Car Finance - PCP help advice

20
Posted 21st Sep
Hi Guys

I've never had a new / newish car and for the first time i've been browsing deals.

It might not be everyone's taste but i really like the Jeep Renegade - and from a financial point of view i think id be comfortable paying around the £170 per month figure (could stretch abit more, but dont want the car dealers to use that to rip me off).
I would be ok putting a deposit of £500 into any PCP deal.

With that said i know i'm not going to be getting a brand new, but one a few years old with average miles on is fine by me.

I have seen a deal .... (i will post it in the comment section below)

I just want members help advice when going into PCP deals - i want to be clear on things i need to be wary of, and things that can help me in getting a good deal, or things to avoid to ensure i dont get a bad deal.
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autotrader.co.uk/cla…e=1


Here is the car and finance deal that is on autotrader ...
Car Price is listed by dealer at £9,995
The finance package proposed is based on £500 deposit, then monthly payments of £172 with an optional final payment of £3,527 - this would be over 48 months.

My obvious question is - does this seem like a good deal ??
Ouch 24.8% interest PCP

Or
17.5% loan.

Both over 4 years.
bigwheels21/09/2019 17:27

Ouch 24.8% interest PCPOr 17.5% loan.Both over 4 years.


Im not exactly sure what you are alluding to - i take it you are saying the 24.8 rate is very high?

I have been told by a friend that bank loans rate are very low these days and it may be cheaper to just get a bank loan , but im not sure of the pros and cons with bank loan to PCP.

Car Finance is admittedly something very new to me, so i don't want to fall into any pit falls
Never had finance on a car.
Used bank of mum and dad.
Basic fatcs not cheap.
Its all about your job, credit rating and do you own property etc for best rates.

Sainsburys or M&S rate of 2.9% would charge only £10,065.60 on £9500 over 4 years @ £209.70 a month
Or over 5 years they want £10,207.20 @ £170.20 a month

Have a look.

money.gocompare.com/loa…80d
If financing, you’ll usually get a better deal on a new one over a used one. Manufactures tend to offer greater deposit contributions and lower APR. You’ll also have the benefit of a manufactures warranty. Go on carwow and ask for a few quotes to compare.
if financing try hitachi for a loan.

if pcp buy car new, keep it a 3 year deal to have warranty cover. after 3 year pay balance or walk away, also you can terminate early IF you have paid more than half of original price. my previous car was pcp i now lease
leitchyleck21/09/2019 17:53

if financing try hitachi for a loan.if pcp buy car new, keep it a 3 year …if financing try hitachi for a loan.if pcp buy car new, keep it a 3 year deal to have warranty cover. after 3 year pay balance or walk away, also you can terminate early IF you have paid more than half of original price. my previous car was pcp i now lease


I do like that idea but my budget per month for a car is probably around the £175 mark - and i think any new car will be considerably higher.

I wouldnt want to get into any deals where i wasnt comfortable with the outgoing monthly payment
My honest opinion?
The rate is too high mate, especially for a PCP where YOU WILL NOT own the car unless you make that final optional payment.
Saying that, if, god forbid, have an accident and the car is a write off then the insurance will pay the market value (paid directly to the finance company) and you’ll have to pay them the difference, so you’ll technically pay for something you don’t have. If you really wish to go with PCP it’d be worth spending an extra £200, £300 for the GAP insurance where if anything happens they will pay the difference that difference and pay you what’s left up to the original car value... I know it’s. Not a nice thing to talk about car write offs but I was in a very similar situation last December where my 1 year old car caught fire in Paris and my insurance only paid the market value where I realised I do have the GAP insurance, so they paid the difference plus £5000 to my bank account covering the difference between what they paid and the original purchase value
Talking about the rate, check with your bank, if you have a good credit score I’m sure they can lend you that money with around 3 to 4% interest, at least the car is then yours ....
nick198121/09/2019 18:09

