Hire Purchase 3 or 4 years?

ihodor · 9 August 2017 at 12:50AM

Hi all, many thanks for any and all advice.

I am currently looking to buy a new car on hire purchase.

I recently went to the Mercedes dealership to look for a C-class.The salesman quoted me £510/month over 3 years or £470/month over 4 years. £2000 deposit for both.

1) Whats to stop me from saying I'll pay over 4 years (thereby paying less per month) but just terminate the contract at 3 years?

Also I understand there is a 'paying half' rule which needs to be met before terminating the contract.

2) Is this half of the value of the car (approx £36,000) or half of what I have to pay (i.e £36,000 minus [the dealership + Mercedes contribution] which is approx 7K).

Thanks!

cjmillsnun · 9 August 2017 at 1:25AM

It is half the repayments.

So over 4 years it is 24 payments of £470 = £11280 and you also lose your deposit. Total £13280

Over 3 years it is 18 payments of £510 = £9180 and your deposit. Total £11180...

However your figures don't add up. Over 4 years you are paying £24560 (including your deposit).

And over 3 years you are paying £20360 (including your deposit).

Are you sure this is HP and not PCP?

If It's PCP different conditions apply.

ihodor · 9 August 2017 at 11:28AM

Thanks for your reply!

Yes sorry, maybe its PCP actually as there is an option to buy at the end but I won't be doing that.

Those figures aren't exact, just roughly what I remember being quoted.

1) Regarding my first question, is that something that people can do, agree to pay less/month over a longer period but terminate early.
--> I would like to keep the car for 3 years but I would rather be paying £470/mnth than £510/mnth?

2) What are the different conditions for PCP?

Many thanks

Alexd52 · 9 August 2017 at 12:24PM

IIf indeed it is PCP, then the balloon payment is taken into consideration for the 50% payment requirement. This usually means that this is reached very close to the end of the monthly payment term.

anto164 · 9 August 2017 at 1:04PM

If you're looking to give back and get a new one after x years, then leasing is normally cheaper, rather than PCP/HP. fixed term, normally cheaper deposit and cheaper monthlys. You can include maintenance too so could work out cheaper.

Nearlyold · 9 August 2017 at 5:58PM

cjmillsnun wrote: »

It is half the repayments.

So over 4 years it is 24 payments of £470 = £11280 and you also lose your deposit. Total £13280

Over 3 years it is 18 payments of £510 = £9180 and your deposit. Total £11180...

However your figures don't add up. Over 4 years you are paying £24560 (including your deposit).

And over 3 years you are paying £20360 (including your deposit).

Are you sure this is HP and not PCP?

If It's PCP different conditions apply.

Its not half the payments, its half the "Total Amount Payable" (ie the price of the goods plus the interest payable plus any arrangement or option to purchase fees). Any deposit or part exchange put into the deal counts towards getting to the 50% threshold (rather than being lost in addition to the 50% to be paid).

jimbo747 · 10 August 2017 at 10:43AM

Drivethedeal often have excellent prices on the C class in various trim - the c350e in sport premium was £28k a couple of months ago, otherwise as above try leasing https://www.contracthireandleasing.com/

PCP is only worth it if its 0%, you've taken a good chunk off the RRP and you're thinking of keeping it

rtho782 · 14 August 2017 at 3:49PM

As has been stated, the 50% includes the final payment, so you might never reach it.

On my Nissan leaf there is an.... "optimistic" final payment, and it's only a 2 year deal, so I will never get the VT option.

Hire Purchase 3 or 4 years?

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