PCP Car Finance

Deep_Space_Niner

Hi Everybody
I'm new here and I have a car finance dilema that I wanted to get a second opinion from other MSE forum members.
3 years ago I purchased an EV on what at I beleived was PCP. I had previously bought 5 new cars from this dealer on finance and not had any issues. My previous car was the ICE model of the same car. Normally, I purchase over 4 years but around 3 years in I start looking at new cars as normally at this point I've paid off the depreciation and interest with some equity in the car to put towards a deposit on the next car. I've been back into the dealers and was surprised to be told that my EV is worth less than half the outstanding finance, which is about 2/3rds the final balloon payment! The dealers have said we as the car was on PCP we can voluntarily terminate and hand the car back cutting our losses. I rang the finance company to enquire about voluntary termination only to be told that we could not as the car finance is a motor loan and not PCP, all be it one disguised as PCP with all the usual features such as monthly payments, a final balloon payment and the option to either hand the car back, keep the car on payment of the final payment or trade in towards a new car. I was told that it was a motor loan and not PCP as the finance is not secured against the vehicle which is something that I was not aware of and can not find any reference to in my paperwork. Only a vague IF your loan is secured against your vehicle, we can reposess the vehicle if you do not keep up with repayments. The paper work says Personal Contract Purchase accross the top and describes the finance as Fixed Sum Loan Personal Contract Purchase. It says in serveral places that the argreement is covered by the Consumer Credit Act 1974 but in the small print it says you will not have the right to terminate the agreement early through voluntary termination under the consumer credit act 1974.
What do you think? Are they trying to pull and fast one and get out of their legal duties under CCA 1974 or have they misselled a motor loan disguised as PCP? I can wait another 12 months and hand the car back, but I feel agreived by the way I have been treated by the finance company. What options would I have if I wanted to pursue this further?
Thanks

paul_c123

It will cost about £10, but you can find out 100% if the finance is secured on the vehicle by doing an HPI check.

XRS200

Deep_Space_Niner said:

Hi Everybody
I'm new here and I have a car finance dilema that I wanted to get a second opinion from other MSE forum members.
3 years ago I purchased an EV on what at I beleived was PCP. I had previously bought 5 new cars from this dealer on finance and not had any issues. My previous car was the ICE model of the same car. Normally, I purchase over 4 years but around 3 years in I start looking at new cars as normally at this point I've paid off the depreciation and interest with some equity in the car to put towards a deposit on the next car. I've been back into the dealers and was surprised to be told that my EV is worth less than half the outstanding finance, which is about 2/3rds the final balloon payment! The dealers have said we as the car was on PCP we can voluntarily terminate and hand the car back cutting our losses. I rang the finance company to enquire about voluntary termination only to be told that we could not as the car finance is a motor loan and not PCP, all be it one disguised as PCP with all the usual features such as monthly payments, a final balloon payment and the option to either hand the car back, keep the car on payment of the final payment or trade in towards a new car. I was told that it was a motor loan and not PCP as the finance is not secured against the vehicle which is something that I was not aware of and can not find any reference to in my paperwork. Only a vague IF your loan is secured against your vehicle, we can reposess the vehicle if you do not keep up with repayments. The paper work says Personal Contract Purchase accross the top and describes the finance as Fixed Sum Loan Personal Contract Purchase. It says in serveral places that the argreement is covered by the Consumer Credit Act 1974 but in the small print it says you will not have the right to terminate the agreement early through voluntary termination under the consumer credit act 1974.
What do you think? Are they trying to pull and fast one and get out of their legal duties under CCA 1974 or have they misselled a motor loan disguised as PCP? I can wait another 12 months and hand the car back, but I feel agreived by the way I have been treated by the finance company. What options would I have if I wanted to pursue this further?
Thanks

Sounds very odd to me.  Have you queried it with the dealer?

