HP V PCP

Nicola98

Hello

If someone could help me please

I was looking at getting anew car on pcp however when I was credit checked initially by the dealership they said I was declined for pcp but not for hp, I don’t understand that because hp is requiring more money from me , therefore it’s more expensive and pcp is cheaper

I spoke to the dealership and they said they will ask the finance company for a pcp deal instead of hp so fingers crossed

Has anyone ever been accepted for hp and not pcp ??

Please help!!

soolin

I've moved this off of a hijacked thread for clearer responses.

Scrapit

Nicola98 wrote: »

Hello

If someone could help me please

I was looking at getting anew car on pcp however when I was credit checked initially by the dealership they said I was declined for pcp but not for hp, I don’t understand that because hp is requiring more money from me , therefore it’s more expensive and pcp is cheaper

I spoke to the dealership and they said they will ask the finance company for a pcp deal instead of hp so fingers crossed

Has anyone ever been accepted for hp and not pcp ??

Please help!!

Firstly, is PCP cheaper? It may be less per month but consider the balloon payment. Also you might have a better APR for one method over the other. I'm think HP is better as you pay the deposit then make the payments and the vehicle belongs to you. Simple enough. PCP seems to be a lot to pay without guaranteeing ownership. Also the large payment at the end puts me off. Total up the price of the vehicle using both payment techniques and see where you are.
Also use Martin's advice to check your credit rating, if it's good you should be offered both options. If it's not good find out why and should you be entering I to a financial commitment such as this?

neilmcl

A PCP agreement is just another form of HP. The only difference is a large portion of the car's payment is deferred to the end and is optional dependant on whether you want to keep the car or not. This is known as the balloon payment or GFV. With a standard HP you pay off the entire cost of the car's finance within the set period.

The only reason a PCP may seem "cheaper" is because you'll have lower monthly payments until the end where you'll have to stump up the balloon if you want to keep the car.

Not sure why you'd be declined for a PCP and not the HP as they're both secured against the value of the car and effectively the same thing.

Jonesya

Just to throw this out there.... but if your credit score is such that you are being declined credit, then can you really afford a new or newish car?

They lose a fortune as soon as you drive them out of the showroom, the new car smell soon goes but the debt stays.

A slightly older car, 3-4 years old but still under manufacturers warranty, much cheaper because someone has paid the depreciation, still reliable and under warranty, much better deal and much less debt/finance needed,

Mercdriver

A low credit score doesn't necessarily equal no disposable income. You can have a poor credit score and earn millions a year, but since you haven't borrowed anything, your credit score won't be optimal.

In addition, finance houses take more than just the credit score into control. Plus the houses used here could be two different ones, one for the PCP and another for the standard HP.

Personally if the OP can afford the payments (and credit score isn't necessarily linked to affordability)to HP the car over a 3 year term, I would keep to the basic HP as you have something at the end, that if circumstances have changed where it isn't as affordable you no longer have repayments to make, but the car is yours.

neilmcl

Mercdriver wrote: »

A low credit score doesn't necessarily equal no disposable income. You can have a poor credit score and earn millions a year, but since you haven't borrowed anything, your credit score won't be optimal.

In addition, finance houses take more than just the credit score into control. Plus the houses used here could be two different ones, one for the PCP and another for the standard HP.

Personally if the OP can afford the payments (and credit score isn't necessarily linked to affordability)to HP the car over a 3 year term, I would keep to the basic HP as you have something at the end, that if circumstances have changed where it isn't as affordable you no longer have repayments to make, but the car is yours.

I was thinking this too.

Mercdriver

Plus if credit score is an issue now, if you get a 3 year PCP term and get to the end and want to roll into the next, what happens if you get declined? You have a choice of no car or paying the GFV. Remember that credit score is one thing and your credit score can be say 350 when you take out the car and could be 500 when you want to start a new deal, but then the finance houses decline you. The required credit scoring is a moveable feast, always has been. You are then slightly stuck.

Jonesya

Mercdriver wrote: »

A low credit score doesn't necessarily equal no disposable income. You can have a poor credit score and earn millions a year, but since you haven't borrowed anything, your credit score won't be optimal.

True, but I wonder how many people earning millions find themselves turned down for car finance every year? I don't expect it's that common, mostly because if you earn that much you don't need to finance your car.

I'd bet its quite a lot fewer than those who aren't earning millions and get turned down because they're over-stretching themselves.

Mercdriver

Jonesya wrote: »

True, but I wonder how many people earning millions find themselves turned down for car finance every year? I don't expect it's that common, mostly because if you earn that much you don't need to finance your car.

I'd bet its quite a lot fewer than those who aren't earning millions and get turned down because they're over-stretching themselves.

You can have a very high income with high level costs and decide to finance a car on 0% as it is an efficient way of doing things. To get 0% deals you need a very high level credit record. Just because someone's income is high doesn't mean that their costs aren't.

Nicola98

Thank you so much everyone