Conditional Sale (CS) car finance is a way of buying a car through manageable monthly payments.
Your finance company will buy the car, and you’ll pay it back monthly.
At the beginning of your CS deal, you’ll pay your deposit and then start paying the rest of the car’s value and the interest through your monthly payments.
It’s very similar to Hire Purchase (HP) finance, but without the small ‘option to purchase’ fee that would be included in your final payment, meaning you’re committed to buying and owning the car when you sign the agreement.
What is CS car finance?
CS finance is basically a loan from a finance company specifically to get a car – your finance provider will buy the car, and you’ll pay its value and the interest back over the term of your contract, becoming the legal owner when the full amount has been paid.
You’ll start by putting down a deposit, and the monthly payments will cover the rest of the value of the car, including the interest.
Unlike other types of finance, there’ll be no extra costs or fees at the end of your contract.
How does CS car finance work?
A lot of people find CS an affordable way to get on the road with no hidden costs and enjoy the guarantee that you’ll own the vehicle at the end of your contract.
You can tailor your CS contract to fit your needs – a larger deposit will mean small monthly payments, while going across a shorter term will see higher payments but you’ll own your car quicker.
It’s a great way to buy a car without the large upfront costs and get some freedom on the terms.
Is CS finance good? The advantages of CS car finance
No fees at the end of your CS contract
When you’re all paid up and your CS contract has ended, you’ll be the legal owner of your car.
You won’t have to pay any of the extra fees or balloon payments that come with other finance deals.
You can tailor your CS contract to suit you
You’ll be able to decide what suits your needs with CS car finance – offering a smaller deposit for larger monthly payments or paying more to cut those monthly costs down.
You’ll also be able to decide on your contract length, which will alter your payment amount.
Bear in mind, there might be some requirements in your deal, but you’ll always have a bit of freedom to change the specifics.
No restrictions or damage costs on CS deals
If you choose a CS car finance deal, you won't have to think about damage charges or excess mileage fees at the end of your contract as you won't be returning the car.
Personal Contract Purchase (PCP) and Personal Contract Hire (PCH) finance could both end with those extra fees if you’ve damaged the vehicle or have gone over your mileage when it’s time to hand the car back, so that’s something to consider.
Disadvantages of CS car finance
Bad credit could mean higher payments
The amount of interest added to your deal will usually be based on your credit score, so poor credit history could mean higher monthly payments.
Higher monthly payments than PCP
PCP finance deals need monthly payments that are equal to the depreciation of the car and not the full value, with the optional balloon payment at the end to own the car.
As CS finance has you paying for the full value of the car, your monthly payments will be higher.
If you think you might return your car at the end of your contract, PCP could be the better choice.
You don’t own the car until you’re paid up
You’ll be the owner of your car when you’ve paid back your loan, but until that point, you’ll only be the registered keeper.
That means you’ll need the finance company’s permission before you do anything to modify your vehicle, and you can’t sell while your finance contract is running.
What is the difference between Hire Purchase (HP) and Conditional Sale (CS)?
HP and CS car finance are very similar – they both need monthly payments to cover the cost of the car, and with both contracts you’ll be the legal owner of the car when you’re all paid up.
The main difference between HP and CS is that HP finance has a small ‘option to purchase’ fee included in your final payment, while CS has no such payment.
You’ll be aware of your ‘option to purchase’ fee at the start of your HP contract, so don’t worry about being hit with large hidden costs.
With both types of car finance, it’ll all be laid out in front of you right at the start.