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VW PCP labelled as HP

in Motoring
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sotonkonasotonkona Forumite
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Hi there, about to purchase a used VW on PCP but the VWFS contract says it's Hire Purchase with an 'option to purchase' at the end. The contract doesn't mention PCP at all but shows a balloon payment at the end. It is all labelled clearly as HP. Has anyone else experienced this?

I had a PCP with them 5 years ago and the contract was very clearly labelled PCP so it feels slightly ambiguous!

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  • BoGoFBoGoF Forumite
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    PCP is a form of HP
  • neilmclneilmcl Forumite
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    As stated a PCP is just another form of Hire Purchase and a lot of agreements will be headed as "Hire Purchase Agreement". Nothing to be concerned about.
  • sotonkonasotonkona Forumite
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    Cool, thank you
  • timwalkertimwalker Forumite
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    There is a big difference between a PCP and HP with a balloon.

    A PCP has a guaranteed future value, so irrespective of its value at the end it can be handed back.

    HP with a balloon has a final payment that must be paid regardless of vehicle value.
  • wgl2014wgl2014 Forumite
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    timwalker wrote: »
    There is a big difference between a PCP and HP with a balloon.

    A PCP has a guaranteed future value, so irrespective of its value at the end it can be handed back.

    HP with a balloon has a final payment that must be paid regardless of vehicle value.

    As always the devil is in the detail, each individual proposal needs to be checked carefully rather than making general assumptions.
  • edited 29 March 2019 at 8:44AM
    neilmclneilmcl Forumite
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    edited 29 March 2019 at 8:44AM
    timwalker wrote: »
    There is a big difference between a PCP and HP with a balloon.

    A PCP has a guaranteed future value, so irrespective of its value at the end it can be handed back.

    HP with a balloon has a final payment that must be paid regardless of vehicle value.
    But, as explained they're all a form of HP. The important bit, which will be outlined in the agreement for the OP to read, which I'm hoping he will, is the final payment is optional.

    In fact the op has already outline this - "Hire Purchase with an 'option to purchase' "
  • edited 29 March 2019 at 4:41PM
    NearlyoldNearlyold Forumite
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    edited 29 March 2019 at 4:41PM
    Technically all HP agreements, whether standard HP, HP with a balloon or HP based PCP have an "Option to Purchase" by paying the "Option to Purchase Fee" (which can be zero) to transfer title of the goods to the borrower at the end of the term. This is a genuine option - the borrower can choose to hand the goods back at the end of the term should they wish to, but only a PCP arrangement allows the borrower to do this with a guarantee it would cover all the amounts still due under the agreement. (obviously it wouldn't make much sense to hand the goods back when you had paid for them in full but the option is there nonetheless.)

    Conditional sale agreements differ in that title always passes automatically to the borrower at the end of the payment term - assuming full payment.

    For this reason you would need to see the "option to purchase" phrase in context to be 100% certain it was a PCP arrangement.

    All HP type agreements have VT rights of course.
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