Loan/hire purchase/pcp

D4nny

Hi
We are looking to buy a family car and have looked and found a couple my partner likes and feels comfortable in/driving as she will be driving it 95% of the time now the only thing that confuses me is if we bought the car through the dealer they have offer 2 options
A hire purchase or pcp can somebody please explain the differences please?
And also there apr is fixed at 9.90% i feel that id possibly be able to get a better deal if i took out a loan? But im unsure as i havnt had a look round as yet.
Any help will be brilliant.

molerat

HP. You pay a deposit and pay off the remainder over a set period. You can hand the car back once you have paid half the total amount. The car does not belong to you until the whole amount is paid.

PCP. You pay a deposit and pay off a reduced amount over the fixed period. At the end of that period you either hand the car back or pay the remaining large payment to keep the car. The car is not yours until the total is paid and there could be penalty payments if you wish to hand the car back and there is damage or excessive mileage. You can hand the car back at the 50% payment point but that is unlikely to be reached until well into the agreement due to the weighting of the large final payment.

Loan. The car is yours from day 1 and you can do whatever you want with it.

http://www.thecarexpert.co.uk/car-finance/

Clive_Woody

Also be warned of car dealers quoting flat rates for interest, you pretty much double what they quote to get the APR value. The flat rate sounds good but is only really used by car dealers to sucker people who don't know the difference.

Whether you will get a loan with a lower APR will depend on your credit history (current debt, repayment history, CCJs, missed payments, etc...). Some bank websites allow you to do a soft search to see what apr you might be offered.

If you don't mind me asking what cars were you looking at buying (I am not a car dealer...I am just nosey....)?

D4nny

Clive_Woody wrote: »

Also be warned of car dealers quoting flat rates for interest, you pretty much double what they quote to get the APR value. The flat rate sounds good but is only really used by car dealers to sucker people who don't know the difference.

Whether you will get a loan with a lower APR will depend on your credit history (current debt, repayment history, CCJs, missed payments, etc...). Some bank websites allow you to do a soft search to see what apr you might be offered.

If you don't mind me asking what cars were you looking at buying (I am not a car dealer...I am just nosey....)?

Thanks for your reply mate,the only debt we have is our mortage
We have never had a loan before (either of us) and we have always paid all bills ect on time.
It is a ford fiesta 1.0 ecoboost 5 5 door mate.