Ahh ok. Furry muff.
Long term car hire vs leasing vs buying
- Thread starter Pulsedriver
- Start date
Ahh ok. Furry muff.
All depends on your criteria, saving money or ease.
Banks make money from financing.
No such thing as 'free servicing'...you pay for it anyway.
I would source a good used car, pay for it and you and it's yours. This is the cheapest way.
Banks make money from financing.
No such thing as 'free servicing'...you pay for it anyway.
I would source a good used car, pay for it and you and it's yours. This is the cheapest way.
Bad choice, the phaeton doesn't have an HP option! Take the CC for instance, look at the box on the right. Hire Purchase.
Select this and the payments are the same regardless of mileage.
You picked a 0% finance deal with over a 1/3rd deposit...
Not your typical HP deal. When you sign up to a usual HP deal, mileage is taken into consideration. You have the option to give the car back at any period, and if you have done over the elected mileage you must pay excess mileage, which is usually 4-5p per mile IIRC.
These arguments needs to stop really, at the end of the day if mileage wasn't a factor in HP, then why would VW have it in their calculator???
That example you showed is brilliant for those who know they will keep the car for 3 years or longer, even a personal loan couldn't match that deal of 0% apr. but I think the deposit has a significant factor in the deal
Caporegime
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The definition in my head for hire purchase is one which you pay a lump sum each month for the car (the hire), then at the end you have the option to either pay the outstanding amount (purchase) or hand the car back and walk away.
The deal on the VW site isn't hire purchase IMHO, its a straight up finance deal.
Much like you say in HP the millage should be taken into account with an excess to pay should you go over and not buy the car.
http://en.wikipedia.org/wiki/Hire_purchase
The deal on the VW site isn't hire purchase IMHO, its a straight up finance deal.
Much like you say in HP the millage should be taken into account with an excess to pay should you go over and not buy the car.
http://en.wikipedia.org/wiki/Hire_purchase
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For god sake have you even watch the video on that page you posted??
Just so your clear here it is again
Solutions is VW's PCP option and is affected by mileage as that determines the future value figure and therefore the monthly payment. So you pay a deposit, they work out the future value of the car based on parameters, they then give you a price per month to pay + the future balloon payment. At the end you either pay that balloon, hand the car back, or PX like normal with that paying off the balloon and you using any remaining as the new deposit.
HP is simply a loan you pay a deposit, you then pay the rest back, with intrest, over x number of months at a pre-determined rate. The only way to get out of an HP agreement is to either hand the car back, as per the terms of the agreement usually after 50%+ of the value has been paid, or pay the value of the remaining finance.
The whole point of HP is I could do 1 mile or 1,000,000,000 miles over the time I have the finance, the finance company don't give a monkeys as you are just repaying a secured loan on the product, which by assumption you will either own at the end of paying it off or own by clearing the finance on the sometime during the agreement.
Just so your clear here it is again
Solutions is VW's PCP option and is affected by mileage as that determines the future value figure and therefore the monthly payment. So you pay a deposit, they work out the future value of the car based on parameters, they then give you a price per month to pay + the future balloon payment. At the end you either pay that balloon, hand the car back, or PX like normal with that paying off the balloon and you using any remaining as the new deposit.
HP is simply a loan you pay a deposit, you then pay the rest back, with intrest, over x number of months at a pre-determined rate. The only way to get out of an HP agreement is to either hand the car back, as per the terms of the agreement usually after 50%+ of the value has been paid, or pay the value of the remaining finance.
The whole point of HP is I could do 1 mile or 1,000,000,000 miles over the time I have the finance, the finance company don't give a monkeys as you are just repaying a secured loan on the product, which by assumption you will either own at the end of paying it off or own by clearing the finance on the sometime during the agreement.
Look at the VW screen grab a few posts above, see the option to purchase fee line? Thats the nominal amount, normally its not 0, take the Skoda example earlier which has a fee of £60, but the whole point of HP, as its been for god knows how many years, is that your a spreading the cost of purchasing something.
Caporegime
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Yes I get that, the point I'm trying to make is I think VW have badly worded the agreement, with 0 final payment it's not a HP deal it's straight up finance for a car spread over 36 months.
HP means you have the option to buy the car at the end, by paying a balloon payment, straight up finance is for the whole value of the vehicle spread over 36 months.
Normally HP with a balloon or final guaranteed valuation will have a millage limit per year clause, otherwise you could run up double the millage per year you said, hand the car back instead of buying it, and instead of the vehicle being worth 10k it's now worth 50p and VW have made a huge loss.
