PCP misselling.

[Ginge R]

C.£30bn in lease sales last year, and with a possible bubble on the horizon, I'd be interested for anyone's thoughts on this and whether or not anyone has successfully complained against a contract.

[sidicks]

Ginge R said:

C.£30bn in lease sales last year, and with a possible bubble on the horizon, I'd be interested for anyone's thoughts on this and whether or not anyone has successfully complained against a contract.

You can guarantee that, if there's money in it, there will be plenty of people coming out of the woodwork to claim 'mis-selling'.

[Gareth79]

I bought a Leaf on PCP a few years ago and I was surprised at how straightforward it was. All the contract paperwork was on-screen and flicked through pretty fast, although all the important stuff was highlighted. No paper copy was supplied as standard, although I recall it was offered. I was surprised that it wasn't insisted upon.

For the person who pays attention and knows what they are dealing with it was fine, but I'd not be surprised if the process was found to be deficient.

[Ginge R]

sidicks said:

You can guarantee that, if there's money in it, there will be plenty of people coming out of the woodwork to claim 'mis-selling'.

Agree, and one or two useful pieces of legislation exist to help companies which are sufficiently motivated, insightful and resolute, to turn the unscrupulous hunter into the hunted through criminal and civil means.

But there are some who are probably genuinely unwary. I was asking because I read some lease documents from last year, and the detail was conspiciously light. The guaranteed future value risk warnings were practically non existent and didn't numerate any shortfall consequences, the lease APR was the same as hire purchase - it's my understanding that it's calculated differently with a lease agreement but that wasn't explained, the GAP was sold on the same day (I thought there now had to be a GAP gap, so to speak). The list goes on, so I won't.

If there is a bubble and price drop (were VW trade-in prices affected eighteen months ago because of dieselgate?), there could be problems ahead. I'm not advocating anyone and everyone beats a path to their main dealer. Yes, there will be the ambulance chasers, but there are also the sub prime-esque victims who were flogged a collaterised pup. If the market does fall, there could be problems. Bear in mind we have become used to ultra low interest rates, and most taking advantage of PCP have done so on the basis of low rates (which can now only go one way).

If new PCP becomes unaffordable, if there's oversupply, I was simply wondering if there are likely to be trade-in value consequences that haven't properly been thought through - something most likely to affect those least likely to afford the shortfall. My insight isn't strong enough to have a firm opinion - hence my question. Not for me btw, I decided against leasing and went down the barge route - someone else took the hit long ago, and I've got burr and hide for the price of three or four monthly XF payments.

[essayer]

We've discussed in other threads about the free use of the term 'deposit' which won't ever be returned - all you get back is the residual value of the car

Also on a 2 yr PCP the manufacturer sets the sale price, the residual value and then, after two years, usually seems to control enough of the used market to also determine the actual value of the vehicle .. something doesn't seem right with that

[Gio G]

Interesting topic OP...

What still surprises me today is the lack of knowledge on the consumer side around terminating their PCP agreement, under voluntary termination (VT). So many diesel cars will be carrying negative equity and many will feel trapped in their agreement. Dealers are not proactively allowed to mention VT to customers, which is within the consumers right.

However if everyone starts to VT their agreement, this will have significant repercussions on the future agreements.

G

[TooLateForAName]

How often is it possible to VT a PCP though?

Aren't the residuals/GFV usually at such a level that the pcp would be almost over before you've paid enough to VT?

[Sheepshanks]

TooLateForAName said:

How often is it possible to VT a PCP though?

Aren't the residuals/GFV usually at such a level that the pcp would be almost over before you've paid enough to VT?

Yep.

Also, and the OP has done this, 'PCP' and 'lease' get very intermingled. If it's a lease (PCH), you can be completely locked in for the term.

One thing I've seen for PCPs which on the face of it is ridiculous, but must be annoying if it affects you, is people bhing over the Guaranteed part of GFV. The complaint being that they want to keep the car but it's not worth the GFV so to keep it they'd be overpaying vs the car's true value.

I don't know if there's been any ruling type of thing, but GFV seems to be caller Optional Final Payment now.

[a]

I found it surprisingly hard to understand whether the voluntary termination point was:
a) 50% of the amount I am due to pay over the 3 years
or
b) 50% of the full amount including the optional balloon payment

The small-print in the finance paperwork was unclear. The dealership gave me contradicting answers. I asked on PH and the answers were split 50/50.
With effort, I came to the conclusion that it's (b). Meaning that for many cars you can't actually do a VT until the car is due to be handed back anyway. I'm sure this must catch out a lot of people.

[HTP99]

a said:

I found it surprisingly hard to understand whether the voluntary termination point was:
a) 50% of the amount I am due to pay over the 3 years
or
b) 50% of the full amount including the optional balloon payment

The small-print in the finance paperwork was unclear. The dealership gave me contradicting answers. I asked on PH and the answers were split 50/50.
With effort, I came to the conclusion that it's (b). Meaning that for many cars you can't actually do a VT until the car is due to be handed back anyway. I'm sure this must catch out a lot of people.

It is half of the total amount payable, this includes the balloon payment and any interest.

[a]

HTP99 said:

It is half of the total amount payable, this includes the balloon payment and any interest.

