New Car - Lease, HP etc... whats best?

    Looking at Peugeout 207cc... whats the cheapest way to get one over 2 or 3 years at 10000 miles per annum:thumbsup:


    do you want to own the car after that 3 years is up?

    Original Poster


    do you want to own the car after that 3 years is up?

    Not necessarily... maybe do another deal after 3 years but depends on the price

    well leasing allows you to get a car that otherwise you prob could not afford. Biggest downside, it's like renting a house - you don't own the car, ever.
    Some allow a purchase after 3 yrs, so that could be interesting. Although clearly this will cost you in the long run.

    I work in motor finance so if you need any help send me a pm. I work for a finance company that offers every type of product.

    If you are looking to exchange the car after two or three years then HP is not necessarily the best way to go noting you will probably still owe more on the car than what it's worth if you're taking it over a 4 or 5 year term.

    The best option is a product that different companies call different names. The most common name is Options or Personal Contract Plan (PCP).

    How it works is that the dealer will ask you how many miles a year you will drive. This will determine the 'balloon payment', which I'll explain in a bit. The less miles you'll do the bigger the final payment will be, which will reduce your monthly payment. Don't lie on this as it could kick you in the backside in the longterm.

    If for example you take the deal over 3 years (max terms on PCP/Options is 3.5 years) the finance company will determine how much that car will be worth at the end of the term. So if you're doing 10,000 miles a year over 3 years they'll work out how much it'll be worth in 2010 with 30,000 miles on the clock. They may come back with a figure of £5000 (for example)

    So you'll pay 36 monthly payments of £200 (example again!) then a final payment of £5000 to keep the car at the end.

    The beauty of the final payment is that the figure is guaranteed on Options. It's also known as a GFV (Guaranteed Future Value). So at the end of the 36 months, the finance company will GUARANTEE your car will be worth £5000 if it's done no more than 30,000 miles.

    They do this by actually working out a balloon payment that's less than they think the car's going to be worth (about 85% of the true value) so you'll find that the £5000 balloon is payable on a £5800 car.

    When the balloon payment is due you can do one of the following;

    1. Pay the final payment in cash
    2. Take another loan out to pay the balloon
    3. Trade the car in at a dealers for a new one (with you getting more than you owe)
    4. Hand the car back. Only downside is that you'll be liable to pay an excess mileage charge if you have gone over the agreed mileage (around 8p a mile on a 207cc, which you'll be told about before you sign the paperwork)

    The best thing to do would be to exchange. I actually took an Options deal out through my work and it was the best thing I did, as having a balloon payment made my monthly payment less meaning I could get a better car, and my car was worth £1500 more than what I owed when I traded it in, giving me a decent part ex.

    As I say, give me a shout if you need any advice.


    I checked out the 207 cc yesterday and have to say that the seating in the rear is a total waste of space, there is no way you could comfortably get 4 people in it. I also looked at the 307 cc, similar but larger and about the same price give or take a couple of grand. I would highly recommend going for the larger 307

    Also have a look at [url][/url]
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