FCA Report Highlights Low Savings Rates

Since it replaced the Financial Services Authority, the Financial Conduct Authority (FCA) has been unashamedly bring banks and financial institutions to account.

In acting to uphold financial laws and regulations, and to work in the best interests of banking customers, the FCA has publicly named and condemned some banks and banking practices, and imposed record fines.

The end of 2015 saw the FCA raising awareness of savings as the regulator revealed those banks, building societies and financial institutions that paid as little as 0.01% on savings accounts. According to the financial watchdog, 32 banks paid poor rates of interest on savings accounts held by long term customers. A total of £160bn of savings were earning no more than 0.5%, the Bank of England base rate.

The FCA named High Street banks like HSBC and First Direct (both paying 0.05% on savings) in its list, with Santander and Yorkshire Bank only paying only slightly better at 0.1%. Amongst the worst banks for savings rates highlighted were Danske Bank, Ulster Bank and Progressive Building Society, all of them paying only 0.01% interest, in common with some other banks also named.

The financial regulator wants to bring more openness and transparency to savings – and ultimately more consumer choice and information. The regulator is planning to introduce measures to encourage customers to compare and move savings accounts easily, and to re-establish effective competition in the savings market. With that in mind, one such measure is a new rule that will force banks and building societies to offer prompt and efficient switching services to better savings accounts that they operate. Further, from January 2017, a seven working days savings switching service for cash ISA transfers will be launched.

December’s list was also but the beginning of a trial for the regulator; the FCA intends to publish information about such low interest savings accounts every six months as part of an 18-month trial. The FCA hopes the regular published information would encourage banks and building societies to “change their behaviour and offer better value” accounts and services for savers.

In its criticism of banks and savings accounts, the FCA stopped short of actually banning high introductory bonus rates to attract customers. It believes that such tempting high rates may actually benefit some customers – but despite that, the financial watchdog expects savings providers to improve the way that they communicate to customers about interest rate changes, and when that introductory bonus rate has expired. Additionally, it wants banks and building societies to take out complex financial jargon, and to give customers key information that to help compare different savings accounts, by providing summary boxes and an easy to understand format. Similarly, savings accounts summaries will have to display interest rate information prominently alongside account balance information in any and all interest rate related customer communications.

Further evidence for implementing the changes and for working to assist savings customers was given in the January report and proposals by the fact that many customers actually found it difficult to know what interest rate they were on. Similarly, many were put off switching savings accounts by the presumed inconvenience, with 80% of easy-access savings accounts not having been switched in the last three years.

With many financial advisers and commentators always advocating savings – now the FCA is shining the spotlight on just that area of personal banking. Amidst a turbulent global economy, savings are always highly advised – even if it is just a little bit regularly.

However, it is important that consumers choose the right savings account or service for their personal finances. Bringing more openness and transparency to that process is just part of what the FCA is hoping to achieve regarding issues with banks and savings accounts.

The FCA List of Poor Performing Savings Accounts (December 2015)

• Barclays – 0.25% for accounts still open to new customers, 0.1% for accounts closed to new customers.
• NatWest and Royal Bank of Scotland – 0.5% for accounts still open to new customers.
• Lloyds Banking Group – 0.5% for open accounts, 0.1% for closed accounts.
• Nationwide – 0.5% for open accounts, 0.25% for closed accounts.
• Santander – 0.1% for open accounts, 0.1% for closed accounts.
• Ulster Bank (owned by RBS) – 0.01% for open accounts, 0.01% for closed accounts.
• Co-operative Bank – 0.25% for open accounts, 0.06% for closed accounts.
• Virgin Money – 1.01% for open accounts, 0.1% for closed accounts.
• Danske Bank – 0.01% for open accounts, 0.1% for closed accounts.
• ICICI Bank UK – 1.4% for open accounts

Sky Complaints & Consumer Rights

Recent months have seen many customer complaints against Sky, some quite public, and referrals of Sky to industry regulator Ofcom.

