Outright purchase or Hire Purchase?

A friend is looking for a small cheap new car. They usually buy a new or pre-reg car costing around £6k car outright, but are being tempted by hire-purchase deals being offered on, say, a £7k car where the manufacturer offers a sizeable deposit contribution to entice the buyer into taking out their finance package.

If my friend took out the manufacturer's finance package (to receive the deposit contribution), is there any 'tie-in' for the full 36 month term that would stop him repaying the full amount outstanding a few weeks into the agreement in order to save on interest charges and to own the car outright?

Asked on 21 March 2016 by romford4

Answered by Honest John
If it's HP, no. He can pay off half the loan and return the car. If it's a PCP, then he's tied to the PCP contract, and the offer you describe is most likely to be a PCP.
Tags: buying finance
Dear Honest John,

Please help me choose my next car. I would like it to have:
    Select a few terms below
Similar questions
My partner and I are buying a car from a garage in Derby, and have paid a £500 deposit by credit card. The car belongs to the garage owners wife, but is being sold through the garage. The car has £3300...
Our PCP ends in November this year. Our mazda2 1.5 Sport 5 door will be 3 years old and will have done 18k miles. The conditions of the PCP were 24k miles. The final payment is £5k. Should we plan to buy...
I am going to buy a new car in the near future and have been advised by the dealership that I should take out a PCP in order to take advantage of a £1000 manufacturer deposit contribution and a cut price...
 

Ask Honest John

Value my car