How Does Financing a Car Work?

Types of Car Finance Explained

Personal Motor Loan (PML)

A Personal Motor Loan (PML) is a traditional finance method where you pay fixed monthly repayments over a set term. PML allows you the option to reduce the monthly cost by making an initial deposit or by trading in your current car.

With a fixed interest rate, you’ll know exactly how much you’ll repay from the start of the agreement. You will own the vehicle only once all monthly repayments have been made. Find more information about PML finance deals available now with Kia.

Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) is a way of financing a car through an initial deposit amount of your choice, followed by monthly payments over an agreed term.

At the end of a PCP agreement, you will have three options: you can return the vehicle, pay the optional final payment to own it, or part-exchange it for another vehicle. Any new finance agreement is subject to application and approval. If the vehicle is worth more than the outstanding balance, you may be able to use the difference towards another vehicle

If you decide to simply return the car, excess mileage charges may apply if you have exceeded the limit set out at the beginning of the contract. When it comes to PCP vs Lease , PCP includes an option to purchase the vehicle at the end of the agreement, whereas PCH is a form of leasing and does not provide an ownership option.

For more information, or to discover the extensive range of Kia cars available with PCP, visit our dedicated PCP finance page.

Personal Contract Hire (PCH)

Personal Contract Hire (PCH) is available to eligible private customers. It is a leasing arrangement and does not provide an option to own the vehicle.

In a PCH agreement, you pay an upfront advance rental fee followed by fixed monthly rental payments during the contract, until you hand it back at the end of the lease. PCH contracts usually have mileage limitations that, if exceeded, will prompt an excess mileage charge.

Learn more about PCH car lease deals with Kia.

What checks are done for car finance?

When you apply for car finance, the lender will assess your eligibility, creditworthiness and ability to afford the repayments. This may include:
• Proof of identity
• Proof of address
• Driver’s licence
• Proof of income
• Employment
• Credit check

Can you sell yourcar with outstanding finance?

You should not sell or transfer a vehicle with outstanding finance without first contacting the finance provider. You will usually need to settle the outstanding balance, or agree how it will be settled, before the vehicle can be sold or part-exchanged. Once the finance has been settled and you own the vehicle, you can sell the car as and when you plesae

If you wish to pay off your car finance early, some options will allow you to do this. At Kia, we allow you to settle both PML and PCP agreements early by paying the remaining balance in the contract. With PCP car deals, you can also terminate your contract early once you’ve paid 50% of the loan amount, although this may incur an additional fee.

Can you modify a financed car?

If the vehicle is subject to a finance or lease agreement, you should obtain the finance provider’s permission before making modifications. Unauthorised modifications may breach the agreement or result in charges when the vehicle is returned

However, if you’re still paying, the lender or dealership still legally owns the car and must therefore approve any modifications you want to make. Usually, your car finance lender will want the car returned in its original condition, so modifying it will be forbidden. In certain cases, it may be approved, so it’s always best to consult your lender directly.

Is financing a car a good idea?

Car financing can be a practical way to fund a car purchase without paying the upfront cost. However, understanding the details of available car finance options will help you find the right solution.

At Kia, we like to keep car financing simple. With our tailorable finance services, your plan is personalised to suit your needs, always with no arrangement or purchase fees. Discover our exciting range of Kia cars available on PCP, PML and contract hire finance, including Hybrid, Plug-In Hybrid and pure Electric cars.