16 Okt Who Owns The Vehicle During The Duration Of A Balanced Payment Agreement
PCP is perfect when you unsubscribe from your company car program. Your company car allowance can fund your monthly payments, but there is no company car tax to pay. The interest rate on HP contracts varies depending on the financial company. Interest is calculated at a fixed rate on the total amount you borrow for each year of the agreement. Because the interest rate is set for the duration of the contract, you usually can`t increase your repayments every month if you wish. If you wish to extend the term, you may be charged a rebooking fee. A PCP is essentially a purchase agreement (similar to a hire-purchase or conditional sale) governed by the mileage and duration of the vehicle, with a balanced Minimum Expected Value (GMFV) at the end of the contract. At the end of the contract, the customer has three options: At the beginning of the contract, the future guaranteed value of your car is calculated, based on an agreed mileage and age. This will be deferred as the last “balloon” payment. Examples of how the half rule works can be found in our brochure on terminating a phased purchase agreement. In general, the term “fees” refers to the interest that the lender charges the customer to provide financing, although it may also include other fees such as arrangement fees in contracts.
The value of the assets at some point in the future – usually the end of a financing contract. It can usually only be predicted at the beginning of the agreement, as the exact number will be unknown at that time. With a hire purchase agreement, you don`t own the car until you make the final refund, so you don`t have the option to sell it and use the money to pay the balance of your contract. However, you can return the car at any time with the “half rule” and terminate the contract. A balanced payment plan offers the benefits of a fixed monthly payment, but unlike a hire purchase agreement where the interest rate is fixed, balanced payments offer a variable interest rate that follows changes in the lender`s benchmark interest rate. If the interest rate increases or decreases during the term of the contract, the amount of interest you pay also increases or decreases. You may be allowed to sell the car to pay for what you owe, but you will need to get permission from the financial company that owns the car to do so. Hire-purchase agreements that include PCPs allow you to terminate your contract with the “half rule”. This allows you to terminate your contract and return the car, but you still have to pay half the PCP price. This is a last resort that should only be used if your situation is so bad that you have no hope of repaying the lender, and involves handing the car over to the lender, possibly without further payments. Even if you return the car, you can expect the lender to sue you for more money because you will be in negative equity for much of the contract period, with the car worth less than the remaining financial balance. .