Is it difficult getting hire purchase finance?

xsupercarlx

I was just wondering, is it generally easier to get than a normal bank loan?

I think I may go the bank loan rout but if for whatever reason that didn't work out, HP would be my only option.

I may be looking at it wrong but in some ways HP seems safer, if you cant maintain payments because you lose your job etc then you can end the agreement and give up the car rather, but then if you get a loan, you can sell the car and have possible profit (just thought of that).

Hmm, anyway back to my original question, is it easier to get? I REALLY need a car because I work way to far from home to be catching the bus for much longer.

chanz4

profit from taking a loan on a car, hahha cars loose value

chalkie99

is it generally easier to get than a normal bank loan?

Probably, because HP is a form of secured loan, the vehicle belongs to the finance company until it is paid for so they have at least something they can recover if you fail to pay.

if you cant maintain payments because you lose your job etc then you can end the agreement and give up the car rather

This only applies after you have made at least 50% of the payments.

If you lose your job before then you are stuck. Also, if you have paid , say, 80% or 90% of the payments ad then fall into problems, the car can be returned but you won't get anything back - The payments are made and you have no car.

if you get a loan, you can sell the car and have possible profit

Very, very unlikely unless you buy privately and get the bargain of the century.

Apples2

xsupercarlx wrote: »

I may be looking at it wrong but in some ways HP seems safer, if you cant maintain payments because you lose your job etc then you can end the agreement and give up the car

Yes, you are looking at it wrong.

If you do this, they will sell the car for a pittance, MUCH less than you owe for it, they will then chase you for the shortfall (it will not be just a few hundred, it will be thousands).

If you are in ANY DOUBT whatsoever that you cannot comfortably afford ALL the repayments, do NOT take a car on HP.
No matter how much you "reallly need a car", you are not entitled to obtain money for one.

Buy what you can afford, you can get a fully MOT'd tidy car for a couple of hundred pounds.

No matter which route you take, either loan or HP, you will ALWAYS be owing a lot more for the car than it is worth. There is no way to walk off with a clean slate (unless you buy something you can afford).

pheonixrising21

Apples2 wrote: »

Yes, you are looking at it wrong.

If you do this, they will sell the car for a pittance, MUCH less than you owe for it, they will then chase you for the shortfall (it will not be just a few hundred, it will be thousands).

If you are in ANY DOUBT whatsoever that you cannot comfortably afford ALL the repayments, do NOT take a car on HP.
No matter how much you "reallly need a car", you are not entitled to obtain money for one.

Buy what you can afford, you can get a fully MOT'd tidy car for a couple of hundred pounds.

No matter which route you take, either loan or HP, you will ALWAYS be owing a lot more for the car than it is worth. There is no way to walk off with a clean slate (unless you buy something you can afford).

Couple of things to point out here Apples2:

1) you cannot say for certain that if the car is sold by the finance company due to the OP losing their job and failing to pay that the loan company will chase them and "it will not be just a few hundred, it will be thousands". I've read the post and at no point does it state how much the car is worth, how much the loan is for, how much deposit is being put in. Oh, and you don't know how much will be left on the loan at the point of redundancy (if that even happens) because that hasn't happened yet. There might only be £2k left on the loan and the car be worth £6k at that point. That is an extremely significant undersell on the car if they get so much less than £2k for the car that the OP would still owe thousands afterwards!

2) an MOT is not a warranty. It may well have passed an MOT, but this is worth precisely nothing in terms of the car's reliability from the second it leaves the test centre. All an MOT shows is that the car was roadworthy while it was at the test centre.Therefore, there is an increased risk of high repair bills over a new(er) car

3) just off the top of my head, Toyota offer 0% on a lot of their models on PCP schemes. Depreciation aside (as that happens on all cars), how would this not leave you with a clean slate at the end of it? I assume that when you say you pay much more than the car is worth on HP you are referring to interest?

Not saying that this is what the OP should do or anything like that, just pointing out that you have made sweeping generalisations which may or may not be accurate.

Apples2

I think it an entirely reasonable assumption given the details the OP has stated.
If OP had a significant deposit, this wouldn't be the question raised, happy for the OP to clarify if a large deposit is available.

All indications point toward no money being available to purchase "any" car for "any" value at this time without borrowing.

I'm not suggesting your post is wrong in any way, but do feel it is not the position the OP is in.

I do not agree with you though that is is not possible to find a cheap car which isn't going to need significant investment to keep it on the road.

It would be remarkable to surrender a car and be left not owing anything until very late into the agreement (50%+) so it should not (in my opinion) be suggested as a good course of action to someone already concerned about not meeting the payments.

poppasmurf_bewdley

pheonixrising21 wrote: »

3) just off the top of my head, Toyota offer 0% on a lot of their models on PCP schemes. Depreciation aside (as that happens on all cars), how would this not leave you with a clean slate at the end of it? I assume that when you say you pay much more than the car is worth on HP you are referring to interest?

