25% drop in second hand car prices possible

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Of course it's a complete nonsense - I posted it to indicate the extremes to which these deals can go to.

It is noted in the details the the final payment includes an option to purchase fee. It doesn't really matter whether it a PCP or HP deal, you can walk away when you've paid 50% of the outstanding balance anyway.

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Er, no. You can't just walk away. It is an HP deal. I just checked with my friendly local Honda dealer.
 
Again - Exactly. The finance arm buys the car at transfer pricing anything up to 40% lower than the list price. That's why the finance arms of the main manufacturers are often the only part of the company that makes money. These things are a way of smothering the ridiculous list prices of cars here and the more they're used, the more they help maintain those high new car prices.
Do you realise you are now saying almost the complete opposite of what you were saying earlier?
 
I believe that with a car on HP once you have paid 50% of the money (capital plus interest?) you can just hand back the car to the finance organisation and walk away. It's called early termination. You would still be liable for any other payments, GAP insurance etc.

Quite what this does you your credit rating I'm not sure. With the Honda example it makes no sense at all anyway.
 
Do you realise you are now saying almost the complete opposite of what you were saying earlier?

For the avoidance of doubt:

1) PCPs are the spawn of the devil, designed to trap people. Several former car sales people have confirmed that in threads here.

2) Residual value in percent, is expressed compared to the list price of the vehicle. Expressing it any other way gives a distorted impression.
 
I believe that with a car on HP once you have paid 50% of the money (capital plus interest?) you can just hand back the car to the finance organisation and walk away. It's called early termination. You would still be liable for any other payments, GAP insurance etc.

Quite what this does you your credit rating I'm not sure. With the Honda example it makes no sense at all anyway.

You're right that the car can be handed back - it's a scheme used by high mileage drivers who buy a car on, say, a 4yr HP deal and then hand it back at 2yrs having paid half the amount owing but with the car's value destroyed because it's done a very high mileage.

There is no credit rating implication, but the same finance company would no doubt be reluctant to take on that person again.
 
Anyone got any formal evidence -say a link to a good source- that you can take out HP deals and walk away after half is paid: -
a) with no effect on your credit rating (as Rory claims)
and b) without being liable for the remaining payments.

?
 
Without digging up the CCA wording I do recall that the finance company can repossess without a court order if you default (2 payments missed) before the first third of the total is paid. In this instance the total is the full amount to be paid and includes deposit and interest.

The car can be handed back with no blemish on your credit rating after a half of the total has been paid - however, the finance company must be satisfied that the car has been well maintained and is in reasonable condition.
 
One thing to be aware of is that the cancellation terms apply to Regulated Agreements, which, until recently, where limited to £25,000. However the Consumer Credit Act 2006 which came into force on 6th April 2008 abolished that £25,000 limit.

Far from relaxing the terms, as the trade was asking for, recent amendments strengthen it by removing the £25,000 limit.

This potentially has an impact for people buying more expensive cars as previously the supplier could rely on the Unregulated Agreement offering them some protection from the buyer terminating early, so they therefore tended to offer slightly lower interest rates than on Regulated Agreements.
 
I believe that with a car on HP once you have paid 50% of the money (capital plus interest?) you can just hand back the car to the finance organisation and walk away. It's called early termination. You would still be liable for any other payments, GAP insurance etc.

Quite what this does you your credit rating I'm not sure. With the Honda example it makes no sense at all anyway.

We did this on Mrs E's previous car - it was such as pain in the rear after the 2 year warranty had gone that we returned ot to the finance company's office with a termination letter and keys. They wrote back to ask why we were terminating (which we had stated in the original letter) and said that they would check the car to ensure it was in a "reasonable" condition. We confirmed the reason for the return (although you don't have to provide a valid reason for doing so) and it's had no further impact - the same company was even happy to quote on the next car (which we didn't go through with as we went down the bangernomics route instead).
 

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