Pay monthly used cars

Don't have the cash to buy your next car outright? Paying monthly could be the answer, with more and more finance options available

John Evans
May 21, 2020
Porsche Macan front

As with choosing a mobile phone, when it comes to choosing a car, more and more of us are thinking in terms of what it will cost us per month on finance rather than what it will cost to buy outright.

The two most common forms of car finance are Hire Purchase and PCP finance - Personal Contract Purchase. With the former the car’s price, less a deposit if one is required but plus interest, is divided by the number of monthly payments you choose to make. At the end of the contract the finance is paid off and the car is yours to keep.

With a PCP, instead of paying off the full price of the car with the aim of eventually owning it (which you can still do if you want), you pay only a portion of its price less a deposit if one is required. At the end of the contract you have three choices: part-exchange the car for a replacement model, return the keys and walk away with nothing more to pay or pay the outstanding balance to own it.

Broadly speaking, hire purchase suits those who are attached to the idea of owning their car but this sentiment comes at a price since because they’re financing its total cost, their monthly payments are higher than had they financed it with a PCP where only a portion of the car’s price is paid for.

Taking a selection of typical monthly budgets with the repayment term set at 48 months, we show, below, how big this difference between monthly hire purchase and personal contract payments can be. Note the gap between them widens as the budget rises. The figures quoted assume an excellent credit rating.

Pay monthly used cars

Monthly budget: £100 - Vauxhall Adam

Our pick Vauxhall Adam 1.2i Jam 2015 (15), 18,000 miles

  • Cash price £6,280
  • Finance term 48 months
  • Deposit £621
  • PCP: £83/month
  • HP: £143/month

Even at this budget, it’s clear that a PCP deal has a big advantage over HP. In fact, what you’d pay per month on HP would get you into the Mini Cooper S D Seven in the next budget bracket, below, if you opted for PCP.

Meanwhile, you’ll be surprised how many cars there are at this entry-level budget. All the mainstream car makers are represented, offering a choice of city cars and superminis. Such models are among the most versatile you can buy and terrific value for money.

Fancy something chic? Check out the Fiat 500 or Renault Clio. City runabouts include the smart Peugeot 108 and its sister model the Citroen C1, while larger cars include the evergreen Vauxhall Corsa.


Monthly budget £150 - Mini Hatchback

Our pick Mini Cooper S D Seven 3dr 2017 (67), 26,000 miles

  • Cash price £13,347
  • Finance term 48 months
  • Deposit £1,327
  • PCP: £140/month
  • HP: £289/month

The difference between PCP and HP payments is even clearer in this example, with as much as £149 separating them.

Meanwhile, although the budget has increased by only £50, using a PCP brings into range some genuinely attractive cars including not only our featured Mini but the Mercedes A-class and for hot hatch lovers, the Abarth 595 1.4 T-Jet.

SUVs are all the rage at the moment and there’s one of these at this budget point, too: the practical Peugeot 2008.


Monthly budget £200 - Kia Sportage

Our pick Kia Sportage 1.6T-GDI GT-Line 2017 (66), 23,000 miles

  • Cash price £15,790
  • Finance term 48 months
  • Deposit £1,572
  • PCP: £195/month
  • HP: £343/month

Once again, PCP beats HP for sheer value with premium brands BMW, Mercedes and Audi all falling within our £200 budget. That said, we’ve chosen to highlight the Kia Sportage, a popular family-size SUV with stacks of equipment and a long warranty.

Still, if a premium car is more your bag then you’re spoiled for choice. How about a BMW 335d M Sport Gran Turismo, a Mercedes GLC 220d 4Matic Sport Premium Plus or an Audi A3 1.4 TFSI S tronic Sportback?


Monthly budget £250 - BMW 4 Series Gran Coupe

Our pick BMW 420d (190) M Sport Gran Coupe auto 2018 (18), 15,000 miles

  • Cash price £20,158
  • Finance term 48 months
  • Deposit £2,008
  • PCP: £249/month
  • HP: £438/month

Just look at the difference between those PCP and HP payments. A monthly budget of £250 is achievable for a lot of people but fewer have £438 to spend on a car.

It explains why there’s such a wide and varied choice of great cars at this budget, everything from a Seat Ateca to a Mercedes CLA 180 AMG Line or the BMW 420d Gran Coupe in our example. There are some fun fast Minis, too, while for the environmentally sensitive, there’s the Toyota Prius hybrid.


Monthly budget £300 - Mercedes A-Class

Our pick Mercedes A45 4MATIC 2016 (66), 12,000 miles

  • Cash price £27,050
  • Finance term 48 months
  • Deposit £2,698
  • PCP: £290/month
  • HP: £500/month

At this budget, a PCP proves you don’t have to spend more than £300 to buy a truly world-class car. The difference between it and an HP’s £500 will more than cover your running costs, too.

There are hundreds of cars to choose from representing most brands from Audi to Volvo. We’ve highlighted the super-quick Mercedes-AMG A45 but if your taste is more SUV, there’s the Mercedes GLC 220d. Staying with SUVs there are plenty of Ford Kugas, one of the best-handling SUVs you can buy.

Meanwhile, lovers of executive saloons can choose from the Jaguar XF, Audi A6 and the all-conquering BMW 5 series. There are even electric cars, too, in the shape of the VW e-Golf.


Monthly budget £400 - Range Rover Evoque

Our pick Range Rover Evoque 2.0 TD4 (180) Autobiography auto 2016 (66), 16,000 miles

  • Cash price £31,800
  • Finance term 48 months
  • Deposit £3,173
  • PCP: £396/month
  • HP: £679/month

Once again, the PCP deal scores over the HP deal for its far lower monthly cost. And it’s not as if your options are limited at this budget with all the premium car brands including Porsche represented.

We’ve highlighted the irresistible Range Rover Evoque but you could have a Porsche Macan or for a little less money a Jaguar E-Pace or BMW X4.

Moving away from SUVs there’s the hot Audi RS3 Sportback and stunning Mercedes-AMG CLA45. It’s all up for grabs.


Monthly budget £500 - Audi Q7

Our pick Audi Q7 4.0 TDI (435) quattro 2016 (66), 57,000 miles

  • Cash price £41,230
  • Finance term 48 months
  • Deposit £4,116
  • PCP: £481/month
  • HP: £881/month

The field really opens up at this budget point with a PCP’s £481 giving you a pass to most makes and models. It makes the HP’s £881 look like very poor value.

We’ve led with the mighty Audi Q7 but how about something sportier such as the exotic Alfa Stelvio SUV? Staying with Alfa, you could even have a sporty 4C.

There are Porsche Macans, Cayennes and Caymans, Land Rover Discoverys and Range Rover Evoques, Sports and Velars, and pretty much every BMW you care to mention. Honda’s here, too, with its CR-V and Lexus with its hybrid SUVs and saloons.


Monthly budget £600 - Porsche Macan

Our pick Porsche Macan GTS 3.0 PDK 2016 (66), 29,000 miles

  • Cash price £45,189
  • Finance term 48 months
  • Deposit £4,512
  • PCP: £592/month
  • HP: £966/month

So, £600 a month on a PCP or nudging £1000 on HP? It’s obvious which since the former unlocks such a choice of premium brands and great cars you really don’t have to spend any more.

We’ve gone with a Porsche Macan, that brilliant SUV, but we could just as well have gone with a BMW X3, X4, X5 or X6. There are Audi Q5s, Q7s and even the enormous Q8.

Talking sports cars, a BMW 8 series convertible is tempting but so also is a Jaguar F-type or Ford Mustang, while if luxury holds more appeal, the Mercedes S-class and Audi A8 are also available.



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