PCP finance operates on a straightforward premise. The motorist pays a deposit at the start of the contract which spans (say) thirty-six months. This payment is followed by a series of fixed, monthly, instalments that incorporate interest (if applicable). Paying a larger, upfront, deposit reduces the monthly instalments.
At the start of the contract, the finance provider also predicts how much the vehicle is likely to be worth at its conclusion. That sum is often referred to as the optional final payment. It is based on a vehicle’s projected age, mileage, condition and market trends.
Option two is to make the optional final payment to own it. The vehicle’s actual value – even if it differs wildly from the sum predicted at the start of the term – does not influence what is due. Option three is to trade it in, then start a new finance plan.
An unscrupulous, misinformed, or careless finance provider might cause a motorist two issues, lawyers suspect. The provider might hint that the vehicle will, in fact, be worth more than its optional final payment at the end of the contract. This “profit” might then contribute towards the deposit of a replacement vehicle.
Finance industry could be shaken to its core
The National Association of Commercial Finance Brokers is a trade body for business finance brokers. Board Member, Graham Hill, said:
“(If) lawyers conclude there is enough basis to put forward a mis-selling case on PCPs then – given the huge volumes in which these products have been sold to both private individuals and businesses – the car finance industry could be shaken to its roots.”
article care of www.motoring.co.uk http://www.motoring.co.uk/car-news/pcp-finance-investigated-amid-suspicion-of-mis-selling_68054?utm_source=newsletter&utm_medium=email&utm_campaign=motoring-190716