Hire Purchase - Help

Manxman_in_exile

I do wonder how far PCP and PCH(?) are complete rip-offs. I'm sure that they suit some people's requirements, but I wonder how far many other people are essentially mis-sold without fully understanding the final price they are signing up to. (They're own fault, I know).


Over about 35 years we've bought two new cars and three second hand. We were fortunate enough to be able to afford to buy all of them cash (ie credit card or debit card or cheque) and bought them with the intention of running them into the ground. We weren't bothered about getting a newer model after three or four years.

AdrianC

Manxman_in_exile wrote: »

I do wonder how far PCP and PCH(?) are complete rip-offs. I'm sure that they suit some people's requirements, but I wonder how far many other people are essentially mis-sold without fully understanding the final price they are signing up to. (They're own fault, I know).

Over about 35 years we've bought two new cars and three second hand. We were fortunate enough to be able to afford to buy all of them cash (ie credit card or debit card or cheque) and bought them with the intention of running them into the ground. We weren't bothered about getting a newer model after three or four years.

Just because your requirements are different, and these are not suitable for you, does not make them unsuitable for others. They have their place as one of a variety of financial options.

The beef here seems to be that the OP signed up for a fixed-term financial product, and now wants out part-way into that term. No fixed-term finance is going to be particularly flexible in that regard, lease/PCP/whatever. This is more of a question of poor long-term planning than an issue with PCP itself.

If the OP had bought the car (assuming they were able to), then they would find themselves at the blunt end of the steepest bit of the depreciation curve right now. Getting a new car for a short period is always going to be expensive, no matter how it's paid for.

gardner1

Manxman_in_exile wrote: »

I do wonder how far PCP and PCH(?) are complete rip-offs. I'm sure that they suit some people's requirements, but I wonder how far many other people are essentially mis-sold without fully understanding the final price they are signing up to. (They're own fault, I know).


Over about 35 years we've bought two new cars and three second hand. We were fortunate enough to be able to afford to buy all of them cash (ie credit card or debit card or cheque) and bought them with the intention of running them into the ground. We weren't bothered about getting a newer model after three or four years.

I can see the adverts now....."have you been mis-sold a PCP":D

People just see the low payments and don't read or understand the t&cs,then complain about it.Every car I've had has been paid in cash or very low cost bank loan and most have been 12-18 month old pre registered avoiding the first year slump depreciation

gardner1

AdrianC wrote: »

Just because your requirements are different, and these are not suitable for you, does not make them unsuitable for others. They have their place as one of a variety of financial options.

The beef here seems to be that the OP signed up for a fixed-term financial product, and now wants out part-way into that term. No fixed-term finance is going to be particularly flexible in that regard, lease/PCP/whatever. This is more of a question of poor long-term planning than an issue with PCP itself.

If the OP had bought the car (assuming they were able to), then they would find themselves at the blunt end of the steepest bit of the depreciation curve right now. Getting a new car for a short period is always going to be expensive, no matter how it's paid for.

The OP obviously couldn't afford it in the first place and is entirely to blame for not reading small print

Someone will try and claim for PCP mis-selling in near future,after all the shark companies need a new angle once the ppi claims dry up

forgotmyname

Nah holiday claims are next it seems, know a few people that have had calls about your poor experience on your holiday.

So maybe thats next?

Picard91

Good to hear about a similar Situation. I have a car I'm 2 years into having on a PCP. I did get a cracking deal as I knew someone who worked there (sadly he's left the company now). 2 Years ago I was doing about 25-30k miles a year with work (self employed) and my car was on the way out, wanted something reliable. Now I'm still self employed but out of the country 10 months a year. With about 4k miles.

Do I carry on paying the car off for 2 years and not use it, or just pay and get rid, a call to shop later will find out :O

In you case it seems like you might as well keep it and use it as originally planned, you'll be paying to get out of the Contract anyway (the equivalent of how many monthly payments?). Either way no car at the end and roughly the same amount of money spent?

Goingroundincircles

Thank you all for your (mostly) useful comments. I am not driving around in a flash car, it's only a polo! I can afford the repayments and am not looking to ditch the deal penalty free but wanted to make sure that although it was perhaps not the most sensible decision at the time, that I'm doing the most sensible thing with it now by seeing what the options are.

Picard91 I hope your call gives you the answer you need!

Personally if it was me i would just carry on paying the payments then when the time came i would refinance the baloon paymet and just keep the car and run it into the ground, the longer you keep the car the depreciation avaergaes out over time so its not that bad in the very long run

retrace, thank you I thought this would be the best course of action but it's always good to get others advice!

The way these (PCP) things work means you'll be very near the end of your term before you have paid half the agreement - most of the money is at the end. If you can afford to, see it through, if not, come back for further advice. I haven't actually seen a reason for getting out of it apart from 'buyer's remorse'.

almillar, that's what I needed to know, thank you. I can make the repayments so no problem there.

Did you seriously think you could terminate a 4 year deal after just 18m without compensating the lender for your breach of contract?

macman, no. Hence why I asked what the penalty would be.

The total cost of the car to buy was deposits + amount borrowed. You didn't borrow the deposits, so they're not part of the 50% VT calculation.

The amount borrowed, including interest, is (monthlies x months) + balloon = just over £14k. It's 50% of this figure - (monthlies x months) + balloon - that's the relevant one for VT. That's about £7k. After 19 months, you've repaid £3,250ish. You've got a long way to go... Another 22 months, which'll take you to 7 months shy of the end of term.

The monthlies include the interest on the entire amount borrowed - including the balloon. You don't say the interest rate... If it's 10%, then the purchase cost would have been a bit over £15k. If it's 7.5%, then about £16k. If it's 5%, then a bit under £17k. Obviously, the rest to the £18.7k is the interest...

AdrianC, thank you for your helpful answer. It's not very clear in the paperwork what counts as what. It does state that 50% is £9,058.86 though. The exact wording is "You have a right to end this agreement. They will be entitled to the return of the goods and to half of the total amount payable under this agreement, that is £9,058.86."
Interest is 6.7%.

I would suggest you think carefully before you make another rash decision.

Can you afford the repayments? If not ask finance company for a VT settlement figure.
Do you need a car? Most likely it will be best for you to keep your PCP until termination.
At the end of 4 years you buy another car (on finance) or raise finance for the balloon payment.

Thanks missile, just seeing what the options are and it sounds as though sticking with it is the winner.

AdrianC

It might only be a Polo, but it's an eighteen grand Polo...

Goingroundincircles

AdrianC - thanks for the reminder! :rotfl: