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    • Mrs Mac 1
    • By Mrs Mac 1 14th Mar 17, 2:28 PM
    • 55Posts
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    Mrs Mac 1
    buying a car - HP vs PCP
    • #1
    • 14th Mar 17, 2:28 PM
    buying a car - HP vs PCP 14th Mar 17 at 2:28 PM
    Hello

    Has anyone on here any views on hire purchase vs personal contract purchase for buying either a new or used car?

    John Mulholland Motors are advertising great offers at the moment for new Hyundai or Skoda cars, something along the lines of up to £2000 dealer contribution towards your new car and then min of £99 per month payment.

    Have any of you used pcp to purchase a car? I have used hp in the past and I understand how it works. I assume with the pcp that i would never outright own the car as most people would opt for a new car by the time 3-4 years are up?

    Which make of car would retain its value better by the time 4 years are up?

    In the case of John Mulholland offers, which would be the better make, Hyundai or Skoda?

    Motorguy Paul, have you any opinions?


    Thanking all in advance.
    Mrs Mac
Page 2
    • motorguy
    • By motorguy 15th Mar 17, 5:14 PM
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    motorguy
    The company his Audi was leased through had a weird concept of wear & tear then.
    Originally posted by bertiewhite
    They may well do. It doesnt make them correct though.

    They are obliged to adhere to those BVRLA standards

    Lets be honest - they've chanced their arm and squeezed your mate for a few extra hundred.
    Last edited by motorguy; 15-03-2017 at 5:23 PM.
    You are not special. You are not a beautiful and unique snowflake.
    • Mrs Mac 1
    • By Mrs Mac 1 15th Mar 17, 10:27 PM
    • 55 Posts
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    Mrs Mac 1
    a VT is forcing the contract termination under your rights in the Consumer Credit Act. Its to protect people who can no longer afford to pay due to a dramatic change in circumstance against being pursued for a disproportionate amount by the finance company.

    It is NOT designed as a handy get out of jail free card and as such i wouldnt recommend abusing that right just to save a few £.

    BUT, you are correct, if you did do a VT and had already paid 50% of the total contract cost but did say 8,000 miles instead of 5,000 miles a year then they cant particularly object - UNLESS you sign a "waiver" as part of a VT pack that they might kindly send you when you try to VT. They tend not to take that lying down any more so i personally wouldnt go in to a PCP agreement, relying on a VT as my exit strategy.
    Originally posted by motorguy

    Probably being stupid here, but what is a "VT"??
    • boliston
    • By boliston 15th Mar 17, 10:44 PM
    • 2,402 Posts
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    boliston
    a VT is forcing the contract termination under your rights in the Consumer Credit Act. Its to protect people who can no longer afford to pay due to a dramatic change in circumstance against being pursued for a disproportionate amount by the finance company.

    It is NOT designed as a handy get out of jail free card and as such i wouldnt recommend abusing that right just to save a few £. .....
    Originally posted by motorguy
    It is simply a statutory right - where does it say that it is only designed for people who's circumstances have changed dramatically?

    Surely if it saves ANY money then it makes sense?
    • bazzyb
    • By bazzyb 15th Mar 17, 10:50 PM
    • 1,034 Posts
    • 3,182 Thanks
    bazzyb
    Probably being stupid here, but what is a "VT"??
    Originally posted by Mrs Mac 1
    Voluntary Termination is a method of debt relief provided under the Consumer Credit Act. It is intended to offer protection to consumers who can no longer afford their monthly payments, but what it means in reality is that anybody can hand a car back to the finance company once they have paid 50% of the total repayable on a HP or PCP agreement.
    • motorguy
    • By motorguy 16th Mar 17, 8:53 AM
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    motorguy
    Voluntary Termination is a method of debt relief provided under the Consumer Credit Act. It is intended to offer protection to consumers who can no longer afford their monthly payments, but what it means in reality is that anybody can hand a car back to the finance company once they have paid 50% of the total repayable on a HP or PCP agreement.
    Originally posted by bazzyb
    Yes, that summarises it as most people would use it.

    Its a bit more than that though as you can VT at ANY time, and the finance company can only seek to recover 50% of the total contract value (subject to fair wear and tear). This, again, because of what its original intention was for was to stop finance companies trying to recover disproportionate amounts from people who could no longer afford to pay.
    You are not special. You are not a beautiful and unique snowflake.
    • motorguy
    • By motorguy 16th Mar 17, 8:56 AM
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    motorguy
    It is simply a statutory right - where does it say that it is only designed for people who's circumstances have changed dramatically?

    Surely if it saves ANY money then it makes sense?
    Originally posted by boliston
    Where did i say ONLY?

    People can use it as a loophole, but it is not in the spirit of the CCA nor is it using it what it was designed for.

