Similar to a Conditional Sale contract but with additional flexibility since part of the cost is deferred until the end of your contract. Also known as an optional final payment (OFP), it may give you the benefit of lower monthly repayments.
At the start of the contract we’ll set this optional final payment for the car, this will be based upon your chosen term and approximate annual mileage. You select the deposit you wish to pay and then make monthly repayments based on the outstanding loan balance, less the optional final payment.
At the end of the monthly repayment period you’ll have three options:
You can pay the optional final payment and the car is yours.
You can hand the car back to us, with nothing further to pay (subject to mileage and fair wear and tear)
You can part exchange the car, using any equity over and above the optional final payment as deposit on your next car. Although equity is anticipated, this cannot be guaranteed.
Typical repayment periods are over 25, 37 or 43 months.
The optional final payment is based on your repayment period and mileage. This can be set from 6,000 to 30,000 miles per annum.
The car can be up to 47 months old and 50,000 miles at the start of the contract and must not exceed 84 months / 100,000 miles at the end of the contract.
A maximum of 50% deposit is allowed and the minimum loan amount is £3,000.
Once all the monthly repayments have been made, including the optional final payment, you will own the car. As with all our finance products, there are no arrangement or purchase fees.
What else do I need to know?
The contract is secured against the car. If you do not keep up your repayments, we may take steps to recover the money that is owed, which may include repossession of the car.
At the end of the contract it is possible there may not be any equity (the difference between the optional final payment and the value of the car).
A higher deposit means you will have lower monthly repayments. However it will not change the optional final payment set at the start of the contract, or the valuation at the end of the contract.
If you decide to return the car at the end of the contract 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 car in reasonable condition for its age and mileage you may be charged a refurbishment cost.
This type of finance agreement is not available to corporate entities, e.g. limited companies, PLCs or limited partnerships.
This type of agreement is covered by the Consumer Credit Act 1974, which means:
- You can pay off lump sum amounts during the agreement
- You can settle the contract early by repaying the required amount