The issue that has landed Sky into such trouble has been cancelling contracts. Under Sky’s terms and conditions that can be done in a variety of ways. However, there is evidence that Sky is perhaps being obstructive regarding such cancellations. There are reports both in the media and elsewhere that detail complaints by Sky customers that the service provider was ignoring written requests to cancel contracts, even after the stated minimum terms had ended. Such practices are alleged to have been going on for several years.

It is reported that Sky routinely refused to accept contract cancellations unless the customers verified their requests to cancel over the phone. That was despite clauses in contracts stating that customers can cancel their contracts by letter, fax and email. It is further alleged that when customers did indeed call Sky’s cancellation department they still faced barriers. Several customers have claimed that they were forced to go through calls to customer service lasting up to two hours – at the end of which their request to cancel was still ignored.

Responding to the allegations, a spokesman from Sky stated that “[Sky is] committed to delivering the best service in the country and we believe this is one of the reasons why more customers than ever are choosing Sky. We will work closely with Ofcom to help them with their investigation.”

As Sky is investigated for their alleged customer malpractices, remember that you have rights as a consumer, and have consumer and customer rights when receiving a service from your provider.

In this context, you the consumer have the right to cancel your provision of services from your provider, within the terms of your contract and the rules set out under law. The law also gives you protection as a consumer and customer. Of particular relevance here are the Sales of Goods Act (1979), the Supply of Goods & Services Act (1982), and more recently the Consumer Protection Act (2010). The relevant industry regulators are there to look after consumer interests – and your rights. Consumer watchdogs such as Which? are also present to ensure that consumer rights are upheld and to call derive providers and retailers to account.

When buying a product, or considering a service such as gas, electricity, or internet, shop around. Consider the various providers, packages and deals on offer. Above all, prior to shining a contract for services, and during your time contracted to a certain provider – know your legal rights, and know what to expect under law and regulations from your service provider. If you need to challenge the, change or cancel – do just that. If you have any problems, contact the relevant regulator, or a consumer watchdog.

In an era of increased transparency, consumer protections, and oversight, consider all of your options as a consumer and a customer. Do not be afraid to cancel your contract, call your service provider to account, or to switch service providers. No longer should you the consumer be intimidated by the retailer; amidst increasing regulation and oversight, the retailer should be intimidated by the consumer.

As the investigation into Sky shows – mistreating customers, or acting contrary to consumer law, will not be accepted. Although the allegations against Sky are not proven as the investigation is on going – it shows that the big service providers can be, and indeed are, called to account when necessary.

Funding Further Education Need Not Be Difficult

There is little question or debate as to the advantages of further education, or further professional training. Vocational training or related qualifications are also very advantageous in today’s workplace.

The merits of such lifelong learning and training are little in doubt. As a previous post has stated (http://www.moneymansion.co.uk/personal-finance/adapting-to-change-the-air-force-job-security-training/) there are many advantages to on-going professional (or indeed non-professional) training. Some companies even encourage it, and assist employees in this regard. For career changers, such education and training can be essential.

Many in the workforce are often willing to undertake such training and further education. However, many findstumbling blocks along the way. One often repeated cry concerns age. Similarly, some might not have the prerequisites to attend a certain course (for example, a medical course might require GCSE’s or similar in science or related subjects), and might need to adjust their thinking and plans. For many, it is a question of time; juggling a career, family, and other interests can be hard enough, without also adding part time (or even full time) studies to the calendar.

Aside from that, one cry heard repeatedly by many concerns one thing- finances. Funding a course of further study, or academic or professional course, can be very expensive. Many are deterred by the sheer difficulties of funding further education.

