Can I switch from hire purchase??

Zara234

Hello, I have a Vauxhall insignia on hire purchase. Over the past year the car has constantly had things go wrong & I have lost all faith in it and quite frankly dont feel safe in it. I can settle early for £4300 and the car should be worth almost £2000. I cant afford high monthly payments and I see pcp is much cheaper. Can you settle early on hire purchase and start pcp?

debtdebt

Settle early for £4300, sell the car and buy another one on PCP then.

ratrace

I take it you bought the car used, i have a vauxhall astra but i know that the vauxhall insignia was very unreliable hence the reason they are so cheap now

there are some good deals outthere for under £150 a month as long as your not to fussed about what caryou drive as long as its under warranty

Such as Dacia, Kia, Ford vauxhall etc.... budget brands but new as they will still be under warrenty

Mercdriver

You will take a hit on the equity of your present car in any case as it is worth less than you owe - that will not change. I don't think there is a way that you can simply convert the finance you have on the car. They would have to make a judgement as to the value of the car at the end of the term. This would not result in lower payments as the value would be much less than £2k.

Beware the traps of PCP. They sound more attractive when you see lower monthly payments, but this is all based on how big the deposit is and what the guaranteed future value is.

Salesmen will tell you that you could have equity left in the car at the end to use towards your next car at the end of the term. Take this with a vatful of salt. The only thing that might create a good chunk of equity is a larger deposit - that is not free extra equity, that is equity that was yours to begin with. The chances are you will need to find another deposit at the end of the term. Remember also the limit on the mileage, and ignore any salesman that says it won't matter if you put down 8,000 miles a year when you do 15,000.

Finally, doing a PCP on a used car is generally a bad idea. The incentives are generally not offered, and the APR on the finance generally higher.

F1F93

Mercdriver wrote: »

The only thing that might create a good chunk of equity is a larger deposit

Sorry but this is not in the slightest bit correct.

A PCP deal will have a final value which does not change based on your deposit, only the cars specs, mileage limit and duration of agreement.

You pay the difference between between the "list price" (minus any dealer contributions etc) and this minimum final value over the duration of the lease as a combination of deposit and monthly payments. If your deposit goes up, the monthlies come down, the final payment stays the same regardless.

sheramber

Check out the mileage that the quote is for. It may be based on a small mileage allowance such as 6000 miles a year and you will be charged for any extra miles if you want to hand the car back.

The figure for an agreement with more mileage will be higher.

Remember, at the end of the finance you have a balloon payment to pay if you want keep the car.

A dealer will only give you the current trade in value regardless of the 'value' quoted in the agreement.

iwb100

PCP should only be thought of as an alternative to car leasing. If you want a new car and want to change it every 3/4 years and to pay monthly for the privilege then you have two options PCP or Car Leasing.

You should compare the total costs of each (across the same terms) for the car you want and decide whether PCP or PCH offers the best value. Of course with dealers and brokers you can negotiate and use brokers to find the best reductions. So compare apples with apples.

PCP MIGHT leave you with equity in the vehicle to use as a deposit on the next one. But assume it doesn't. If you really want to be scientific look up model average depreciation and use a depreciation calculator to work out if the car is likely to be worth more than the GMFV. But don't assume it will be. If it is its a bonus. In other words do not use that equity value when comparing PCP and PCH.

What you will find is often PCH is better value initially but if you get dealer incentives PCP can become competitive.

These deals are only really for people who want a new car every few years (note the want) as they will work out more expensive than buying a reliable second hand car. But they do sometimes make sense for high mileage users who want that new car warranty in place.

foxy-stoat

So your going to set fire to £2300 only to set fire to even more money on a PCP deal?

What is up with it to make you feel unsafe? Can you spend say half of the money on it on servicing and repairs that you will lose to make you feel safe?