HP or bank loan

Catw0man

I am in the process of buying a new car, after a PCP deal, I wanted to avoid a PCP again and had looked at taking a bank loan.

The bank loan was for £21k and over 66 months paying £383 per month (7.1%) the car dealer was trying to get me to take pcp but I turned it down, they came back with various offers, obviously wanting to get the sale as they make more selling finance. So the latest offer was for HP they are going to make a £1000 deposit contribution, and it would be over 5 years with £405 per month payments (similar to bank loan over same period) ultimately I would pay less over the term on the HP (loan is for £18.5k) if I take the bank loan I had to take more due to negative equity on previous car. I think that the HP is better but my husband is wary of finance and has always preferred a bank loan, he would rather own the vehicle and own the bank rather than a finance company.
I am now tying myself in knots not knowing what’s the best, there have been so many different offers!
sorry it’s a bit garbled my brain is fried

Isthisforreal99

Not sure why your husband is wary of finance, whatever way you look at it you are borrowing money and have less protection if you pay by bank transfer from a loan.

Haggle for some extras on the finance such as a free service plan.

ac909045

I’d probably lean towards the HP in this situation. Although your husband prefers a bank loan, financially the HP sounds better as you’re borrowing less overall, getting a £1k dealer contribution, and clearing it in 5 years instead of 66 months. With HP you still own the car at the end, just not until the final payment. The key thing to compare is the total amount repayable and APR on both deals, but based on the figures you’ve given, the HP doesn’t sound like a bad option at all.

QQQQQQQQ_Y

https://forums.moneysavingexpert.com/discussion/6667889/hp-or-bank-loan

Hire Purchase agreements are covered by S75 of the Consumer Credit Act - they therefore offer protections which a bank loan does not, this may be of particular benefit if the goods (in this case a car) are faulty or the supplier goes out of business.