Please explain car finance to me as if I'm 3 years old

[reallifeboogie]

I've never bought a car on finance before but considering it for my next car.

If I have a deposit of £2500 does that come off the price the car is for sale at? So for instance if I see a car at £8000 and put down a deposit of £2500 would I then be paying £5500 plus interest over say 60 months?
A lot of the cars I've seen give monthly price based on £99 deposit.

Also what's the difference between finance and hire purchase??

99 deposit? See what the terms are. How many months at what rate of interest. Finance often provided by the garage. They get a cut of the finance. HP you borrow the money from eg a bank and pay it back to the bank. 5k car, you pay the bank 5k plus interest the garage gets 5k

Hire purchase is a type of finance.

Hire Purchase = the cost of the car is split into equal payments and at the end you have paid it completely and own it.

PCP = you pay a set monthly amount and at the end you there's still a chunk left to pay. You can either pay the remaining chunk as a "balloon payment" and the car is yours, or hand it back and you owe nothing else but don't own the car.

In both cases, the value of your deposit is taken off the cost of the car. Then they work out the monthly payments/balloon payment.

And yes the deposit is removed from the total. 60 months at what %? PCP allows you a newer car but really you are just paying depreciation but you won't own the car unless you make the balloon payment