    And of course, you can VT a car and exercise that right at ANY time, however as i said, i wouldnt be going in to a PCP agreement relying on a VT as my only exit strategy, and if you do use it, dont expect the finance company to necessarily take it lying down.
    You are not special. You are not a beautiful and unique snowflake.
    • Suplex Backbreaker
    • By Suplex Backbreaker 23rd Mar 17, 5:16 PM
    • 101 Posts
    • 77 Thanks
    Suplex Backbreaker
    To the OP, HP is aimed at people who want to ultimately own the car whereas PCP is typically more like a form of leasing but with an option to buy (at a predetermined price) once the 'lease' is up. It could be used to buy a car but I would guess that far more people use it as a way of leasing and never pay the 50% bubble at the end.

    With HP you pay a monthly fee and once you have paid a pre-determined amount of money, the car is yours to keep.

    With PCP, you'll typically pay a monthly fee for three years at which time you can either pay off the balance (typically 50% or just under of the entire agreed sale cost) or give the car back.

    Assuming you definitely want to keep the car, just crunch the numbers and see which works out cheapest for you to own the car.

    A lot of people are tempted by PCP because monthly payments seem so low, but they fail to factor in that after three years or so are up, they'll be looking to cough up the equivalent of all that they have just paid, over again and in a lump sum, in order to own the car.

    If you give the car back, you have well, no car. Sometimes there might be 'equity' in the car depending on the buyback prices agreed at the start of the deal so you might get a small sum back (remember, you have to pay an extra large sum at the start too - typically anything from 3-9 months normal payments in one go in the first month that you are not guaranteed to get back). What usually happens is that if you agree to take out another PCP on a new car, the dealer finds enough 'equity' in the last deal to be able to finance the initial large downpayment on your new deal and the cycle of being stuck on paying every month but never owning the car continues ......
    • bingo bango
    • By bingo bango 24th Mar 17, 2:09 PM
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    bingo bango
    I had a Renault out on PCP last time round. I did a VT last year (3 yrs into a 4 year deal) to take up a new PCP deal with Renault. No chance of a straight trade in as there was no equity.

    They do take into account fair wear and tear with the VT, but there was still an £80 charge for a lovely big scrape I put on the front bumper the first week I had it . The dealer covered this charge as part of the agreement to take the new deal.

    For the mileage, I was being charged 6p per mile excess. They work the mileage allowance out on a pro rata basis, so even though I had the car into it's third year, I did not not get the full 3 yr mileage allowance. The final charge for excess mileage was well over £300, but again the dealer took care of that.

    As for OP's question at the start, HP will give you the option to buy the vehicle outright, whereas PCP should be viewed more as a lease deal where you don't intend to buy it. When the term is up, you hand it back and start from scratch again.

    For the record, I did not have to make any inflated payments at the start, other than a £99 credit arrangement fee.
    • motorguy
    • By motorguy 24th Mar 17, 9:10 PM
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    motorguy
    I had a Renault out on PCP last time round. I did a VT last year (3 yrs into a 4 year deal) to take up a new PCP deal with Renault. No chance of a straight trade in as there was no equity.

    They do take into account fair wear and tear with the VT, but there was still an £80 charge for a lovely big scrape I put on the front bumper the first week I had it . The dealer covered this charge as part of the agreement to take the new deal.

    For the mileage, I was being charged 6p per mile excess. They work the mileage allowance out on a pro rata basis, so even though I had the car into it's third year, I did not not get the full 3 yr mileage allowance. The final charge for excess mileage was well over £300, but again the dealer took care of that.

    As for OP's question at the start, HP will give you the option to buy the vehicle outright, whereas PCP should be viewed more as a lease deal where you don't intend to buy it. When the term is up, you hand it back and start from scratch again.

    For the record, I did not have to make any inflated payments at the start, other than a £99 credit arrangement fee.
    Originally posted by bingo bango
    Did you give the car to the dealer or did the finance company take it away? Where is the car now?
    You are not special. You are not a beautiful and unique snowflake.
    • bingo bango
    • By bingo bango 27th Mar 17, 10:26 AM
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    bingo bango
    It goes straight to the finance company. They send Wilson Auctions to collect it. I had the dealer deal with that end of it, as I needed to get to work. They handled the handover inspection and paperwork for me. Wilsons are happy to collect from somewhere other than your home, as long as it is within reason.

    The VT papers will ask you where you want to do the handover.

    Edit: Just to add, expect the handover to happen very quickly when you return the papers (I scanned and emailed them to Renault finance which they offer as an option). IIRC it was less than a week from signing the papers to the expected return date. I managed to get this arranged for the same day I was picking up the new car so I wasn't left without transport.
    Last edited by bingo bango; 27-03-2017 at 10:29 AM.
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