effort to display correct information we are aware that errors may occur occasionally. We are not able, therefore, to guarantee the accuracy of all information especially when given to us by third parties. If you do require clarification of some information you have seen on our website, please email us at info@hippomotorgroup.com . This does not affect your statutory rights.

We are a broker not a lender and our registered office is Unit 26 Trident Park, Trident Way, Blackburn, BB13NU.