Beating the hire purchase trap

[LandingSpot]

A close relative of mine is looking for a new car this month (to get new '13 reg) in the 10-15k region, brand new and is currently on a HP deal that is now one year in. Obviously, the dealers figures are low for the month/qtr/year and they call up people from their CRM database who fit the profile of "likes a new car regularly" whether it's 3 years regular or every 6 months.

If the car were not on a HP deal already, it could be sold prior to walking in to the dealership and buy as a cash buyer. So, there are two options as I see...

1) go HP for the new deal. Since you never own the car, I would like to avoid this if possible as it only pushes the balloon payment further away. Same situation in 2/3 years.

2) settle the finance, sell the car privately and walk in as a cash buyer in a month or so.

Are there any other options that you can think of other than not buying the new car or just carrying on. The car is great, just needs something more practical.

I've never had HP finance, so am not sure how to recommend getting out of the viscious circle.

Thanks for reading, and for any advice.

[davepoth]

If this person wants to swap cars regularly, leasing rather than HP is probably a better way to go.

[Lawrence5]

Pcp deals can be good with no money down....

If they are 1yr into an hp agreement on a newish car you'll likely find you owe more than the car is worth. If it is true hp then you can hand it back once more than half has been paid.

It's all in the small print - I've had car loans thinking they were hp and turned out to be a conditional loan on the car...