However, that need not be the case. These days, as more and more importance and emphasis put on qualifications and education, increasingly there are more and more varied avenues of finding money to fund those vital studies. There are a great many options regarding student funding and financing, for those just out of school, to more mature career changers, to those seeking a professional qualifications to enhance their current career. A few such funding options are listed here:

24+ loans To successfully apply for a 24+ loan, you must fulfil the eligibility criteria: you must be over 24, and have lived in the UK for three years or more. The course itself must be at Levels 3 or 4 (which includes A- levels and HE Diplomas). A 24+ loan does not need to be repaid until you earning in excess of £21,000 per year.

Student loans Most students at university or similar institution apply for, and are eligible for, Student Loans. Students can get up to £9,000 to cover their tuition fees, and a further £8,009 in a maintenance loan. Students only replay 9% of their earnings in excess of £21,000; if the student never earns enough, then they do not repay the loan.

Grants If your household income is below £42,620, then you are eligible for a Maintenance Grant. You are further eligible for a special Support Grant if you qualify for certain social security benefits.

Scholarships There are no end the scholarships, awards, grants and similar that are on offer. The only problem is knowing where to look to find them! Many of them will have certain criteria and requirements for the applicant to fulfil. A useful place to start your scholarship search is thescholarship hub.org.uk and scholarship-search.org.uk, both of which let you search for university funding. Moneysavingexpert.com/family/grants-education also gives information about those hidden sources of funding, scholarships and awards.

Interest-free overdrafts. Some banks and accounts will allows you have overdrafts to fund your course of study. The current market-leader is Santander’s 123 student current account; this offers interest-free overdrafts for three years of up to £1,500 to students who are studying a two-year course with a recognised higher education provider. Santander also throws in a free railcard. To qualify for the 123 Student Current account the student must pay in at least £500 per term. Most other banks will have similar specialist student accounts, overdrafts and loans.

The list of how to fund further education or study is endless. Aside from the list above, there are many more options open to the prospective student, ranging from specialist funding schemes and awards (for example, Neilson has exciting funding schemes with certain sailing academies to fund and encourage those who want to pursue a career at sea). Modern apprenticeships also combine working and training, and are paid for it.

The key point to remember is that although it can be hard funding a course of study- if you look hard enough, there is funding available in most cases. Although you might get a lot of rejections- eventually you will find a method to fund your studies. It is just a question of looking and searching.

Further education can be rewarding, and career enhancing. Although daunting, financially it does pay off over time, and finances should not be what stops the prospective student.

Adapting to Change: the Air Force, Job Security &Training

Recent months have seen a wide array of job cuts announced by large UK firms.

Not only did iconic High Street brand Phones4U close its doors, but specialist courier firm Citylink also collapsed over Christmas. Not only did the latter give ruse to great anger from trade unions and other bodies due to its sudden collapse over the Christmas season, but that resulted in nearly 3,000 job losses. Phones4U saw around 1,700 job losses.

2014 also saw major companies such as troubled supermarket Tesco and Lloyds Bank also announcing closures and job losses. 2015 saw tbe United States Air Force (USAF) announce some restructuring itself. Under the Pentagon mandated restructure (citing cost cutting measures and a shift in defence policy), the USAF announced that they are withdrawing from three airbases. Although RAF bases, RAF Mildenhall (Suffolk) and RAF Alconbury and RAF Molesworth (Cambridgeshire) have been leased to and operated by the USAF for many decades, in a throwback to Cold War military planning. Not anymore; as part of programmes to save £320m ($500m) a year across the US forces in Europe, the USAF assets will be redeployed, and the airbases returned to RAF control.

The USAF F111F bomber: soon to leave the UK, along with jobs and job security

The USAF F111F bomber: soon to leave the UK, along with jobs and job security

However, the local communities have long worked with and depended on the airbases. They were a crucial part of the local economy, creating as they did nearly 3,000 civilian jobs between them, which are now at risk. The military forces and families stationed there also contributed to, and were a dynamic factor in, the local economy. Consequently, the news has been greeted with dismay and concern from local residents and leaders. Whilst thanking the local communities for their support, US Defence Secretary Chuck Hagel announced that the USAF presence at RAF Lakenheath would eventually be augmented by the troubled F35 jets and support crews; this would offset to a degree the job losses and impact at the other three bases.