Deep_Space_Niner

XRS200 said:

Deep_Space_Niner said:

Hi Everybody
I'm new here and I have a car finance dilema that I wanted to get a second opinion from other MSE forum members.
3 years ago I purchased an EV on what at I beleived was PCP. I had previously bought 5 new cars from this dealer on finance and not had any issues. My previous car was the ICE model of the same car. Normally, I purchase over 4 years but around 3 years in I start looking at new cars as normally at this point I've paid off the depreciation and interest with some equity in the car to put towards a deposit on the next car. I've been back into the dealers and was surprised to be told that my EV is worth less than half the outstanding finance, which is about 2/3rds the final balloon payment! The dealers have said we as the car was on PCP we can voluntarily terminate and hand the car back cutting our losses. I rang the finance company to enquire about voluntary termination only to be told that we could not as the car finance is a motor loan and not PCP, all be it one disguised as PCP with all the usual features such as monthly payments, a final balloon payment and the option to either hand the car back, keep the car on payment of the final payment or trade in towards a new car. I was told that it was a motor loan and not PCP as the finance is not secured against the vehicle which is something that I was not aware of and can not find any reference to in my paperwork. Only a vague IF your loan is secured against your vehicle, we can reposess the vehicle if you do not keep up with repayments. The paper work says Personal Contract Purchase accross the top and describes the finance as Fixed Sum Loan Personal Contract Purchase. It says in serveral places that the argreement is covered by the Consumer Credit Act 1974 but in the small print it says you will not have the right to terminate the agreement early through voluntary termination under the consumer credit act 1974.
What do you think? Are they trying to pull and fast one and get out of their legal duties under CCA 1974 or have they misselled a motor loan disguised as PCP? I can wait another 12 months and hand the car back, but I feel agreived by the way I have been treated by the finance company. What options would I have if I wanted to pursue this further?
Thanks

Sounds very odd to me.  Have you queried it with the dealer?

We have spoken to other dealers including a dealership a sister brand who both agree that its very strange. We have asked somebody who bought a car on PCP from the same dealer a couple of months before we got ours to look at their paperwork and their's are true PCP with the right to voluntary termination. The car is booked in for its first MOT so I will ask them.

Deep_Space_Niner

paul_c123 said:

It will cost about £10, but you can find out 100% if the finance is secured on the vehicle by doing an HPI check.

Good idea. I think I'll try that. 

DullGreyGuy

PCP isnt really a thing, it's technically a HP agreement with a balloon payment; PCP is just a marketing name thats been added to differentiate. 

Objectively speaking though, what's the problem though? Obviously you are sold the PCP with the dream that you will have some equity in the car when it comes to the balloon but clearly thats never guaranteed. If you are still in negative equity when you come to the end of the contract you just hand it back and walk away. Our last PCP, an ICE, was in negative equity so did just that which was ok as wasnt intending on buying it and whilst a contribution to the next car would have been nice we got a very good deal on the car so not complaining. 

Nearlyold

There is no legal definition of a PCP.   Most are based on HP agreements, some are based on Conditional Sale agreements. A minority are based on a fixed sum/term loan i.e. a Personal Loan - these do not have Voluntary Termination rights. They are generally used where the Lender for whatever reason  is concerned over the possible financial loss should a Voluntary Termination occur, this may be due to concerns over excessive depreciation combined with the risk of the borrower doing monster miles then VT-ing  to avoid the mileage charges on using the hand back option at the end of the fixed term.

Is it a Santander Loan? 

Deep_Space_Niner

Nearlyold said:

There is no legal definition of a PCP.   Most are based on HP agreements, some are based on Conditional Sale agreements. A minority are based on a fixed sum/term loan i.e. a Personal Loan - these do not have Voluntary Termination rights. They are generally used where the Lender for whatever reason  is concerned over the possible financial loss should a Voluntary Termination occur, this may be due to concerns over excessive depreciation combined with the risk of the borrower doing monster miles then VT-ing  to avoid the mileage charges on using the hand back option at the end of the fixed term.

Is it a Santander Loan? 

Its Hyundai Finance but Santander are mentioned in the documents although its not clear what role they have.

