A Fixed Sum Loan with Guaranteed Final Payment is not available as a standard product choice. We may offer you this product as part of our underwriting conditions. Your dealer will make you aware of this after your application for finance has been received and assessed by us.
What is it?
If you have applied for a Personal Contract Purchase agreement we may offer you an alternative product known as a Fixed Sum Loan with Guaranteed Final Payment. Part of the cost is deferred until the end of the agreement which may give you the benefit of lower monthly payments. The deferred amount is known as the Guaranteed Final Payment.
At the end of the agreement you have three options:
How does it work?
- Your dealer will advise you if we can offer you this product, as it isn’t available by choice. The decision will be based on the car, the amount of deposit, your credit score and the Guaranteed Final Payment
- During the agreement you simply make regular monthly payments to cover the amount you borrow plus any interest and fees
- The interest rate is fixed so you’ll know exactly how much you’ll repay from the start of the agreement
- At the end of the agreement we’ll write to you to remind you of the three options
- You decide which option is best for you. Your dealer may be able to help if you decide to part exchange the vehicle
Features and Benefits
- You own the car right from the start of the loan
This type of agreement is covered by the Consumer Credit Act 1974, which means
- As a Fixed Sum Loan you will have no right to terminate the agreement early (under a voluntary termination through the Consumer Credit Act 1974)
- You can pay off lump sum amounts during the agreement
- You can settle the agreement early by repaying the required amount
Other things you should know
- The product is usually suitable if you have little or no deposit. However the outstanding balance may be greater than the value of the car
- At the end of the agreement it is possible there may not be any equity (the difference between the Guaranteed Final Payment and the value of your car)
- A higher deposit will provide the benefit of lower monthly repayments throughout the agreement, however it will not change the Guaranteed Final Payment set at the start of the agreement, or the vehicle valuation at the end of the agreement
- If you decide to return the car at the end of the agreement and it has covered more miles than agreed, you will be required to pay a charge for excess mileage. In addition, if you have not kept the vehicle in reasonable condition for its age and mileage you may be charged a refurbishment cost
- This type of agreement is not available to corporate entities, e.g. limited companies, PLCs or limited partnerships