Quote:
Originally Posted by stevew
My only concern with lease purchase over PCP is the Balloon payment because, as far as I understand it, I must have sufficient finance to afford the balloon payment at the end of the contractual period because it is not optional. With a PCP I can just hand back the vehicle with no questions.
Anyone got any advice/opinons?
Cheers
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With PCP the dealer takes the risk on the resale value. If you don't want to pay the balloon you just give the car back.
With Lease Purchase you take the risk. The balloon has to be paid .. either by:
1. Selling the car and using the proceeds to settle the finance.
2. Taking out a new loan to cover the final payment.
The balloon payments in the illustration I posted are very low. There is no chance that the outstanding finance would exceed the value of the car at the end of the term. On that basis there is no real value in paying extra to get the dealer to take the risk.
PS - forgot to mention that these agreements are now regulated under the consumer credit act, which means you can end it without penalty by returning the car once you have paid 50% of the amount owed.