Conditional Sale is a popular form of car finance that is similar to Hire Purchase. It allows you to spread the cost of a vehicle over regular, fixed monthly payments. At the end of the agreement, the vehicle is entirely yours. One of the main differences between Conditional Sale and Hire Purchase is that Conditional Sale does not include an option to purchase fee at the end of the term. This makes it a straightforward and transparent way to finance a car.
When you enter into a Conditional Sale agreement, the only charges you’ll incur are the interest on the monthly payments as set out by the lender. The agreement offers flexibility, allowing you to customise the following aspects:
One of the significant advantages of a Conditional Sale agreement is the absence of mileage restrictions or charges for wear and tear. Unlike some other types of car finance, where exceeding a mileage limit or returning the car with damage could result in additional costs, Conditional Sale has no such penalties. Once you've made the final payment, the vehicle is yours outright, with no further fees.
Yes, you can end a Conditional Sale agreement early if your circumstances change, or if you simply want to upgrade your vehicle. The process is straightforward:
If your vehicle's trade-in value is higher than the settlement figure, you could either receive the difference as cashback or use it as a deposit towards your next vehicle finance agreement. This flexibility makes Conditional Sale an appealing option for many drivers who like to change their vehicles regularly.
The key difference between Conditional Sale and Hire Purchase lies in the end-of-term options. While both allow you to spread the cost of a vehicle over time, Conditional Sale does not require an option to purchase fee at the end of the agreement. This means that once you've made your final payment, the car is automatically yours.
No, there are no additional charges apart from the interest on your monthly payments. Once you've completed all the payments, you own the vehicle outright with no further fees or conditions.
Yes, you can end your Conditional Sale agreement early. To do this, you will need to request a settlement figure from your lender, which accounts for your remaining payments and a rebate for early repayment. Any amount your vehicle is worth over this figure can be used as a deposit on your next vehicle or given to you as cashback.
The above rates and monthly payments are an example only. The actual rate you will be offered by lenders could be lower or higher depending on your circumstances
Representative example: borrowing £6,500 over 5 years with a representative APR of 19.9%, an annual interest rate of 19.9% (Fixed) and a deposit of £0.00, the amount payable would be £166.07 per month, with a total cost of credit of £3,464.37 and a total amount payable of £9,964.37.
*After completing the application, lenders will perform a "soft search" that will not affect your credit score. Should you get an offer of finance and wish to proceed, the lender will then perform a "hard search" of your credit file. Finance acceptance is not guaranteed, please click the following link for more information: Initial Disclosure Document
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