PCP vs HCP...??

zudecke

Hi,

I have been in contact with two different car finance firms. One who claims to have quoted me a PCP deal and rhw other a Hire Contract Purchase deal.

Can anyone please explain the differences?

I was told from the firm who quoted me a PCP deal that I was pretty much able to swap cars at any point during the contract. However the firm offering HCP said that was obviously not possible.

Can anyone clear that up and then go on to explain which one is the best value? I can find comparisons with HP, but not between these two.

Appreciated as always.

Z

zudecke

Anyone??????????

Kilty_2

PCP = £x deposit, £y per month for a number of months

At the end of the contract, you will owe a final payment of a few thousand pounds, at which point you can hand the car back if you like or trade it in for another (the value/payment at the end of the contract usually allows you to end up with a deposit for your next car). Alternatively, settle the balance in full and keep the car.

Caveat is that there will be an excess mileage charge if you hand the car back and it is over the mileage you specified at the start of the agreement.

I seriously doubt you'd be able to "swap" cars at "any point" in the contract - unless you're buying something with really solid residuals that you're paying off faster than it's depreciating.

zudecke

I spoke with !!!!!! Lovett (BLW Bristol) where the girl assured me 100% that at anytime (I know, sounds crazy already), I could swap the car..

So the fact that I can pay a balloon payment at the end of a PCP contract and buy the car differentiates it from a HCP deal? With that in mind, which of the two would generally present a better monthly charge?

Kilty_2

PCP usually has a lower monthly payment than HP over the same period of time. In my experience I'd need to take HP over 5 years to have the same monthly payment as a 3 year PCP, with a bigger deposit.

blacksta

zudecke wrote: »

I spoke with !!!!!! Lovett (BLW Bristol) where the girl assured me 100% that at anytime (I know, sounds crazy already), I could swap the car..

So the fact that I can pay a balloon payment at the end of a PCP contract and buy the car differentiates it from a HCP deal? With that in mind, which of the two would generally present a better monthly charge?

I am not sure swapping cars is allowed but if i am wrong , make sure it clearly started in the lease contract. Verbal contracts dont hold much weight around here

Flyboy152

zudecke wrote: »

Hi,

I have been in contact with two different car finance firms. One who claims to have quoted me a PCP deal and rhw other a Hire Contract Purchase deal.

Can anyone please explain the differences?

I was told from the firm who quoted me a PCP deal that I was pretty much able to swap cars at any point during the contract. However the firm offering HCP said that was obviously not possible.

Can anyone clear that up and then go on to explain which one is the best value? I can find comparisons with HP, but not between these two.

Appreciated as always.

Z

I am concerned that you say that they have contacted you. How did they contact you?

zudecke

Kilty wrote: »

PCP usually has a lower monthly payment than HP over the same period of time. In my experience I'd need to take HP over 5 years to have the same monthly payment as a 3 year PCP, with a bigger deposit.

Cheers, but I am not talking about HP, but HCP. HP as I understand it is basically just a loan.

Flyboy152 wrote: »

I am concerned that you say that they have contacted you. How did they contact you?

No, I asked them for a quote and she sort of recommended the 4-year lease plan explaining that I'd be able to trade in cars at any point.
Her words: "Please find attached the quotation of the car that I have quoted on for you, I have looked at three and four years for you because with this agreement you can change at any stage so if you get bored at two / three years you can still change whenever you like… I have based this on 10,000 miles per annum and a £6000 deposit and including Metallic paint". She then went on to say: "With regards to the change cycle. It really is that flexible, interest on all finance agreements is bulked up front so the further through you are the better but yeah you can change whenever you get bored and start again on your next agreement… good hey??".


Regardless, I still don't understand that advantages/disadvantages between the two. Is the rate for HCP better than PCP because you do not have the option to buy the car at the end? I.e. do you pay a premium on PCP because of the balloon payment option?

Flyboy152

zudecke wrote: »

Cheers, but I am not talking about HP, but HCP. HP as I understand it is basically just a loan.


No, I asked them for a quote and she sort of recommended the 4-year lease plan explaining that I'd be able to trade in cars at any point.
Her words: "Please find attached the quotation of the car that I have quoted on for you, I have looked at three and four years for you because with this agreement you can change at any stage so if you get bored at two / three years you can still change whenever you like… I have based this on 10,000 miles per annum and a £6000 deposit and including Metallic paint". She then went on to say: "With regards to the change cycle. It really is that flexible, interest on all finance agreements is bulked up front so the further through you are the better but yeah you can change whenever you get bored and start again on your next agreement… good hey??".


Regardless, I still don't understand that advantages/disadvantages between the two. Is the rate for HCP better than PCP because you do not have the option to buy the car at the end? I.e. do you pay a premium on PCP because of the balloon payment option?

Why is ths happening over the phone anyway. Have already got the car, or are you buying it from a dealer?

verityboo

One advantage of a PCP is that they effectively agree a value for the car in 2 or 3 years time. When our neighbour handed his Range Rover Sport back after 3 years it was worth £8K less than the balloon payment (because the bottom had fallen out of the 4x4 market). £8K of depreciation he did not have to pay for! If the car is worth more than the balloon payment you can use that as a deposit towards your next car, if its worth less then just had it back

zudecke

So let me get this straight...

I take out a PCP contract on a merc at £350p/m. At the end of the 3 yr period, what happens? I understand I can pay a balloon payment, swap for a new car. But what if I don't want a car anymore? What if I want to let it go?