That’s partly correct.
As to the amount of detail each finance company goes into is hugely different. Companies like Blackhorse (the biggest Caravan funder in the UK and biggest independent car finance company) do proper checks based on Affordability, Sustanainability and overall indebtedness but, they don’t all do this. In addition the FCA banned the use of flat rates in favour of APR but you will find many dealers still quoting flat rates.
With regard to customers GMFV on PCP agreements, the customer has the option to reduce the amount they last as the Deferred payment, you can reduce this liability ultimately giving you equity when you come to part exchange at the end of the agreement. This will of course increase your monthly payment, but there has to be a compromise somewhere.
The rule of thumb is if you plan on owning your car at the end of the agreement then PCP I’d more expensive than regular finance because interest is added to the final payment. PCP is great if there is instability in the market, because of the option to hand back and also if you plan on changing your vehicle on a regular basis.
All purchasing of vehicles should be done on a variation of finance whether it be HP, PCP or even LP as it gives the customer better rights as consumers. All of the above finance agree to are tri-party agreements, meaning the goods are owned by the finance company until such time as the hirer (you lot) have met all your financial obligations to the lender and title is then passed on.