What is Conditional Sale (CS) Finance?
Are you thinking about financing a used car? There are plenty of options to help spread out the cost, such as Personal Contract Purchase (PCP), Hire Purchase (HP), and Conditional Sale (CS) agreements. But what is CS car finance, how does it work, and what are the key things to consider before entering into one?
In this guide, we'll explain Conditional Sale finance, how it works, and everything you need to know to make the right decision.
How does CS car finance work?
Conditional Sale car finance agreements allow you to spread the cost of buying a new or used car into manageable payments over a set period.
First, you'll put down an initial deposit—usually around 10% of the car's price. The size of this deposit will affect your monthly payments—a bigger deposit means lower payments, while a smaller one bumps them up.
Your monthly payments are spread over a set term, typically two to three years, though some deals can go up to five years.
Once you've made all the payments, the car is officially yours—there are no extra fees to worry about.
CS Finance vs. HP Finance: Key Differences Explained
Conditional Sale (CS) and Hire Purchase (HP) are similar ways to finance a car but have some key differences. In both cases, the car buyer will make monthly payments until the full cost of the vehicle is covered. The main difference is how ownership is transferred.
With Hire Purchase, there's usually a small extra payment at the end, called the 'Option to Purchase' fee, which officially makes the car yours. With Conditional Sale, there's no additional fee—ownership automatically transfers to you once you've made the final payment.
The contract will outline the final stages of both Conditional Sale and Hire Purchase agreements, including any end-of-agreement fees (if any), so you'll know exactly what to expect before signing up.
What are the benefits of a CS finance agreement?
A Conditional Sale (CS) agreement can enable you to spread the cost of purchasing a new or used car over an agreed period instead of paying the whole sum upfront. Additionally, since they can be used to finance used cars, you'll have the option of buying a wider variety of vehicles than a PCP agreement.
Things to know before you sign up for a CS finance agreement
Impact on your credit score
Missing monthly repayments could harm your credit score, impacting your ability to access loans in the future. Your car could also be repossessed if you fail to meet your repayments, so it's essential that you enter into an agreement you know you can afford. Always compare the total amount repayable under different finance options, including interest, before making a decision.
Modifications
You will not officially own the car until the full price is repaid, meaning you can't modify it without the lender's approval until ownership is fully transferred to you.
Monthly finance costs
CS agreements cover the car's full value, while PCP agreements are based on the car's depreciation costs, so CS repayments tend to be more expensive.
Ownership of the vehicle
You will take full ownership of the vehicle at the end of your CS agreement. If owning the car outright at the end of the term isn't essential, it might be worth looking at PCP finance instead.