In response, Matthew Hancock, West Suffolk MP and Minister of State for Business, Enterprise and Energy, stated that he and others in government and the Ministry of Defence would endeavour to support the affected communities. The MP stated that Mildenhall had a long and proud history of working closely with the USAF, and that the move “will come as a shock to many…I have met with the defence secretary, and others in government to ensure we can work, together with the American administration, to support the community… We will create a Mildenhall, Alconbury and Molesworth (MAM) Working Group, which I will chair, inviting local LEPs [local enterprise partnerships], councils, the Ministry of Defence and US representatives to ensure no stone is left unturned in supporting Mildenhall and the surrounding area.”

Despite such well-intentioned efforts and supportive sentiments, the local communities will be affected badly by the American withdrawal. Jobs and companies connected with supporting the airbases and American forces will go, and contracts and business dealings involving the airbases will also be threatened.

Even as the UK is emerging from a recession, and the economy is slowly improving, job security is an issue in Britain currently- as has been clearly shown by recent news. This is compounded by an uncertain Eurozone, and an anti-austerity government recently installed in Greece. In such uncertain times, people need to be prepared to find a new job, or even career. That means more than simply having enough money to cope with being between jobs.

Career development, gaining new skills or qualifications, are a shrewd long term investment. Whatever the cost in time, effort and money, such extra skills or knowledge can make finding a new job or career easier- or even help make your current job more secure, or further your own career (either with a current or prospective employer).

These days, many companies encourage such development and learning. Indeed, many providers of training or education are increasingly offering distance and online courses, making study easier for those currently working, and also seeking to learn. City & Guilds continues to offer respected and recognised certification and qualifications. Many in HR increasingly see such personal development as valuable to the employee, and (by increased loyalty and morale) to the employer. Even if a company is not so sympathetic, it is easier than ever to get specialist training, and qualification, learning around work commitments. The British Armed Forces are a good example here. Championing as they do ‘lifelong learning’, all three services offer a wide range of specialist (military and non-military) skills training and qualifications. All members of the Armed Forces are eligible to benefit from top quality and heavily subsidised training courses in a wide array of areas. Not only do the Armed Forces see a very high level of retention, but when eventually discharged into civilian life again, ex-servicemen and women have a wide array of skills and qualifications to offer new employers (aside from their military mind-set).

The ability to weather and deal with any economic changes, and to adapt to any such changes, is a must when considering personal finances, and long term goals, financial, career or other.

Branch closures for Lloyds in 2015?

Despite every effort, significant change, and hard work, Lloyds Banking Group (including HBOS and Halifax banks) is still far from recovery.

Earlier this year, Lloyds Banking Group (LBG) confirmed that 9,000 jobs would be lost, and 150 branches would close, over the next three years. Coming on top of 43,000 job losses since 2008, these latest cuts represents about 10% of the Group’s workforce. Further to those losses, LBG is still feeling the burden of the PPI mis-selling scandal. Compensation and fines from PPI mis-selling have already cost LBG £11.3bn so far (including £2.5bn in administration costs), with other fines reaching in excess of £200m. However, LBG recently announced that it is setting aside yet more money for PPI claims, this time an extra £900m.

This comes after relatively good news for LBG. Following the sale of TSB, and the creation of the new bank, figures show that the sale was beneficial for both TSB and Lloyds. Additionally, with improved and increased revenue, less toxic debt (most of which is now held by TSB), and similar corporate burdens, LBG was given a vote of confidence earlier this year. The government announced the sale of part of the 39% government held stake in LBG, thus indicating a degree of government confidence in the banking giant, and reducing the stake in Lloyds held by the taxpayer. After the two sales over the last two years, the public’s stake in Lloyds is now 25%.