I do like that idea but my budget per month for a car is probably around …I do like that idea but my budget per month for a car is probably around the £175 mark - and i think any new car will be considerably higher.I wouldnt want to get into any deals where i wasnt comfortable with the outgoing monthly payment


If your budget is £175 and your payments are £172, how would you make the final payment? If you don't make that payment, you are no better off in four years than you are right now. To me it sounds really expensive. That is store card interest rate.
Forgive me but where does it say 24% interest rate?
Generally speaking, the higher the interest rate the worse the deal is. Don't let a dealer blind you with a simple monthly payment figure. Always add up the total of all the payments to see how much the deal will end up costing.

PCP rates are nearly always high on used cars, that's how the dealers make their money as otherwise there's less mark-up on them.

If you have a decent credit history a low cost (low rate) loan may be a better way to go. It will probably take about a year longer to pay off, but you'll be paying interest charges in the hundreds rather than thousands of pounds on the expensive PCP deal. You'll also have a car at the end of it too instead of a balloon payment to make.
nick198121/09/2019 17:30

Im not exactly sure what you are alluding to - i take it you are saying …Im not exactly sure what you are alluding to - i take it you are saying the 24.8 rate is very high?I have been told by a friend that bank loans rate are very low these days and it may be cheaper to just get a bank loan , but im not sure of the pros and cons with bank loan to PCP.Car Finance is admittedly something very new to me, so i don't want to fall into any pit falls


Yes it is. My current deal with ford is 0% for a brand new vehicle. Some of the other car manufacturers charge up to about 8%.
Edited by: "cmdr_elito" 21st Sep
deeky21/09/2019 18:57

Forgive me but where does it say 24% interest rate?


Good Question !!! It seems the user Big Wheels quoted that - im not sure where from.
I have just copied and pasted the finance deal from the site based on paying £500 deposit then monthly payments over 48 months and heres what it states............

PCP representative example
First payment - £321.97
47 monthly payments £172.97
Optional final payment £3,527.75
Term 48 months
Contract length 49 months
Cash price £9,995
Cash deposit £500
Total amount of credit £9,495
Total amount payable - £12,479.31
Representative APR 9.6%
Total charges payable £2,484.31
Fixed rate of interest 4.2%
Admin fee £149
Option to purchase fee £149
deeky21/09/2019 18:57

Forgive me but where does it say 24% interest rate?


The total finance is £2480 on £10000 its 24
bigwheels21/09/2019 19:32

The total finance is £2480 on £10000 its 24


Nope. Because that is over four years. To get an idea of the percentage per annum you'd need to divide it by four. Still high mind you.
psychobitchfromhell21/09/2019 19:36

Nope. Because that is over four years. To get an idea of the percentage …Nope. Because that is over four years. To get an idea of the percentage per annum you'd need to divide it by four. Still high mind you.


That’s basically what I was saying it’s to highSainsbury’s loan is less than 7% over 4 years and 7.1% over 5 years.
bigwheels21/09/2019 19:39

That’s basically what I was saying it’s to highSainsbury’s loan is less tha …That’s basically what I was saying it’s to highSainsbury’s loan is less than 7% over 4 years and 7.1% over 5 years.


Finance is too high but it isn't 24%. personal loan would certainly be cheaper and you do own the car from the outset. in all honesty I'm fairly sure I'd be bored of a 118 bhp 1600l car well before it was paid for. Put more than a bag of spuds in the back of that and 0-60 will be in weeks not seconds.
I recently used Ratesetter for a similar amount of money only 3% Interest and just under £160 per month over 5 years if you put down £500 deposit, do not use those deals you posted they are for bad credit applications
bigwheels21/09/2019 19:32

The total finance is £2480 on £10000 its 24


If you don't understand interest rates its probably better not to confuse things. Yes its expensive, yes the car is gopping, but it isnt a 24% rate of interest
Mate always swears by Sainsburys Bank loan, over car dealership interest rates.
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