If HP is as you suggest then the name makes 0 sense, since you are simply purchasing the car, not hiring it.
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What you have described is a PCP not HP.
HP is purchase, a loan, finance or what ever you want to call it is still Hire Purchase, thats a standard term to describe spreading the cost of purchasing something over a defined period. In affect you are "hiring" it from the finance company over the defined period at which point you have "purchased" it.
Jesus Christ j1nxy is right HP usually has a nominal payment at the end <£100 to purchase the car. You'd be beyond idiotic to have paid 99.9% of the value of the car and not take up the purchase. It is as he said just traditional finance hence not affected by mileage as the dealer doesn't need to shift the car on. PCP is what you guys are describing as the guaranteed minimum value (aka final balloon payment) is directly affected by the mileage as that would reduce the residual value.
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It was like arguing with a brick wall, hell, Rossk26 even posted up a link to a site that proved himself wrong, yet still failed to understand how HP works
I was running out of ways to try to explain politely that they were wrong...
Anyway amid the chaos of explaining HP and PCP the OP stated he doesn't keep a car for more than 6 months. I would argue the only viable options for you are to purchase older used cars as a runabout in order to limit your depreciation hit when you eventually sell it 6 months later. Short term hire is extremely expensive and longer term hire isn't an option.
For example if you were to enter a PCP agreement, unless you get a significant discount on your purchase at a good APR rate you would more than likely find yourself in negative equity after 6 months (and arguably you are unlikely to realise any equity until you reach the final months of your agreement). Even though there is flexibility to trade in at any time during your agreement (ie after 6 months), the trade in values offered are unlikely to cover the outstanding balance on the vehicle. This means not only do you lose your deposit but also you are likely to be left with a shortfall that you will need to pay.
Hire purchase is likely to be more than what you're paying now even on a smallish vehicle as there is no offset of a final balance to reduce your monthly outgoings. In addition you wouldn't be able to terminate your HP within 6 months as I believe the consumer credit act only allows you to return the vehicle after 50% of the balance is paid which is usually around 1.5-2 years into a 3 year HP agreement.
For example if you were to enter a PCP agreement, unless you get a significant discount on your purchase at a good APR rate you would more than likely find yourself in negative equity after 6 months (and arguably you are unlikely to realise any equity until you reach the final months of your agreement). Even though there is flexibility to trade in at any time during your agreement (ie after 6 months), the trade in values offered are unlikely to cover the outstanding balance on the vehicle. This means not only do you lose your deposit but also you are likely to be left with a shortfall that you will need to pay.
Hire purchase is likely to be more than what you're paying now even on a smallish vehicle as there is no offset of a final balance to reduce your monthly outgoings. In addition you wouldn't be able to terminate your HP within 6 months as I believe the consumer credit act only allows you to return the vehicle after 50% of the balance is paid which is usually around 1.5-2 years into a 3 year HP agreement.
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Give up, you were wrong. Mileage makes NO difference with HP.
He would be able to terminate the agreement but only by paying off the outstanding balance.
It doesn't really matter what option he takes to finance a car swapping after 6 months is in almost every case going to end up with him in negative equity , unless he puts in a large deposit, due to VAT and dealer margin.
Yep absolutely but based on what the OP said I don't think he intends to splash the capital he has saved on a large deposit so like you said none of these options are viable.
They probably need to re-name it.
HIRE purchase, to me means they are hiring the car, with the option to hand back at any given time. Thus why mileage is taken into consideration as if you hand the car back after a year and have put 60k miles on it, it's going to be significantly less valuable than if it had 5k miles on after a year...
Obviously if you see out the HP agreement, then mileage wouldn't be considered a factor, and you are not hiring the car, you are financing it.
So yeh, turns out I was wrong, but the name doesn't help, and the fact on most websites you have to enter in your annual mileage allowance to show how much the HP would be...
HIRE purchase, to me means they are hiring the car, with the option to hand back at any given time. Thus why mileage is taken into consideration as if you hand the car back after a year and have put 60k miles on it, it's going to be significantly less valuable than if it had 5k miles on after a year...
Obviously if you see out the HP agreement, then mileage wouldn't be considered a factor, and you are not hiring the car, you are financing it.
So yeh, turns out I was wrong, but the name doesn't help, and the fact on most websites you have to enter in your annual mileage allowance to show how much the HP would be...
Or even Lease Purchase...
No, that's not how it works either. You can't hand it back at any time for a start.
This is usually because the same site allows comparison with a PCP product so by getting your mileage it can show you how much each option would cost.