In the wake of such positive news, CEO Antonio Horta Osorio, senior LBG executives and  managers, and commentators are overall confident in the bank’s performance and future, despite the announcements the other month. Also, they are set to stand by promises made previously.

With such job losses and branch closures forthcoming, though, there are fears that branch closures will affect Lloyd’s customers if local or rural branches are closed. Following the LBG announcement, it was later revealed that Vince Cable, the Business, Innovations & Skills Secretary, intended to write to the major UK banks demanding that they re-affirm their commitment to previous promised to keep the “the last branch in town” open. An agreement between the major banks and the British Banking Association (BBA) to that end expires at the end of 2014. Lloyds has already stated that they willing to examine a new, similar commitment to keep existing rural branches open. Despite that, banking sources state that the policy and agreement of not closing branches in smaller towns and cities is the nearest alternative branch is over one mile away is in need of rethinking.

Although the biggest change both seen, and being planned for, is online banking, LBG does not want to lose out on branches in the High Street. Although embracing online banking enthusiastically, and seeing a huge trend toward it, LBG is aware that some matters, and demographics (such as the elderly), need face to face banking. LBG online services and systems are incredibly advanced and secure, even offering banking via Skype.

For high street banks, the customer service and loyalty generated by a physical presence will do wonders for profits, investment, balance sheet, stability and growth. Whilst benefiting senior executives and shareholders alike, such returns will also give dividends to customers too, and ultimately the taxpayer, by being able to divest the public shares in LBG soon.

With this in mind, closing many branches (particularly rural or smaller ones) is seemingly unlikely. What is more likely is a smarter, more efficient allocation and placing of staff, opening hours, and branches. Not all customers will benefit; but most will. The money set aside for the fines, etc will not affect LBG’s bottom line (sic) customers. In LBG, Lloyds has shown recovery, and success; that will continue, as long as there is confidence in LBG. That should be the case, given its performance, and redress of prior consumer issues.



Consumer Rights and Switching Service Providers

For consumer, when it comes to service providers (such as gas, electrical, mobile phones, etc), switching to a different supplier is the ultimate threat to an existing supplier. The threat itself will often get the existing service provider to act swiftly to keep you as a customer.

If the threat does not work, and the issue or substandard customer service still continues- then it is time to make good on that threat. Switching suppliers is also a legal and moral right that consumers have, and indeed to an extent acts as a protection When the time comes to switch supplier- for whatever reason- it is only sensible to compare other suppliers, and to shop around for the best deal. Over recent years, comparison websites and similar have sprung up to help with that very matter.

However, recent allegations have been levelled against five of the biggest such websites. The Big Deal website has accused uSwitch, Compare the Market, MoneySuperMarket, Go Compare and Confused.com of acting unethically (as far as computer algorithm can act unethically) specially as regards energy prices and deals. The allegations are currently under investigation by energy industry regulator Ofgem.

According to the Big Deal (which also aids consumers in comparing energy deals), the websites in question are using a certain mechanism that hides some deals from consumers. The websites ask whether the consumer wants to switch provider immediately. If the consumer answers ‘yes’, then the website automatically filters out deals and prices that do not earn a commission for the online company. Quite often, those deals tend to be the best available deals. Only by answering ‘no’ will the consumer see the details of all available deals and prices. Additionally, a further accusation is that some of the websites answer that question with a default ‘yes’, making it even harder for the consumer to get every deal. This action of the online comparison sites in filtering out the results is hardly in the interest of the consumer.

In response to these allegations, the websites in question deny such filtering, stating that their results are open and transparent. If for whatever reason all the results available are not on display, the websites clearly indicate and state that other and better deals might be available elsewhere. Indeed, the websites all keep to Ofgems’s Consumer Confidence code (which protects customers who switch energy suppliers). At this time, Ofgem is still investigating.

