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  • FIRST POST
    • boj27
    • By boj27 15th Sep 16, 10:30 PM
    • 30Posts
    • 12Thanks
    boj27
    PCP vs bank loan
    • #1
    • 15th Sep 16, 10:30 PM
    PCP vs bank loan 15th Sep 16 at 10:30 PM
    Hi Guys,

    I am looking to swap my car. I have a 2014 Leon Cupra worth around £17-18k in a private sale. i have £6700 worth of remaining finance on the vehicle. I am thinking of selling, and getting my £10,000 back out of the vehicle, and paying the rest off. The only reason I would like to swap is because the warranty runs out in April of next year and I have already had a replacement gearbox in the vehicle. if that was to come out of my own pocket it would have cost upwards of £2500, not a thought i'd like to think about in all honesty.

    the replacement car I have been looking at is a VW golf R (yes i love cars, everyone has something they are a sucker for!) and it is priced at £29317 (£250 of a 4 year warranty in there, i intend to keep it for the whole term) if i take out the PCP deal where VW are giving me a £2,000 deposit contribution. this means it could either go 2 ways.

    1) I put down the smallest deposit available and agree to the finance deal. Just after the car is delivered within the 14 day cool off period i cancel (from what i understand there is no penalty in the first 14 days to do this). for arguments sake, if i put down say £500, I owe £28,817, on the car. If i then take the £10,300 from my old car above, that means I owe £18,517. I then planned on taking out a bank loan for £18,500 @ 3.3% APR fixed over 48 months, with a repayment of £411 per month. this means I am paying £1253 in interest over 4 years, not a lot. my reasoning behind this is because if i don't take the PCP deal i do not get the the extra £2000 off the car. in 4 years i expect the car to be worth around £15,000 by the looks of autotrader, I'd own the car, and it would have cost around £15517 over 4 years, which equates to £3880 per year in depreciation.

    2) the second option is i take out the PCP as it supposed to be done. I would put down £5,000, leaving a remaining balance of £24,317. I then pay 49 monthly payments of £262, equating to £12,838. add my deposit onto that and I have paid £17,838 and DO NOT own the car. The final balloon figure was something like £12-13k.

    i guess both have their pro's and cons. at the end of the PCP i can just hand the keys back or use the equity in the car towards a new agreement. no "loan" required, although finance is a loan but not in the traditional sense.

    what are your guy's thoughts on this? yes i know, brand new cars are a waste of money, but its all my money goes on, its what i enjoy in life.

    there is also the option of dipping into my money which is sat in premium bonds making naff all, so instead of getting the full £18,500, i could take £8,000 from that and borrow £10,000.

    thoughts?
Page 1
    • Pixie5740
    • By Pixie5740 16th Sep 16, 7:09 AM
    • 8,402 Posts
    • 11,013 Thanks
    Pixie5740
    • #2
    • 16th Sep 16, 7:09 AM
    • #2
    • 16th Sep 16, 7:09 AM
    If it's a brand new car you want have you tried Drive the Deal? It could help you knock more than £2k of the price.

    Take the PCP, get your £2k discount plus whatever else you manage to negotiate off. Then repay the PCP (I do this when I buy cars) using a mixture of a loan (Providing you can get a decent rate. Remember that you might not be one of the 51% offered the representative APR) and savings since your Premium Bonds aren't really making you anything. Keep some savings back for emergencies though.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • boj27
    • By boj27 16th Sep 16, 8:05 AM
    • 30 Posts
    • 12 Thanks
    boj27
    • #3
    • 16th Sep 16, 8:05 AM
    • #3
    • 16th Sep 16, 8:05 AM
    Hello,

