Ford Credit, Ford’s financing arm, has introduced two new financing products to give business purchasers more choice when purchasing a new van.
The Personal Contract Purchase (PCP) is by far the most popular finance product for consumers when buying a new car, and Ford is now bringing a similar product to its commercial vehicle buyers.
Ford Options is the name given to a new Business Contract Purchase (BCP) product, which is the business equivalent of the consumer PCP.
It is a form of hire purchase (HP), which means it is a purchase product where you borrow money and have to repay that debt, rather than a lease were you are simply renting the vehicle for an agreed amount of time.
Like a PCP, buyers can choose their deposit amount, term length and annual mileage. You make an upfront payment (aka deposit), up to a maximum of 35% of the vehicle cost, followed by monthly payments over the length of the financing agreement. This can be for up to 48 months, with a balloon payment due at the end to clear the debt.
To avoid the balloon payment, you can either part-exchange the van on another vehicle or return the vehicle to the finance company.
Like a PCP or an HP, a business contract purchase is a secured loan, which means the vehicle remains the property of the finance company until the last penny is paid off.
It is rare to see a PCP-style offering for business buyers, and Ford will be hoping to tap into the market of small business owners who already use a PCP for their family cars and would like a similar option for their work vehicle.
Ford Options Cashplan is a similar product, but instead of up to four years of regular monthly payments, these are all included in a much larger initial payment. The customer then has nothing to pay until the end of the agreement when the balloon falls due.
Again, the customer can part-exchange or return the vehicle instead of paying off the balloon amount and keeping the van.
Like a PCP, there are strict conditions for both of these new products regarding annual mileage, servicing and vehicle condition (wear and tear). However, they only appy if you want to part-exchange or return the vehicle at the end of the agreement. If you are paying off the balloon and keeping the vehicle, it doesn’t matter how you maintain it.
As the vehicle is a business purchase, customers will not be protected by the Consumer Credit Act 1974, which provides private owners with the right to voluntarily terminate their agreement and clear rules regarding repossessions in the event of failure to make payments.
For more information about PCP car finance, which is very similar to Ford Options for commercial vehicles, visit our sister site The Car Expert:
- Personal Contract Purchase (PCP) car finance explained
- How to understand a PCP fiance quote
- What are your options at the end of a PCP?
Additional reporting by Dan Parton