Such allegations just goes to show that even companies who are seemingly acting in the customer’s best interest might not be doing that in reality. Further, when looking round for better supplier deals, energy or otherwise, it is often advisable not to rely just on one source (regardless of how irritating their adverts are). Indeed, instead of relying on a third party, website or otherwise- why not go to the supplier direct? Quite often, the suppliers themselves offer some very generous deals directly through them.

Turn Unwanted Assets Into Money

Many people have unwanted or unused assets hanging around, some of which are worth more than they realise. If you want to give a quick boost to your finances, this can be a good place to start. While it’s no secret that selling second hand can be a good way to make some many, many people  don’t realise how much their unwanted assets are worth. Often, these objects also have a tendency to depreciate over time, and a lot of people also leave it until it’s too late to get as much as they could have.

What Assets Might be Worth Money?

Gadgets are the key type of asset you should consider turning into cash. Have you bought a new laptop and left the old one hanging around disused in a cupboard? Perhaps you have bought a new games console and stopped using the old one? Alternatively, mobile phones are one of the most common examples because many people get free upgrades upon renewing their contracts, often after just a year. This often leaves the “old” yet relatively up-to-date phone unwanted and often hanging around in a drawer.

While gadgets are particularly common examples, there are many other types of asset that might be worth money. For example, unwanted jewellery could be worth money whether sold on second hand or scrapped for the value of the precious metal. Even old toys, especially certain collectible brands such as Lego, can also be valuable if complete and in good condition.

How to Turn Them Into Cash

The most common way to turn these assets into money is simply to sell them second hand. This can be done through online auction sites or classified adverts, either online or the traditional way in a local newspaper. It is worth  doing some research into how much the items are worth beforehand, to make sure that you do not undersell. Even if you don’t intend to sell them this way, search for the item on an online auction site such as eBay to see how much it tends to fetch.

If you don’t want the hassle of selling the item yourself, there are often companies willing to buy them from you directly. This is especially true of gadgets such as mobile phones and laptops, and also for jewellery made of precious metal. However, be careful when selling through this method. You will usually make less than you would from selling second hand because the companies need to leave themselves room to make a profit. This might be an acceptable trade-off for the low-effort sale, but companies vary a lot in just how much they offer. While some pay respectable prices, others pay far less. Try to make sure you are happy with the amount on offer before you agree to part with your goods.

Reclaiming PPI: A Quick Guide

The PPI scandal shows no sign of ending. Thousands of new claims are lodged every week, and hundreds of millions of pounds are paid out in compensation every month.

PPI stands for Payment Protection Insurance. It is a form of insurance designed to protect people’s ability to meet monthly credit repayments in the event of them being made redundant involuntarily. There is nothing wrong with PPI in itself, but a 2005 investigation found that there was widespread mis-selling of policies throughout the consumer credit industry. Since payouts average around £2,750 per policy, it is worth checking over any credit cards, loans or mortgages you have taken out in six years to see if you are eligible.

Who is Eligible to Make a Claim?

Anybody is eligible to claim a refund for a PPI policy that has been mis-sold to them. There are several circumstances which qualify as mis-selling. One of the most common tactics used was to make consumers believe they had to take out the lender’s own PPI policy. In fact, those taking out credit have a legal right to shop around for the best PPI policies and should have been made aware. Other people were sold inappropriate but more expensive policies, or policies that were completely useless because the terms would never have allowed for a claim.

How to Make a Claim

Lodging a claim is the legal right of anybody who has fallen victim to the PPI mis-selling scandal. There are several ways to lodge your claim. You can choose to lodge your claim yourself and handle all steps of the process personally. Alternatively, you can use a claims management company, who will handle the bulk of the process for you in return for a portion of the money you have reclaimed.  This will cost you some of your compensation but will remove much of the effort from the process, and many do not charge for unsuccessful PPI claims. Even if you are not sure you want to use a claims management company, often you can find independent specialists who can give you advice and discuss your options.

How Much Could you Get?

