Lease or HP ?

brothers_in_arms

Does anyone know the difference between: i) a Lease agreement,
ii) A HP agreement
iii) A HP Agreement with an option to purchase fee?
iv) A HP agreement that is outside the scope of the ConsumerCredit Act. Primarily for vehicles.

standupguy

Does anyone know the difference between: i) a Lease agreement,
ii) A HP agreement
iii) A HP Agreement with an option to purchase fee?
iv) A HP agreement that is outside the scope of the ConsumerCredit Act. Primarily for vehicles.

1. You can never own the vehicle and pay vat on the monthly payment
2. You own the vehicle when you have made all the payments.
3. Same as 2 - most HP agreements have fees of some kind and this is just a fee at the end of the agreement
4. This would be a HP agreement for a Limited company rather than an individual

brothers_in_arms

Thanks for the quick reponse it was much appreciated.

in51der

roperr wrote: »

Does anyone know the difference between: i) a Lease agreement,
ii) A HP agreement
iii) A HP Agreement with an option to purchase fee?
iv) A HP agreement that is outside the scope of the ConsumerCredit Act. Primarily for vehicles.

Hi
1) A lease is usually 3 months up front rented over a period of 24/36 months normally with pre-agreed mileage, at lease end the car is returned and you walk away. This is mainly for business users.

2) A hire purchase is a deposit up front, which can be zero to any agreed amount usually max 90% balance financed over 1-5 yrs generally at end of term you own the car.

3) A PCP or personal contract plan is when you pay a deposit £0- I think to a maximum of 30%, with pre-agreed mileage, and at contract end you can give the car back and walk away (protection from negative equity) re-finance the balloon payment or GFV (guaranteed future value) which is set out at beginning of contract, or if there is any equity left, (i.e. car value minus GFV balance) you can keep the car or use it to re-finance your next car.

I don’t know of any HP agreement within the motor trade or any finance agreement that falls outside the CCA. All front line staff who speak to any customer about finance must be FSA accredited meaning they have to have completed their accreditation for the financial services act.

This is a basic overview of finance agreements, for more detail and small print most manufacturer websites will have a full explanation of these agreements though they will mostly be called something different i.e. Ford used to be called “options”, Volkswagen “solutions” etc for their PCPs. Hope this helps.

brothers_in_arms

Good feedback thanks a lot.