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HP Does it make sense?

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Looking at a new caravan purchase a year from now (hopefully a discount on what will then be a 2021 model). Does Hired purchase make sense when keeping a caravan 10 plus years? My thoughts were we don’t have £20k cash to just lump on a van anyway so would be looking to at least part finance with some sort of loan. I am aware I could get a personal loan rate under half The rate of APR a HP deal would be but I think I like the fact the loan is secured against the van more so to help with any dealer/manufacture warranty claims. 
 

ideally I’d put £5k down as a deposit then lump the rest on a 10 year deal to keep repayments low. We are just waiting to pay off our remaining personal car loan before we go down this route hence waiting till next year.

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It would seem counter intuitive to me to volunteer to pay more for a loan in the hope that it might act as a way of getting warranty work given more urgency and purpose which seems to be what you are suggesting? By all means compared what a dealer might have to offer in terms of finance but also look and compare what the difference might be obtaining the loan elsewhere. You could have a perfectly trouble free caravan but be paying hundreds of pounds in extra interest for what you see as peace of mind?

 

David

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To me, the only benefit of HP over a personal loan is to the dealer, who gets a fat commission for signing you up. Don't think it would get you preferential treatment from said dealer in long run as they will be guided by what manufacturer allows as warranty claims.

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Not only is there a big difference in the interest paid between HP and a bank loan, if you choose HP the caravan is not yours until you make the final payment.

In my opinion your best bet is to pay cash for a caravan that you can afford then trade up as the funds become available, that way you owe nothing to anyone and all you hold is yours free and clear.

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Make sure at least £100 is paid by a credit card so you can get the benefit of the CC's legal team if there is a problem with the dealer on warranty work. The dealer may resist the CC payment because he knows why you are doing it but do it anyway!

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Graham

 

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2 hours ago, AndyK159 said:

To me, the only benefit of HP over a personal loan is to the dealer, who gets a fat commission for signing you up. Don't think it would get you preferential treatment from said dealer in long run as they will be guided by what manufacturer allows as warranty claims.


Don’t know where you get your information from but the FCA stopped dealers getting “fat commissions” several years ago.

 

Secondly if you use either HP or PCP the finance company owns the goods until you have made the final payment, so they share the responsibility to ensure the goods are of merchandisable quality.


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Took a  very small Black Horse loan out on ours in the hope of them fighting our corner should something go badly wrong.

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I bought a brand new caravan last year for £17k, I paid £5k cash and added the rest to my mortgage which has an interest rate of 0.48% over its remaining 7 years.


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I’d use Black Horse if we change the protection it gives you is worth it imo.

They put the fear of god up the dealers if things go really bad with your new van. I’ve seen it first hand and it’s very impressive ! 

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To the OP.

NO. If you can't afford it, you can't afford it.

 

£5k will buy you a reasonable caravan that will give you many years use.

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7 hours ago, cb300 said:

I’d use Black Horse if we change the protection it gives you is worth it imo.

They put the fear of god up the dealers if things go really bad with your new van. I’ve seen it first hand and it’s very impressive ! 

 

That's who we chose and when a problem arose and I contacted them about it, they insisted on having all related information about it.

 

Fortunately the problem was resolved by the manufacturer.

 

 


                      Stay safe - Griff.:ph34r:

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7 hours ago, daveat92 said:

To the OP.

NO. If you can't afford it, you can't afford it.

 

£5k will buy you a reasonable caravan that will give you many years use.


Some people may not have £5,000 or more sat doing nothing under the bed, but it doesn’t mean they don’t have  a few hundred pounds of disposable income each month to buy something on HP.

 

Not having thousands in the bank doesn’t mean you can’t use the legitimate means available to buy something.

 

By your theory no one should be allowed a mortgage to buy a house either!

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9 hours ago, Griff said:

Took a  very small Black Horse loan out on ours in the hope of them fighting our corner should something go badly wrong.

 

Always done the same, £1,000 with Black Horse then pay it off early in six months when I'm happy everything is as it should be (with crossed fingers that no problems show up later!).