As mentioned above, the average throughout the industry is £2750 for a single policy. However, this is only a general indication as the actual amount will vary significantly from person-to-person. It depends on factors such as the type and duration of the policy that was mis-sold. A few exceptional cases have resulted in many thousands of pounds being paid out.

Getting a Better Credit Rating

There are a number of things that can lead to a poor credit rating, and they may have been beyond your control. However, if your credit rating is bad, you can find yourself being turned down for credit or offered only poor rates. If you are turned down, this can also form a black mark and make your rating even worse.

However, your credit rating is not completely beyond your control. There are a number of simple steps you can take to help improve your score.

Stop Applying for Credit

As mentioned above, applying for credit and being turned down can make matters worse. Stop applying for credit until you have improved things. There is only one exception to this rule, which is improving your credit rating through careful use of a credit card. See the section on credit cards (below) for more information.

Get a Credit Report

The first step in improving your credit score is to find out where you stand. You have a legal right to see a copy of your credit score, which will come with a small charge of £2. Experian and Equifax are two of the major credit reference agencies, and the ones most widely used by companies who are checking your credit rating. Noddle, meanwhile, offers access to credit reports for free.

Check for Mistakes

Sometimes your credit report can include mistakes. It may include things that relate to other members of your family who live at the same address, or even people who have lived at the address in the past. People with whom you have held joint credit may also appear. If you see any false marks against you on your credit report, make sure you complain to the credit referencing agency.

Look Into Credit Cards

If you have any old, unused credit cards hanging around now is the time to cancel them. Otherwise, on your credit report it will look like you have taken out a number of credit cards and are struggling to manage debts. If you do not currently have a credit card, it may be worth taking one out even if you can only get a poor rate. Spend small amounts on the card and repay them before interest accrues to build up a record of repaying debts promptly.

Join the Electoral Register

You will find it much harder to obtain credit if you do not appear on the local electoral register. If you currently are not part of the electoral roll, make sure that you join it and there will be a noticeable improvement in your lending profile. Joining the electoral register involves filling out a very short, simple form.

Popular Options for Financing a new Car

Usually, buying a new car will be at least a moderately big expense. As a result, there are many options available for financing the purchase. There is no definitive answer as to which is best, as each has a range of advantages.


The simplest and most obvious way to finance a car purchase is with cash. If you have sufficient savings to buy the car outright and not miss the money, this is often the best option. There will be no further repayments and no interest to worry about.

If you don’t have the money to buy the car fully with cash, you should make the biggest deposit you feel able to. That will result in more affordable repayment rates.

Hire Purchase

Hire Purchase arrangements are a popular option. After paying an initial deposit, normally around 10%, you pay the rest of the cost in instalments. Usually, the repayment term is between one and five years. Rates for higher purchase can be very attractive, and arrangements are made directly with the dealer.

The car acts as security for the loan, and so you only own it after making the final repayment. Until you have fully purchased the car, it is effectively leased to you – hence the phrase “Hire Purchase.”

Personal Loan

Many people choose to seek out a personal loan from a separate source and use this to finance the purchase of the car. There are several reasons this may be an attractive option. There are many types of loan available from a wealth of providers, and some of the rates can be more favourable than finance arrangements offered by dealers. Unlike hire purchase, you take immediate ownership of the car instead of waiting until the final repayment.

Make sure you use online comparison sites to thoroughly research the market and find the best APR. Never use your house as security for a loan, as you will gain a car but risk losing your house.


Some people may find they prefer leasing a car to purchasing one. However, strictly speaking this is not a finance option for a purchase because you never own a leased car. However, it allows you to gain the right to use a car for a fixed monthly repayment, usually within a certain mileage limit. Usually, a deposit will also be required.

Monthly payments on a lease may be higher than on a car purchase, but this is because they include servicing and maintenance so for many people this is still an attractive deal. You will also be unaffected by the car’s loss of value over time.