Is PCP being mis-sold

TCE home 2021 Forums Car finance Is PCP being mis-sold

  • This topic has 2 replies, 2 voices, and was last updated 2 years ago by Abbie.
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    • #149659

      I am wondering, is the industry is (knowingly) incorrectly presenting PCP deals.

      Following a visit to my local dealer, PCP was, once again, explained as “only financing the difference between the price and the GFV”.

      The moneysavingexpert website also explains it similarly (link:https://www.moneysavingexpert.com/car-finance/personal-contract-purchase/)

      It is explained by both above as:
      Car price = X
      GVT = Y
      Amount to be finance: X – Y = Z

      However, it appears on closer inspection that the interest rate is calculated over the entire outstanding car value. Which actually means that the quoted GVT is more like a settlement amount at the quoted point in time.

      Perhaps I am too obtuse to understand, but if I am financing Z then I should only pay interest on Z, as the dealer retains car ownership until I settle, if I decide so.

      By paying interest on the entire cars value (minus any deposit) it seems like what I am actually doing is financing the whole car with an agreed payment plan based on the quoted amount of payments followed by a single settlement payment, which, is optional.

      Of course, I am slow-witted, so I am happy to be corrected.

      Many thanks

    • #150368
      Stuart Masson

      Hi Joe. On a PCP, you are very definitely borrowing the whole value of the car (minus any deposit). The Money Saving Expert article is incorrect.

      For more information, have a read of our article on the top 10 PCP myths, as well as our article on how a PCP works.

    • #172152

      Have I been missold PCP?
      I bought my car a year ago, firstly, we told the salesman we only drive the car at weekends due to commuting and walking to work yet he sold us a diesel that we have since been told we are having problems with as it is not being used enough. Secondly, we were told we could bring the car back and refinance a new car after 2 and a half years however due to a large balloon payment we won’t have paid 50% until the 3 year mark. Thirdly, the balloon payment we were given as the GFV is currently 2.5k more than the car is worth now and we still have 2years to go. How is this possible? Is this claims for misselling?

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