What is the BMW finance scandal?
The motor dealerships that sold BMW HP (Hire Purchase) and PCP (Personal Contract Purchase) agreements received advanced commissions for selling these finance arrangements [1], and as a result, sometimes the customers ended up paying more interest charges than necessary or remained unaware of other charges levied on . The Advantages of PCP in 2025 The most obvious draw is lower monthly payments. Because you’re not paying off the full value of the car, just the depreciation, the instalments tend to be more manageable than other types of finance, like Hire Purchase. There’s also flexibility at the end of the term.When deciding whether to go with PCP or HP, it all depends on your goals. If you want to change your car every few years and not own it, the PCP is definitely better for you. However, if you are interested in owning a car, the HP is the obvious choice.You may be able to claim for a mis-sold PCP car finance agreement if the salesperson failed to give you all of the information about your agreement, misled you, or did not explain to you about any commissions or interest being charged as part of the agreement.However, PCP is only the best solution for drivers when it’s combined with the right choice of deposit and other conditions. We recommend sticking to the standard deposit amount – 10% of the cost of the car. So, you can save your budget and possibly receive compensation at the end of the term under the deal.
Is BMW PCP better than a loan?
PCP allows the low deposit and option to hand back if not keeping it, but loan means no finance attached and your free to sell anytime and it’ll show hpi clean. My Last PCP was on a new bmw 3. However, if you make your payments in full, and on time, your PCP can actually have a positive impact on your credit score. Lenders love to see responsible and sensible activity on your credit report.PCP is quite forgiving on your credit rating – Because PCP is secured by the car you’re buying, lenders are willing to offer it even to people with poorer credit ratings. In fact, its one of the best finance options for those who might struggle to get a personal loan or hire purchase agreement.If you make your situation clear to your lender, and they have good knowledge of your financial situation, then there is a chance they will agree to amend your hire purchase or transfer PCP to someone else – but this isn’t guaranteed, and it’s down to the lender.This can be a perfect time to end your PCP contract early because the total repayments you’ve made will have covered the value that the car has lost over the contract. These monthly payments are with interest, so you may see the car in positive equity sooner than you might think.
What is the PCP BMW scandal?
The motor dealerships that sold BMW HP (Hire Purchase) and PCP (Personal Contract Purchase) agreements received advanced commissions for selling these finance arrangements [1], and as a result, sometimes the customers ended up paying more interest charges than necessary or remained unaware of other charges levied on . With HP you’ll need to pay back the amount you borrow plus interest. With a PCP arrangement you’re only paying back the amount the car is expected to depreciate over of the period you have it. So PCP repayments are cheaper than HP repayments as you are not buying the car.When you make an overpayment, it can lower how much you pay each month (HP and PCP agreements) or reduce the length of your agreement (HP agreements only). There are no fees or charges for making an overpayment and you could also be entitled to a reduction in the total amount of interest owed.
Are BMW paying out on PCP claims?
You may be able to claim for mis-sold car finance if you bought a car or motor vehicle through PCP, HP finance or lease set up by BMW between April 2007 and 28th January 2021, and the finance agreement was mis-sold. Personal contract purchase (PCP) As long as you’ve paid back 50% of the overall amount outstanding (again, including interest and fees) then you can hand the car back.Paid 50% of your PCP finance? Returning your car is an alternative option. Under the Consumer Credit Act 1974 you have the right by law to terminate your PCP finance agreement early if you’ve paid 50% of the total finance. Importantly, this includes the final balloon payment, plus any additional fees.If your PCP or HP agreement was mis-sold, you may have overpaid. You can make a claim directly to your lender for free, or through a claims management company like PCP ClaimBack, who can assess your case, handle the paperwork, and guide you on next steps.You’re likely to lose out financially if you return your car before the finance agreement ends. If you bought it on a PCP or HP agreement, you can return your car without fees once you’ve paid off at least half of the finance amount. If you’ve paid any more than this you’ll lose that money.
How does BMW PCP work?
BMW Select, also known as Personal Contract Purchase (PCP), involves an initial deposit, low monthly payments and then an optional final payment. With three options at the end of your agreement, PCP is our most popular finance product for both New and Approved Used BMWs. Some Islamic finance experts say PCP is not Halal, but others suggest that it depends whether the deal is interpreted as a loan of money to buy the car, or as the hire of a car during the period of monthly payments. Hiring the car is halal, but owning it at the end isn’t.Halal Personal Contract Purchase (PCP) is a tailored finance option that aligns with Islamic principles, notably the prohibition of interest. Unlike conventional PCP dealsthat involve interest payments, halal PCP is structured to avoid this.If you like the idea of having a new car every few years but don’t want to have to buy and sell, PCP could be a good option for you. The monthly payments on a PCP can also work out cheaper than on a hire purchase arrangement or personal loan as you are only paying for the wear and tear on the car and are not buying it.With PCP the amount you’ll borrow is decided by the finance company’s prediction of how much the value of the car will drop over the term of the deal (usually 24 or 36 months), they also subtract the deposit from this to give them the total amount you’ll owe. You’ll then make monthly payments including interest.To change your car early on PCP (Personal Contract Purchase), you’ll first need to agree a settlement figure with your lender and make sure the V5 certificate is in your name. If the car is worth more than the settlement figure, you can use this money towards the deposit on your new vehicle.