buying a car - HP vs PCP

motorguy

boliston wrote: »

Can they still charge a mileage penalty if you have paid off 50% of the finance and the car is still in good condition?

Surely as long as those 2 criteria are met they are obliged to terminate the agreement with nothing further to pay?

a VT is forcing the contract termination under your rights in the Consumer Credit Act. Its to protect people who can no longer afford to pay due to a dramatic change in circumstance against being pursued for a disproportionate amount by the finance company.

It is NOT designed as a handy get out of jail free card and as such i wouldnt recommend abusing that right just to save a few £.

BUT, you are correct, if you did do a VT and had already paid 50% of the total contract cost but did say 8,000 miles instead of 5,000 miles a year then they cant particularly object - UNLESS you sign a "waiver" as part of a VT pack that they might kindly send you when you try to VT. They tend not to take that lying down any more so i personally wouldnt go in to a PCP agreement, relying on a VT as my exit strategy.

motorguy

daveyjp wrote: »

50% of the finance repayment on a 3 year PCP is around the full term of the agreement anyway.

So on 5,000 a year after 3 years you need to do less than 15,000 or expect a charge.

It tends to be around months 30-33 of a 36 month agreement, thus you usually have a window in advance of the contract end date in which you could VT with nothing further to pay.

motorguy

MataNui wrote: »

Lets split hairs and say about 40%. Only saying that because there are a few posts on here about VT on PCP and people are only meeting the 50% in month 30ish (or later) of a 36 month contract. Also these deals are financed so the eventual balloon payment closely matches the residual value of the car. On average this would be around 40% after 3 years. Note liberal use of words like 'average', 'ish' and 'about'.

Once you factor in interest charges, admin charges etc, its usual for it to be around months 30-33.

It would be wrong to say it doesnt happen until month 36 of a 36 month agreement, because its very very unlikely.

bertiewhite

Based on a friend's experience - a PCP car needs to be in pristine condition when it's returned as well.

qwert_yuiop

Coolhandluke wrote: »

Of topic I know but i have a 2002 Peugeot 106 for sale , One lady owner and 51,000 miles, get in touch if interested £475 .

That's more like it. Loans to buy a car? Using money I've paid tax on to pay interest on a depreciating asset? Not going to happen in this house.

Does anyone remember a magazine years ago titled "jalopy, incorporating slow car"? Entertaining tips for budget motoring. At the time, I had an elderly Saab with no first gear, which eventually lost reverse as well. We went to Dublin one Saturday, and parked it illegally. When we came back it was clamped. I took out the tax disc and went home in the train. Hard core cheap motoring.

motorguy

bertiewhite wrote: »

Based on a friend's experience - a PCP car needs to be in pristine condition when it's returned as well.

No. It doesnt.

It can have wear and tear in line with industry guidelines.

http://www.bvrla.co.uk/service/fair-wear-and-tear-guides

qwert_yuiop

motorguy wrote: »

No. It doesnt.

It can have wear and tear in line with industry guidelines.

http://www.bvrla.co.uk/service/fair-wear-and-tear-guides

Do they not penalise extreme mileage in some way? Speaking as someone who's driven 150,000 miles in the last five years (but isn't in the market for pcp).

motorguy

qwert_yuiop wrote: »

Do they not penalise extreme mileage in some way? Speaking as someone who's driven 150,000 miles in the last five years (but isn't in the market for pcp).

If the PCP agreement was for say, 90000 over 3 years then fair wear and tear still applies.

High mileage PCP deals rarely stack up as viable though.

bertiewhite

The company his Audi was leased through had a weird concept of wear & tear then.

motorguy

bertiewhite wrote: »

The company his Audi was leased through had a weird concept of wear & tear then.

They may well do. It doesnt make them correct though.

They are obliged to adhere to those BVRLA standards

Lets be honest - they've chanced their arm and squeezed your mate for a few extra hundred.