Can I exchange my financing contract from a PCP to an HP? Hi, Dave. If you return the car to the financial company at the end of the deal, you cannot claim equity that could pass over the figure of the balloon – you simply return the car instead of making the final payment. The main difference between a PCP and a private loan is that you borrow the money for a private loan, pay for your car and own it immediately. With a PCP, you don`t own the car: you basically rent it for an agreed period, usually three years. You only own it if you pay the GMFV. This is important, because if you encounter financial difficulties during your agreement, you can not sell the car, unless you have permission from the financial company – since they are the rightful owner of the car. Don`t ignore the problem. If you miss payments, it will undoubtedly cause you problems, as your creditworthiness will be severely compromised. The reaction may vary, but if all goes well, it will be a temporary problem, so a deferral of payments could be allowed, or the term of the loan could be extended, which would reduce the amount paid each month.
Call your lender, as many offer options during this crisis. The GFV only applies at the end of a PCP. Depending on your circumstances, you may be able to return the car prematurely without waiting for the deal to end. For more information, see our guide to voluntarily stopping a PCP. Monthly repayments: PCPs usually last three years and can have low monthly repayments. This can have the effect of making them more affordable than other forms of financing. If the monthly repayments are low, it is because a large part of the cost of the car is not paid until the end of the agreement. Any excess is then converted into a new car – where it can be paid into a new financing contract, which reduces monthly payments – or you can choose to deposit it directly into your bank account. Hi, Ian.
Voluntary termination is not an option to terminate the contract, but a termination of the contract during the term of the contract. Here we have a complete guide to voluntary termination – this is the most popular article on our site. Whether it is a PCP contract (personal purchase) or an HP contract (rent purchase), both are covered by the Consumer Credit Act 1974. Hello, I hope someone can help. I recently came to the end of a PCP agreement with Audi, they say that the call option fee is payable, no matter what and that it is only an “administration tax”. I think this is wrong and I should get paid if I keep the vehicle and pay the balance. Thoughts….