Avoid the Pitfalls of Car Finance
Car showrooms are polishing their windows, sprucing up their salespeople and making sure "that new car smell" hits each prospective client coming through the door.
Once inside the showroom you will find that friendly sales desk where you can buy, with low, low payments, a brand new model.
Taking out a car loan is normally quite an expensive ordeal, with banks charging up to 14.5% for personal loans.
What you're actually buying, is a PCP (Personal Contract Plan) which is just another name for hire purchase. While it is a loan, you never own the car until the very last payment.
There is nothing wrong with PCPs, for most people its a cheap way of getting a car. Six out of 10 Volkswagens were purchased this way last year, for example.
While the upside might be low monthly payments, there are of course downsides, especially if you get into trouble with repayments.
If this does happen to you don't worry, you have the right to cancel a PCP agreement at any time and return the car under the Consumer Credit Act 1995.
If you have already paid half the total value of the loan (including interest due) then you are not liable for the balance on returning the car.
If you would like to go down this route: Write to the finance provider telling them you are returning the car under this rule.
Alex Todd Brand Manager at BoxyMo commented "When looking at car finance, make sure you take into account the size of the deposit and the final payment, as well as the monthly payments, as this can increase the overall cost."
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