Hi all,

we are about to buy Kodiaq SE. We opted for PCP but I have just realized that one of the documents I received from the dealer is:

"Hire Purchase Agreement regulated by the Consumer Credit Act 1974"

I am lost now: is it just a common title/name for the document or really HP ?

 

Regards

The dealer says:

"PCP is a Hire Purchase agreement with a balloon payment. On the agreement, you will see a large balloon final payment. This is 100% pcp as we don't offer HP on new cars."

But https://www.magnitudefinance.com/finance-products/hire-purchase-with-balloon/

says that there are "Hire Purchase with a balloon payment".

I am confused now ... 😕

I'll try and simplify the numbers for illustration and I'll ignore interest (let's just assume you've got a 0% deal).

 

So you buy a new car and finance £21,600 over 36 months.

 

On HP you'll pay £21,600 / 36 = £600 per month.  And then you own the car.  Because 36 x 600 = £21,600.

 

On PCP you'll maybe pay £10,800 / 36 = £300 per month.  But at the end of the term, you'll either need to make a "balloon payment" of £10,800 to buy the car outright or you hand the keys back and walk away.  Because all you've paid is 36 x £300 = £10,800; so you need to pay another £10,800 to buy the car outright.

 

That's why PCP is so attractive to punters; you can drive around in a car that you couldn't normally afford.

Edited 19 May, 20197 yr by SkodaVRS1963

The paperwork on my PCP mentioned Hire Purchase too.

 

Ignore it, it's all legitimate and above board.

 

See my paperwork in this thread...

 

 

1 hour ago, silver1011 said:

The paperwork on my PCP mentioned Hire Purchase too.

 

Ignore it, it's all legitimate and above board.

 

See my paperwork in this thread...

 

 

@silver1011 thanks for the topic - really interesting ! Learning something new every day ... 😉