    Yes I've tried drive the deal, carwow, carfile, orange wheels and broad speed. carfile are offering the best deal. When you say pay off the PCP with a mixture of a loan, what do you mean exactly?
    • Pixie5740
    • By Pixie5740 16th Sep 16, 8:28 AM
    • 8,402 Posts
    • 11,013 Thanks
    Pixie5740
    • #4
    • 16th Sep 16, 8:28 AM
    • #4
    • 16th Sep 16, 8:28 AM
    I said you should pay off the PCP using a mixture of loan and savings.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • boj27
    • By boj27 16th Sep 16, 8:30 AM
    • 30 Posts
    • 12 Thanks
    boj27
    • #5
    • 16th Sep 16, 8:30 AM
    • #5
    • 16th Sep 16, 8:30 AM
    As in cancel the PCP agreement and pay it off in one hit, or do you mean pay the PCP agreement monthly cost and deposit out of savings/loan? Sorry if I'm sounding dumb it's early
    • Pixie5740
    • By Pixie5740 16th Sep 16, 8:34 AM
    • 8,402 Posts
    • 11,013 Thanks
    Pixie5740
    • #6
    • 16th Sep 16, 8:34 AM
    • #6
    • 16th Sep 16, 8:34 AM
    As in pay it off in one go.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • class2ldn
    • By class2ldn 16th Sep 16, 9:05 AM
    • 277 Posts
    • 69 Thanks
    class2ldn
    • #7
    • 16th Sep 16, 9:05 AM
    • #7
    • 16th Sep 16, 9:05 AM
    So your selling your cupra to buy what is essentially the same car underneath but looks different?
    Just on a side note I had a golf r and I wouldn't be rushing back to one that's for sure.
    As said above best way if you can do it is to pay off the pcp as you'll get a better deal with their finance usually although it doesn't always go down well but that's life lol.
    Also I'm not sure if it will be worth 15k at the end, the mk7 r has been ruined by a massive influx of lease deals
    Last edited by class2ldn; 16-09-2016 at 9:09 AM.
    • boj27
    • By boj27 16th Sep 16, 9:15 AM
    • 30 Posts
    • 12 Thanks
    boj27
    • #8
    • 16th Sep 16, 9:15 AM
    • #8
    • 16th Sep 16, 9:15 AM
    The only reason I want to swap is the warranty runs out on mine, and there is no chance of a UK main dealership warranty extension, and given what's happened in the past, I don't fancy my chances.

    May I ask why you wouldn't go back to a golf R?

    You may be right about the price and the lease deals, I may recalculate my maths above
    • jaydeeuk1
    • By jaydeeuk1 19th Sep 16, 4:11 PM
    • 7,381 Posts
    • 4,782 Thanks
    jaydeeuk1
    • #9
    • 19th Sep 16, 4:11 PM
    • #9
    • 19th Sep 16, 4:11 PM
    Been some cracking lease deals over the months on a Golf R, working out at around £6800 in total over 2 years, replace after 2 with another and it will work out far cheaper than a PCP, and equivalent to £3400 depreciation each year.

    Not many people want to spend £18k on a private sale, might struggle to sell quickly or at the price you want.
    If you've never had PPR, then people probably don't care about what you say.
    • nomoneytoday
    • By nomoneytoday 19th Sep 16, 5:00 PM
    • 4,651 Posts
    • 2,797 Thanks
    nomoneytoday
    IMHO - I'd do the PCP thing to get the discount.


    However, the PCP comes with a minimum value guarantee (the balloon), whereas the cash loan doesn't. With all the ex-cheap lease cars hitting the market when the loans run out, will the future market price be higher than the guaranteed balloon?


    In essence, the PCP interest is insurance of a minimum price in 3 years.


    (all IMHO)
    • nomoneytoday
    • By nomoneytoday 19th Sep 16, 5:04 PM
    • 4,651 Posts
    • 2,797 Thanks
    nomoneytoday
    Also, you're spending £29k on a new car to avoid a potential £2500 that might never happen?
    • takman
    • By takman 19th Sep 16, 6:58 PM
    • 1,310 Posts
    • 991 Thanks
    takman
    Two main points that jump out at me are:

    1. Your worried about the possible cost of repairs on a two year old car, yet are happy to guarantee to loose thousands of pounds in depreciation on a new one. There is no way that repairs on a two year old car are going to be more than the many thousands of pounds you will loose on a new one in the first few years. So that's not a valid reason to buy a new car.

    2. Get your savings out of premium bonds as soon as possible and if you don't waste use them on a new car then get them into 5% current accounts and 6% regular savers as soon as possible. Your loosing hundreds of pounds a year by keeping them in premium bonds.
    • chanz4
    • By chanz4 21st Sep 16, 8:15 PM
    • 9,778 Posts
    • 2,835 Thanks
    chanz4
    I'm just getting rid of my leon 18k new, 1 year later now 9500. I wil be very surprised if you will get that high figure for it, I have seen a few for 15k from dealers on the cupra.


    They drop like bombs, also you will be in to negative equity all the time up until the balloon with their pcp
    Don't put your trust into an Experian score - it is not a number any bank will ever use & it is generally a waste of money to purchase it. They are also selling you insurance you dont need.
    • AnotherJoe
    • By AnotherJoe 22nd Sep 16, 12:25 PM
    • 3,529 Posts
    • 3,570 Thanks
    AnotherJoe
    The only reason I would like to swap is because the warranty runs out in April of next year and I have already had a replacement gearbox in the vehicle. if that was to come out of my own pocket it would have cost upwards of £2500, not a thought i'd like to think about in all honesty.
    ------

    Then as pointed out, since that's a non-reason as you are swapping an absolute certain huge loss (depreciation) for a hypothetical much smaller one (might need repairs) you have no reason at all to purchase.
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