Deep_Space_Niner

DullGreyGuy said:

PCP isnt really a thing, it's technically a HP agreement with a balloon payment; PCP is just a marketing name thats been added to differentiate. 

Objectively speaking though, what's the problem though? Obviously you are sold the PCP with the dream that you will have some equity in the car when it comes to the balloon but clearly thats never guaranteed. If you are still in negative equity when you come to the end of the contract you just hand it back and walk away. Our last PCP, an ICE, was in negative equity so did just that which was ok as wasnt intending on buying it and whilst a contribution to the next car would have been nice we got a very good deal on the car so not complaining. 

Our circumstances have changed over the last 3 years, our family has grown and changed jobs so use the car for a small number of business miles. Our current car is too small and we need something a bit bigger.
Our problem not the depreciation, it's that we were sold a car on what we were told was balloon payment HP which comes with certain legal rights under the consumer credit act 1974 but what they gave us was a personal loan structured to look like balloon HP but without the legal protections. If it was HP we could hand it back and buy a bigger car but as its a loan we can't and will have to live with our old car is no longer suitable for another 12 months.
Its like asking for a veggie burger and being given a beef burger, it wasn't what we wanted or asked for.

Nearlyold

How does the paperwork the dealership gave you in relation to the finance product describe it? 

Deep_Space_Niner

Deep_Space_Niner said:

XRS200 said:

Deep_Space_Niner said:

Hi Everybody
I'm new here and I have a car finance dilema that I wanted to get a second opinion from other MSE forum members.
3 years ago I purchased an EV on what at I beleived was PCP. I had previously bought 5 new cars from this dealer on finance and not had any issues. My previous car was the ICE model of the same car. Normally, I purchase over 4 years but around 3 years in I start looking at new cars as normally at this point I've paid off the depreciation and interest with some equity in the car to put towards a deposit on the next car. I've been back into the dealers and was surprised to be told that my EV is worth less than half the outstanding finance, which is about 2/3rds the final balloon payment! The dealers have said we as the car was on PCP we can voluntarily terminate and hand the car back cutting our losses. I rang the finance company to enquire about voluntary termination only to be told that we could not as the car finance is a motor loan and not PCP, all be it one disguised as PCP with all the usual features such as monthly payments, a final balloon payment and the option to either hand the car back, keep the car on payment of the final payment or trade in towards a new car. I was told that it was a motor loan and not PCP as the finance is not secured against the vehicle which is something that I was not aware of and can not find any reference to in my paperwork. Only a vague IF your loan is secured against your vehicle, we can reposess the vehicle if you do not keep up with repayments. The paper work says Personal Contract Purchase accross the top and describes the finance as Fixed Sum Loan Personal Contract Purchase. It says in serveral places that the argreement is covered by the Consumer Credit Act 1974 but in the small print it says you will not have the right to terminate the agreement early through voluntary termination under the consumer credit act 1974.
What do you think? Are they trying to pull and fast one and get out of their legal duties under CCA 1974 or have they misselled a motor loan disguised as PCP? I can wait another 12 months and hand the car back, but I feel agreived by the way I have been treated by the finance company. What options would I have if I wanted to pursue this further?
Thanks

Sounds very odd to me.  Have you queried it with the dealer?

We have spoken to other dealers including a dealership a sister brand who both agree that its very strange. We have asked somebody who bought a car on PCP from the same dealer a couple of months before we got ours to look at their paperwork and their's are true PCP with the right to voluntary termination. The car is booked in for its first MOT so I will ask them.

I queried this with the dealer. They said they have nothing to do with the finance and just print out the documents. They said they are aware most PCP is HP but some are Motor Loans but the finance company makes that descision. They repeated what @Nearlyold said, that they usually only do this with customers who are serial VT'ers (VT'ed at least twice). We have never previously VT'ed on any finance (Part-Ex'ed against a new car and once paid it off and kept the car) and both have good credit history so their was no reason to offer a motor loan rather than HP.