I know that now

Before I knew, I asked on PH and there were just as many answers saying the opposite. Same at the dealership, they didn't have a clue.

[Sir_Dave]

Sheepshanks said:

'PCP' and 'lease' get very intermingled.

I was about to say exactly that, the OP appears to be talking about "lease" and "PCP" as the same thing, whereas they are completely different, which is possibly why he isn't seeing early termination clauses in a lease contract, as there wont be any!

- Personal Contract Purchase (PCP) with a balloon - usually sold by main dealers/manufacture finance, i.e. Audi/BMW/Mercedes
- Hire Purchase (HP) with a balloon - usually sold by independent dealers, i.e. Oracle/Motonovo/Black Horse
- Hire Purchase (HP) without a balloon - sold by both

- Contract Hire (often called a "lease", "finance lease" or "lease rental") - usually used for M135i/Golf R/insert other forum favs

Therein lies the issue really, whilst the dealers selling finance are supposed to be FCA registered, their knowledge, from my own personal experience of a "Business Manager" at BMW is quite frankly, limited. His face when i told him what i did for a living was well, amusing to say the least

Edited by Sir_Dave on Monday 22 May 16:11

[Soov330e]

NO ONE got mis-sold.

The contracts are VERY VERY CLEAR.

You lay down some money, you make the cheap payments, you limit your mileage to what you said, and at the end you either pay the final payment and keep the car, or you hand it back.



Anyone claiming that they didn't know what they were getting into here is an idiot or after compensation for no reason.

[Fast Bug]

a said:

I found it surprisingly hard to understand whether the voluntary termination point was:
a) 50% of the amount I am due to pay over the 3 years
or
b) 50% of the full amount including the optional balloon payment

The small-print in the finance paperwork was unclear. The dealership gave me contradicting answers. I asked on PH and the answers were split 50/50.
With effort, I came to the conclusion that it's (b). Meaning that for many cars you can't actually do a VT until the car is due to be handed back anyway. I'm sure this must catch out a lot of people.

It's clearly stated on every set of finance documents I've seen under 'Termination Rights'

[Sheepshanks]

Soov330e said:

The contracts are VERY VERY CLEAR.

You're being faintly ridiculous - consumers can't be expected to read contracts. Much less understand them.

The salesman will tell them everything they need to know.

[kiethton]

HTP99 said:

a said:

I found it surprisingly hard to understand whether the voluntary termination point was:
a) 50% of the amount I am due to pay over the 3 years
or
b) 50% of the full amount including the optional balloon payment

The small-print in the finance paperwork was unclear. The dealership gave me contradicting answers. I asked on PH and the answers were split 50/50.
With effort, I came to the conclusion that it's (b). Meaning that for many cars you can't actually do a VT until the car is due to be handed back anyway. I'm sure this must catch out a lot of people.

It is half of the total amount payable, this includes the balloon payment and any interest.

Still very useful if you've done 30k a year on your leased 320d SE instead of the 10k a year you signed up to!

You can just give the car back without paying the excess mileage at ~10p per mile, £6k in this instance...

[liner33]

Soov330e said:

NO ONE got mis-sold.

The contracts are VERY VERY CLEAR.

You lay down some money, you make the cheap payments, you limit your mileage to what you said, and at the end you either pay the final payment and keep the car, or you hand it back.



Anyone claiming that they didn't know what they were getting into here is an idiot or after compensation for no reason.

I was put very much in my place when I suggested to someone who had signed up to £16k yes £16k of PPI on his loans, that he hadnt done his homework properly, his excuse was they wouldn't offer me the money unless I went for the protection

[a]

kiethton said:

Still very useful if you've done 30k a year on your leased 320d SE instead of the 10k a year you signed up to!

You can just give the car back without paying the excess mileage at ~10p per mile, £6k in this instance...

Surely they'd still charge you the excess mileage??

[Ginge R]

Sir_Dave said:

I was about to say exactly that, the OP appears to be talking about "lease" and "PCP" as the same thing, whereas they are completely different, which is possibly why he isn't seeing early termination clauses in a lease contract, as there wont be any!

I'm certainly not a car finance expert, I was assuming that PCP is a form of just one of many different lease arrangements. Point taken though, I was referring specifically to PCP.

Soov330e said:

NO ONE got mis-sold.

The contracts are VERY VERY CLEAR.

You lay down some money, you make the cheap payments, you limit your mileage to what you said, and at the end you either pay the final payment and keep the car, or you hand it back. Anyone claiming that they didn't know what they were getting into here is an idiot or after compensation for no reason.

Even if affordability checks weren't done properly? What about the consequences and risks of there being an equity deficit or shortfall? I agree that there will be some dishonest claimants if some sort of 'scandal' does develop. I hope they are as treated as ruthlessly as their behaviour warrants.

[Fast Bug]

kiethton said:

Still very useful if you've done 30k a year on your leased 320d SE instead of the 10k a year you signed up to!

You can just give the car back without paying the excess mileage at ~10p per mile, £6k in this instance...

A lease isn't a PCP!

If you 'handed' back a lease car early, they'd charge you a percentage (if not all) of the repayments owed along with a bill for excess mileage