7 hours ago, daveat92 said:

To the OP.

NO. If you can't afford it, you can't afford it.

 

£5k will buy you a reasonable caravan that will give you many years use.

 

Rubbish.  The days of people having disposable income to go out and "pay cash" for everything have gone.  The world turns on the back of loans and finance.  Providing people have the means to meet the repayments then all is good.

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15 minutes ago, Grandpa Steve said:


Some people may not have £5,000 or more sat doing nothing under the bed, but it doesn’t mean they don’t have  a few hundred pounds of disposable income each month to buy something on HP.

 

Not having thousands in the bank doesn’t mean you can’t use the legitimate means available to buy something.

 

By your theory no one should be allowed a mortgage to buy a house either!

 

I agree, but the OP does have £5k to put down as a deposit, this could buy a decent 2nd hand caravan.

 

Personally I wouldn't buy brand new for my first caravan, its not until you've had a caravan that you know if a certain layout is actually right for you. I'd suggest that if the OP is a first time caravaner that he buys 2nd hand to start with, to see if the particular layout is right.

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I'd pay the deposit on a credit card (over £100) and get a personal loan for whatever you can't make up in cash.

 

My bank is doing loans @ 3% APR over 2 years so made it a no-brainer.


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Following up on Griff's idea of a small amount on HP, how about doing that for the minimum amount for the maximum period to give your the reassurance you need and then taking the rest on a personal loan with your bank at a much reduced interest rate. Unless things have changed since I left the banking side of Black Horse (Lloyds) 20 years ago, the loan is personal and we trusted the customer to spend it on what they said and so they won't be interested in the fact that you have part financed it through HP - although it will show up on a credit search and may affect future borrowing if you have too many loans . . . . . . . . 

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8 hours ago, daveat92 said:

To the OP.

NO. If you can't afford it, you can't afford it.

 

£5k will buy you a reasonable caravan that will give you many years use.

Whilst I accept your point unfortunately in this day and age the world simply does not work like this, or maybe It’s just that we have been conditioned to think that.  Despite me and my wife  both having well above average payed jobs I couldn’t afford to buy my house with cash either but I still got a loan of £250,000 to pay with it...  along with our £35k cash deposit. GULP! Not many people of my generation will ever have £20k in cash in the bank unfortunately as those good ol times have long since passed.

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12 hours ago, WispMan said:

Make sure at least £100 is paid by a credit card so you can get the benefit of the CC's legal team if there is a problem with the dealer on warranty work. The dealer may resist the CC payment because he knows why you are doing it but do it anyway!

It's the cost of the goods that affects eligibility for Section 75 Consumer Credit Act 1974 protection, not how much you pay by credit card. As long as the goods cost between £100.01 and £30,000 you only need pay a 1p deposit by credit card for Section 75 to apply.

Incidentally, goods costing exactly £100 are not protected. It must cost over £100.

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52 minutes ago, LeadFarmer said:

 

I agree, but the OP does have £5k to put down as a deposit, this could buy a decent 2nd hand caravan.

 

Personally I wouldn't buy brand new for my first caravan, its not until you've had a caravan that you know if a certain layout is actually right for you. I'd suggest that if the OP is a first time caravaner that he buys 2nd hand to start with, to see if the particular layout is right.

Hi thanks for the response, layout is a concern but this would essentially be my 3rd van and  6th if you include teenage years so we kind of know what we want. The biggest deciding factor will be fixed bed or not. With kids on the scene soon I know that layout will be crucial for us.

51 minutes ago, DerbyClubman said:

 

Following up on Griff's idea of a small amount on HP, how about doing that for the minimum amount for the maximum period to give your the reassurance you need and then taking the rest on a personal loan with your bank at a much reduced interest rate. Unless things have changed since I left the banking side of Black Horse (Lloyds) 20 years ago, the loan is personal and we trusted the customer to spend it on what they said and so they won't be interested in the fact that you have part financed it through HP - although it will show up on a credit search and may affect future borrowing if you have too many loans . . . . . . . . 


