Car Finance Explained

Choosing the financial package goes hand-in-hand with finding the right car. We have a range of products to make the purchase of your car a simple process.

For private buyers through Volvo Car Financial Services UK Limited there are many ways for you to finance, hire or lease the right car for you. In support of the finance options we also offer Guaranteed Asset Protection (GAP) Insurance.

We will work with you through your purchase journey to ensure you select the funding method that suits your requirements exactly.

Finance Options Explained in Detail:


Hire Purchase is the most widely known and often used funding method which is very simple to understand.


  • The purchase price is split into equal amounts over an agreed period of time
  • Pay your agreed deposit, the more deposit the lower the monthly payment
  • Choose your agreed term and repay the balance over this period, which will be a fixed payment from the contract start
  • At the end of the contract, subject to all payments having been made, including the final (option to purchase fee) the car is then yours to keep, sell, or trade-in for a new car


  • A fixed monthly payment, allowing you to budget with confidence
  • At the end of the agreement you will own the car outright
  • There are fewer conditional restrictions in the agreement such as mileage etc



A PCP is the most flexible way of financing your car, there are many attributes that can be tailored to suit your financial requirements.

First you need consider what your estimated annual mileage will be. This will then be used to determine the Optional Final Payment.

Next is to decide on how much deposit you would like to put down. This figure combined with the agreement duration and Optional Final Payment will determine the amount of your monthly payment

You then sign the agreement, pay the deposit and then make the monthly payments until the end of the agreement.

At the end you will have 3 options, retain the car by settling the outstanding amount, return the car, or renew the car and start a new agreement.


  • A fixed monthly payment, allowing you to budget with confidence
  • Lower monthly payments than a Hire Purchase agreement
  • Variety of options available at end of the agreement
  • You can match the length of your agreement with the time you want to keep the vehicle


Personal Contract Hire is the choice favoured by most people who would prefer to use a vehicle, rather than own one. You simply choose a vehicle for an agreed period up to 48 months in exchange for a fixed monthly rental. There are no depreciation or vehicle disposal worries since you just return the vehicle at the end of the contract. Fixed price servicing and maintenance options are usually available with most contracts for an additional cost. Personal Contract Hire is the ultimate in hassle-free motoring.

Contract hire additional options.

  • Servicing costs
  • Maintenance costs
  • Tyre replacement (normal wear and tear only)
  • A replacement vehicle following an accident or breakdown or during services


A Personal Contract Hire agreement can be structured to meet your needs based on the car, estimated annual mileage, the agreement duration and any additional services you require.

You may pay an initial rental based from a provisional monthly payment. Typically this is 3, 6, or 9 month based payment that can be tailored to suit your requirements. The greater the initial rental, the lower your regular rentals will be.

At the end of the contract you simply return the vehicle.


  • You pay a fixed monthly rental for the duration of the contract – subject to tax and Road Fund Licence charges
  • The contract is flexible to meet the rental period and mileage that suits you
  • Your monthly rental can also include servicing, maintenance and repair, for an additional cost

In support of the finance options, we also offer Guaranteed Asset Protection (GAP) Insurance. This is designed to cover those unfortunate experiences such as theft or an accident resulting in the car being written off. GAP insurance ensures the value you get back from your insurer is the original invoice value, not the valuation of the vehicle at the time of the claim.

Depending on the age of the vehicle when the claim was made there could be a gap between how much the insurer is prepared to pay and how much is left on the finance agreement. In this situation, the agreement holder would be liable to fund the difference. GAP insurance provides cover to ensure any difference is protected.

Should you have any further questions please ask a sales consultant who will be happy to help.