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Car Finance FAQs
08 Jan 2024
Almost all new cars in the UK are bought on finance, and many people are now choosing to purchase used cars this way.
However, it can be a very daunting process, and it can be hard to know where to begin.
We’ve compiled a list of the most commonly asked questions about car finance to help you understand your new car-buying experience a little easier.
How does financing a car work?
Your car finance provider will pay for your vehicle after you have paid a deposit. You will then have an arrangement with the provider where you agree to pay off some or all of the price of your car over a set repayment period.
Mercedes-Benz South West offers a range of options for you to consider when planning your vehicle finance.
Agility (Personal Contract Purchase):
If you’re looking for a more flexible method of financing your vehicle over a fixed amount of time, an Agility Plan may be the best option for you. Our most popular option as it often requires a lower deposit and lower monthly payments. This agreement allows you to keep your options open giving you the freedom to defer your end of agreement choices.
- Choose a deposit that suits you; the larger the deposit, the lower the monthly installments will be.
- Decide the terms of your agreement and average mileage – this will determine your monthly instalments and the Optional Purchase Payment at the end of your contract.
- The Optional Purchase Payment must be paid to own the vehicle outright.
As you are only funding a proportion of the vehicle’s value, you can choose what to do at the end of your agreement:
- Pay the Optional Purchase Payment and purchase activation fee to own the vehicle outright.
- Hand back the vehicle - Subject to wear and tear, mileage and whether the vehicle meets the Mercedes-Benz Vehicle Returns Standards, additional charges may apply.
- Part Exchange for a new vehicle - If you choose to hand your car back and purchase a new one simultaneously, we can make the process seamless for you. We will work your settlement figure and equity into the order, settle the part-exchange vehicle finance for you, and take your old car off your hands at the same time you drive away with your new one.
Hire Purchase:
This is a straight forward and affordable route to ownership. With our Hire Purchase option, you can work your way up to full ownership over a period of time and spread the overall cost across a fixed term.
- Choose a deposit that suits you and decide on the terms of your agreement.
- Fixed monthly payments until the remainder of your vehicle’s value is repaid.
At the end of your agreement, when you have made your final payment plus the purchase activation fee, you will own the vehicle outright.
Cash Payment:
Paying fully upfront for your new vehicle means the moment you get the keys you will own it outright.
Business Options:
If you are looking at purchasing a vehicle for your business, contact our dedicated teams to discuss tailored finance options to accommodate your business requirements.
Coming to the end of your agreement with Mercedes-Benz South West?
Whichever finance plan you take with us, we will be there to support you throughout the whole experience. From six months before the end of your agreement, one of our team will be in touch to discuss next steps with you. Using the latest Mercedes-Benz and market information, we can provide you with a free market appraisal of your vehicle.
We will help you understand if there is equity in your vehicle, and what potential future costs you might need to consider if you decide to hand back the car, buy the car outright, or part-exchange for a new one. Our loyalty appointment service is free of charge and is designed to ensure that you have the most up to date information whilst your agreement is coming to an end, so that you can make an informed decision that meets your needs.