The way these 0% deals work is by selling the car at virtually full retail price and giving a poor price for the px. Frequently, cars offered at 0% are slow sellers or models about to be replaced. They are also usually models on which you can get a very large discount if you don't take the 0% finance.

So if you buy a new car retailing at £12k on 0%, after three years it will be worth probably £4k at most as many buyers will have paid £9k without the 0% for the identical model new. Both cars will be worth the same price of, say, £7k the day after coming out of the showroom. Depreciation always works on the lowest purchase figures.

pheonixrising21

poppasmurf_bewdley wrote: »

The way these 0% deals work is by selling the car at virtually full retail price and giving a poor price for the px. Frequently, cars offered at 0% are slow sellers or models about to be replaced. They are also usually models on which you can get a very large discount if you don't take the 0% finance.

So if you buy a new car retailing at £12k on 0%, after three years it will be worth probably £4k at most as many buyers will have paid £9k without the 0% for the identical model new. Both cars will be worth the same price of, say, £7k the day after coming out of the showroom. Depreciation always works on the lowest purchase figures.

Just have to say that I disagree on that. I do a lot of mystery shopping getting quotes on new vehicles (best price to sign today, hard negotiating, etc, etc) and I have to say that in the majority of cases the final negotiated price is the same or better for the finance deal over cash (whether that is actual hard cash of your own or finance from elsewhere). My mystery shop scenario had to be for no part-ex, so I cannot comment on what you say about dealers offering lower part-ex prices on the finance deals, but based on my findings on the on the quoted prices for new cars, I cannot see them offering different part-ex values for cash.

BTW, Toyota are offering 0% on new Yaris (18 months since new shape release) and new Auris (2 months since launch), so I dispute the end of line 0% too. Your point on slow selling models may be true, but if you are happy to have one of these, then its a good deal.

Olza23

poppasmurf_bewdley wrote: »

The way these 0% deals work is by selling the car at virtually full retail price and giving a poor price for the px. Frequently, cars offered at 0% are slow sellers or models about to be replaced. They are also usually models on which you can get a very large discount if you don't take the 0% finance.

So if you buy a new car retailing at £12k on 0%, after three years it will be worth probably £4k at most as many buyers will have paid £9k without the 0% for the identical model new. Both cars will be worth the same price of, say, £7k the day after coming out of the showroom. Depreciation always works on the lowest purchase figures.

Extremely pessimistic, your right that cars do depriciate rapidly in the first three years but NOT to that extent, learn some figures.

pheonixrising21

Apples2 wrote: »

I think it an entirely reasonable assumption given the details the OP has stated.
If OP had a significant deposit, this wouldn't be the question raised, happy for the OP to clarify if a large deposit is available.

All indications point toward no money being available to purchase "any" car for "any" value at this time without borrowing.

I'm not suggesting your post is wrong in any way, but do feel it is not the position the OP is in.

I do not agree with you though that is is not possible to find a cheap car which isn't going to need significant investment to keep it on the road.

It would be remarkable to surrender a car and be left not owing anything until very late into the agreement (50%+) so it should not (in my opinion) be suggested as a good course of action to someone already concerned about not meeting the payments.

Not saying that its impossible to buy an old car and not spend a fortune keeping it running. Just stating that the law of averages suggests older cars go wrong more often and as they have no warranty to cover the costs, if they do go wrong, they will cost money to repair.

Personally, I've had issues with several cars in the past which would have cost me thousands in total if they were older cars and out of warranty, hence I don't like the risk. Granted, it is perfectly feasible that if I had bought different, older cars I would have had no reliability problems with them at all, but equally feasible that I may have had even more issues.

In the last 8 years across 4 different cars, I've had the following problems - 2 x blown turbo, suspension failure, full replacement of electronics controlling airbags and seat belt pre-tensioners (over 5 visits to the garage), full clutch replacement. Total cost to me = £0. I dread to think of what that lot would have cost if I didn't have the manufacturer's warranty!

If the OP is concerned about losing their job, then maybe PPI is in order? However, it is very feasible to me that any future redundancy could come at a point where the outstanding balance on any finance is less than the current value of the car. Even if the car is worth the same or slightly less than the outstanding finance, then the OP will not owe "thousands" after the sale.

Apples2

All sounds like a gamble to me, you are gambling a job loss won't occur until there is less finance outstanding than the car is worth.
Gambling that the monthly repayments are manageable month in month out without incurring any other catastrophe.

I don't like gambling like that where money is concerned. Protect yourself and only buy what you CAN afford, not what you are hoping to afford.

Each to their own though. There are plenty of posts around here by people looking to take £30k cars with a pitiful deposit, no savings and a £24k Salary.

I think Mercedes lead the field with plenty of horror stories about what happens after a VT with those guys.