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  • FIRST POST
    • MSE Amy
    • By MSE Amy 11th Sep 15, 10:00 AM
    • 27Posts
    • 36Thanks
    MSE Amy
    Cheap Personal Car Loans
    • #1
    • 11th Sep 15, 10:00 AM
    Cheap Personal Car Loans 11th Sep 15 at 10:00 AM

    Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.
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    • zx81
    • By zx81 11th Sep 15, 10:59 AM
    • 12,479 Posts
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    zx81
    • #2
    • 11th Sep 15, 10:59 AM
    • #2
    • 11th Sep 15, 10:59 AM
    The link goes here - http://www.moneysavingexpert.com/error

    Oops.
    • DCFC79
    • By DCFC79 11th Sep 15, 11:25 AM
    • 29,537 Posts
    • 18,668 Thanks
    DCFC79
    • #3
    • 11th Sep 15, 11:25 AM
    • #3
    • 11th Sep 15, 11:25 AM
    The link goes here - http://www.moneysavingexpert.com/error

    Oops.
    Originally posted by zx81
    Someone at MSE towers needs to get the page sorted.
    Je Suis Charlie
    • Jon Peart
    • By Jon Peart 9th Jun 17, 8:25 PM
    • 1 Posts
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    Jon Peart
    • #4
    • 9th Jun 17, 8:25 PM
    Interest calculations on PCP
    • #4
    • 9th Jun 17, 8:25 PM
    I have read a fair number of articles now on PCP and all say the same thing - it makes it cheaper to drive a newer car as it defers the a lot of the interest to the backend of the agreement.


    I would like some clarity on this if possible as it seems to me, from the calculators I have used, that the cost of credit is calculated from the car price less any deposits and does not deduct the GFV prior to the interest being calculated.


    As such, a more expensive car will be more expensive on monthly payments through PCP regardless of the residual value - is this correct?
    • Tarambor
    • By Tarambor 10th Jun 17, 2:46 PM
    • 887 Posts
    • 591 Thanks
    Tarambor
    • #5
    • 10th Jun 17, 2:46 PM
    • #5
    • 10th Jun 17, 2:46 PM
    Correct. You're still paying the depreciation on it and that will be higher on a more expensive car. My Mondeo I bought at 2 years old was just 40% of its new value. In comparison most small hatchbacks at that age would be likely to be well over 60% of their new value.

    The only cheap car finance is 0% offers but even then you tend to find that you need a 50% deposit and that deposit will be money that you no longer have which will be losing returns it could have earned so the 0% finance with 50% deposit is actually potentially costing you around 3%.
    Last edited by Tarambor; 10-06-2017 at 2:48 PM.
    • Mobeer
    • By Mobeer 11th Jun 17, 12:49 AM
    • 1,675 Posts
    • 4,371 Thanks
    Mobeer
    • #6
    • 11th Jun 17, 12:49 AM
    • #6
    • 11th Jun 17, 12:49 AM
    PCP doesn't really "defers a lot of interest compared to the backend"; it defers more of the capital due to be repayed. As a result each month with a PCP deal you pay less than with a loan (or hire purchase), but at the end of the PCP deal you have to make a large capital payment in order to keep the car. Each PCP monthly payment is comprised of relatively more interest and less capital repayment than a loan.

    Your interest calculation is correct.

    A more expensive car will almost always be more expensive than a cheaper car on any loan, hire purchase or PCP arrangement, if all else is equal. This assumes in particular that the two cars have the same interest rate (APR). Sometimes more expensive new cars can work out cheaper including interest payments than apparently cheaper used cars because the new car manufacturer will offer discounted interest rates and incentives.

    A particular car may be cheaper on a PCP deal where the manufacturer and\or dealer offer incentives to take out the PCP deal.
    • antrouser
    • By antrouser 22nd Jun 17, 3:20 PM
    • 19 Posts
    • 8 Thanks
    antrouser
    • #7
    • 22nd Jun 17, 3:20 PM
    Effect of residual value
    • #7
    • 22nd Jun 17, 3:20 PM
    This useful discussion has missed one point. The GFV is the estimate of the value of the car at the end of the agreed lease term. So cars that hold their value well will have higher GFV and that means there is less to be paid off during the term. Obviously the payment to purchase the car afterwards will be higher, but you don't have to purchase it. So PCP can be a good way to buy a quality car that holds its value and these can look better value than more ordinary cars.
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