Personal Contract Purchase (PCP) schemes are a useful way to get the vehicle you want, without spending out a huge lump sum. Thousands of people across the UK have used a PCP as a loan to pay off the cost of their car, but unfortunately, there’s a catch. While some of these schemes are solid, others were poorly sold – with customers signing up, without being told about the financial risks.
If you’re on a PCP plan, and you suspect you were mis-sold the product, you could be entitled to compensation.
How does a PCP work?
A PCP works as follows:
1) You put down an initial deposit on the car.
2) Then, you take out a loan for the amount that the car is expected to reduce in value, for the term of the deal. Loan periods usually last for three years, though this can vary. The deposit is taken away from this sum.
3) Once the term of the loan is over, you can then purchase the car via a ‘balloon’ payment.
4) This ‘balloon’ payment is usually agreed at the start, and it typically equals what’s left over from the vehicle’s initial value, once you’ve taken away the deposit and the loan.
It’s estimated that approximately 90% of all new cars are purchased using a PCP. That’s a lot of customers, tying themselves into a loan-style agreement. This is fine if it’s an arrangement that benefits both parties, but not so good if it leaves the customer out of pocket.
How could a PCP be mis-sold?
Unfortunately, some PCP schemes are incredibly complicated, which is often a recipe for disaster.
For example, many customers are given the promise that their next vehicle deposit will be covered. But this is never guaranteed, and in some cases, customers end up with no cash at all to use as a deposit.
There’s the mileage allowance to consider. Make the mistake of under-estimating how much travelling you’ll be doing, and you could find yourself paying extra money for every mile you go over. Even more frustratingly, new agreements often come with a fresh fee, which can be hundreds of pounds; and there are also damage charges – which is a nightmare if your car is involved in an accident.
If this wasn’t enough, some lenders aren’t conducting themselves in a terribly ethical manner. Complaints have started to come in about irresponsible selling, for example – where the salesman has failed to mention all the fees involved or hasn’t explained the possible financial outcomes of the loan.
Some have also been sold ‘add on’ insurance, to cover things like accidental damage. These can be costly and are not always required.
Have you been mis-sold to?
Here are some signs that you could have been mis-sold your PCP:
- The seller didn’t properly explain how the loan works in reality.
- They failed to detail all the fees involved.
- They weren’t honest about whether they’d cover the PCP deposit for your next car.
- They sold you insurance that you didn’t actually want or need.
If you think that you’ve been a victim of this latest mis-selling scandal, get in touch with our team today on 0808 163 1659 or email firstname.lastname@example.org .