PCP the new PPI Scandal?

Stacy_B

Far too many youngsters, often with their 1st car, are going out and paying for brand new cars using PCP without understanding what they are signing up for. Some not even understanding they don't own the car! I know of one such teenager that took out PCP on his 1st car which was brand new, 12 months later he ordered a top of the range Fiesta worth in excess of £19k!
My own son walked into a garage and the salesman said how much do you want to pay per month and then showed him a gleaming brand new Corsa and he was told don't worry about the mileage just swop it at the end of the contract which he believed. Needless to say the contract did not suit his needs as he travels 1,800 per month just for basic travelling needs and the salesman signed him up to 5,000 per year or 15,000 over the 3 years contract needless to say 12 months later he's already exceeded the 3 year mileage and he firmly believed what the salesman said that mileage doesn't matter but I'm sure give at today's run rate he will have in excess of 60,000 in 3 years against a contracted 15,000 miles!!!!
Will the salesman honour his word and write it off I don't think so!
There needs to be better governance over PCP contracts as youngsters need more protection and guidance as I'm convinced this in a few years will be the next PPI scandal.

motorguy

Stacy_B wrote: »

Far too many youngsters, often with their 1st car, are going out and paying for brand new cars using PCP without understanding what they are signing up for. Some not even understanding they don't own the car! I know of one such teenager that took out PCP on his 1st car which was brand new, 12 months later he ordered a top of the range Fiesta worth in excess of £19k!
My own son walked into a garage and the salesman said how much do you want to pay per month and then showed him a gleaming brand new Corsa and he was told don't worry about the mileage just swop it at the end of the contract which he believed. Needless to say the contract did not suit his needs as he travels 1,800 per month just for basic travelling needs and the salesman signed him up to 5,000 per year or 15,000 over the 3 years contract needless to say 12 months later he's already exceeded the 3 year mileage and he firmly believed what the salesman said that mileage doesn't matter but I'm sure give at today's run rate he will have in excess of 60,000 in 3 years against a contracted 15,000 miles!!!!
Will the salesman honour his word and write it off I don't think so!
There needs to be better governance over PCP contracts as youngsters need more protection and guidance as I'm convinced this in a few years will be the next PPI scandal.

The contracted mileage doesnt matter - provided he doesnt hand it back at the end of the term.

If he sells it privately or trades it in, he'll get market or trade value for it respectively.

He could also pay off the remaining GMFV and keep the car.

AdrianC

You're right, there should be better financial literacy amongst younger adults.

Perhaps their parents should educate them...?

motorguy

Stacy_B wrote: »

There needs to be better governance over PCP contracts as youngsters need more protection and guidance as I'm convinced this in a few years will be the next PPI scandal.

What about more governance as parents to examine and advise children before they make a massive knee jerk purchase?

People need to take ownership, and if its anywhere here, its with your son and if he wasnt mature enough then you as a parent must bear some of that responsiblity.

motorguy

AdrianC wrote: »

You're right, there should be better financial literacy amongst younger adults.

Perhaps their parents should educate them...?

But its always someone elses fault isnt it?

And where theres blame theres a claim!

motorguy

Stacy_B wrote: »

I know of one such teenager that took out PCP on his 1st car which was brand new, 12 months later he ordered a top of the range Fiesta worth in excess of £19k!

And your point being presumably that teenagers should be taught restraint?

Cornucopia

Stacy_B wrote: »

...the salesman said how much do you want to pay per month...

Salesman having been using this tactic for decades. It works equally for PCPs and straight finance.

I've actually reversed the tactic and used it on a Salesman as part of negotiating a deal (0% finance made it easier to do the maths). He offered me the new vehicle at £215 per month over 3 years with my car as deposit, and I asked if he could get below £200, which he did, saving me £540.

I don't think there's mis-selling going on (or at least it isn't widespread), but then I think people should understand financial products before signing up for them.

If I have one suggestion about better regulation, it is in the advertising of PCPs. I've seen retail PCPs with deposits as low as one monthly payment, and I've seen them with £6000-8000 deposits (probably more at the luxury end of the market). Clearly a car that is £179 down and £179 per month, genuinely is "£179 per month", whereas a car that is £8k down and £125 per month is not really what most people understand to be "£125 per month". I would expect that the Advertising Standards Authority may regulate this in due course. I would suggest "Low, Medium or High deposit" as an additional prompt to the buyer that there is more to the deal than just the monthly payment. I would define Low, Medium and High as proportional to either the monthly payment or the list price.

onomatopoeia99

motorguy wrote: »

What about more governance as parents to examine and advise children before they make a massive knee jerk purchase?

If the son has signed a PCP deal they must be an adult, so it's none of the parents' business.

I know government seems intent on extending childhood indefinitely, but once you're 18 you are legally an adult and your choices are your own, not your parents'.

AdrianC

onomatopoeia99 wrote: »

If the son has signed a PCP deal they must be an adult, so it's none of the parents' business.

I know government seems intent on extending childhood indefinitely, but once you're 18 you are legally an adult and your choices are your own, not your parents'.

And there are many FAR worse choices that an 18yo could make than buying a car they can just-kinda-sorta afford.

Remember, the lender clearly thinks they can afford it...

jaybeetoo

Read the contract before signing it. It is very clear.

Stacy_B

Thanks for the replies, those that were constructive - I can't see how the parents of young adults 18+ can be to blame in any shape or form especially when they are considered to be legally responsible and an adult at that age - I hope your child doesn't do the same ie walk into a garage as an young adult and walk out with a brand new car on PCP that is not suitable for their needs, I'm sure you wouldn't see that as your responsibility but it's still your child regardless of age and you care and worry for them - salesmen do not think the same as a parent they need the bonuses and sale!
PCP is always cheaper than finance which again makes it attractive and in easier reach - how many experience adults sign up to contracts and agreements without understanding small print etc... In all types of finance?
If the individual was correct regarding parents being responsibile then why did we have such the large scale PPI scandal before that affected all ages including the parents that you say should be teaching their children?? Clever comments with no substance