This is a good idea and potentially something we might look into. Currently have the remainder of an £11k personal loan for a car that we are due to pay off next year so when that’s done will prob take a few months holiday and wait for the credit reference agency’s to see that account as closed before applying again. We have got very good credit scores so I’m hoping we can get a competitive rate as our car is only 3.5%.

9 minutes ago, Legal Eagle said:

It's the cost of the goods that affects eligibility for Section 75 Consumer Credit Act 1974 protection, not how much you pay by credit card. As long as the goods cost between £100 and £30,000 you only need pay a 1p deposit by credit card for Section 75 to apply.

I might well go down this road on top of any financing deal as last year we managed to recoup full costs of £3900 for a patio that was laid incorrectly after paying with MasterCard, whilst it was a battle that lasted 6 months Section 75 eventually prevailed in our favour.

Thanks for the replies everyone, it’s good to have a sense check of these things before even considering what routes to potentially go with. Got at least a year to play on this so will research heavily. In the meantime will be enjoying our 18 year old sterling Europa and all the jobs I have yet to do on it over this winter!

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27 minutes ago, Grandpa Steve said:

Unless you want the security of knowing you have a finance company behind you in the event of something going wrong.

 

 

Which is the whole point of paying the deposit on a CC no?


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Tesco bank are lending up to 25K at 3% APR for up to 5 years for "other vehicles" which should include caravans..

 

Problem with dealer HP is the amount of interest you end up paying especially if the term is a long one.

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20 minutes ago, Legal Eagle said:

It's the cost of the goods that affects eligibility for Section 75 Consumer Credit Act 1974 protection, not how much you pay by credit card. As long as the goods cost between £100.01 and £30,000 you only need pay a 1p deposit by credit card for Section 75 to apply.

Incidentally, goods costing exactly £100 are not protected. It must cost over £100.

 

Does Section 75a still apply for purchases over £30,000 up to £60,260 as long as the loan is specifically tied to the item. e.g. Black Horse loan for a caravan?

 

Think it's called a debtor, creditor, supplier agreement?

 

Another reason why we did it at the time.


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16 minutes ago, Hort2074 said:

 

Which is the whole point of paying the deposit on a CC no?

 

No, it's not the same level of interaction as between a finance company and a dealer.

 

The finance company also provides the wholesale funding facilities for dealer stocking, and more often than not the finance company has an account manager allocated to the dealer, so that relationship is much stronger and carries more weight than just Section 75 of the CCA.


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"Unless otherwise stated, my posts will be my personal thoughts and have the same standing as any other member of Caravan Talk"

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53 minutes ago, Griff said:

 

Does Section 75a still apply for purchases over £30,000 up to £60,260 as long as the loan is specifically tied to the item. e.g. Black Horse loan for a caravan?

 

Think it's called a debtor, creditor, supplier agreement?

 

Another reason why we did it at the time.

Yes, that's correct. However, under Section 75a you have to exhaust all avenues with the seller first before going to the HP company so the process can be quite long and painful. With Section 75 you can go straight to the credit card company from the outset.

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2 hours ago, Grandpa Steve said:


Some people may not have £5,000 or more sat doing nothing under the bed, but it doesn’t mean they don’t have  a few hundred pounds of disposable income each month to buy something on HP.

 

Not having thousands in the bank doesn’t mean you can’t use the legitimate means available to buy something.

 

By your theory no one should be allowed a mortgage to buy a house either!

The OP has said they have £5k to put down as a a deposit, so they do have that amount in cash now.

A roof over your head is a necessity of life, one that is in constant use, even when you're not actually inside it, because it stores all your worldly goods.

A fancy new caravan is not a necessity, it's a luxury that in reality doesn't get used that often, even if you're retired.

 

I have no idea of the OP's financial status, but the fact that they are talking about a loan means they are not cash rich. What happens should they become unable to work or some other unfortunate occurrence?

 

Buying anything on credit works out very expensive in the long run. Businesses take loans because they need them to generate an income greater than the cost of the loan. I doubt that applies to the OP.

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