any car finance experts?! PCP's

doughuelas

Hi please excuse my stupidity in advance, i'm not really clued up on this

PCP's...can these be arranged on used cars?

I have approx £5k to use (as a possible deposit) and i want to use it to put down on a used Range Rover Sport. Is this possible?

If it is possible are there any tips of the trade you can pass on to help educate me further?

I am looking at keeping the car for 3 years

I know car dealers are infamous for trying to dupe people into thinking they're getting a better deal through another finance package when they are not

And if PCP is a viable option what APR should i be looking at realistically?

Many thanks

Lemonade_Pockets

Hi for your purchase the PCP route probably won't be suitable.

They are generally only available on new or high value used cars that are under three years old.

If it is even an option from the dealer I think you'll find the rate makes it more expensive to purchase than doing it on HP.


SELECTIVE READING PROBLEM SEE BELOW!

bclark

Yes you can for Cars up to 3-4 years old. Car-finance.net is one that i saw a while ago.

Lemonade_Pockets

Hence the word generally. You will also notice on Car-finance.net that the accompanying APR's will be circa 12% if not more.

doughuelas

Lemonade_Pockets wrote: »

Hi for your purchase the PCP route probably won't be suitable.

They are generally only available on new or high value used cars that are under three years old.

If it is even an option from the dealer I think you'll find the rate makes it more expensive to purchase than doing it on HP.

Thanks for your advice, if the car was 20-22k and i have 5k to put down on it, what would you suggest as being the cheapest option? HP?

I only want to keep the car for 3 years max and obviously keep my repayments as low as possible

can i put a balloon payment on an HP agreement?

If so does this affect the APR?

And lastly, sorry for so many questions, will the 5k i have currently pretty much be eaten up with depreciation

thanks

Lemonade_Pockets

To do a complete U-Turn because i somehow missed the words deposit and Range Rover sport. (I'd got it in my head you were buying a used car worth £5k total)

Yes PCP is probably best option, if the car is eligible i reckon at that price it maybe to old still. There will be a issue with APR as they are generally high on PCP's for used cars. But these are negotiable so this is another angle as well as asking for straightforward discount. Alternatively if they give you discount check they aren't hiking the APR up to compensate.

PCP's are great if they don't cost any more than HP because they give you some gaurantee against the market value. However the amount of deposit you put in has no effect on your equity at the end of the agreement all it does is reduce your payments.

There is little point going for a baloon agreement.
Two scenarios:
Balloon is to big which is great for your monthly payments but means your short when it comes to sell. So you will have to find the money sooner or later
Or
Balloon is to small in which case it doesn't reduce payments so there isn't really any point since you can settle HP at any time.

The car will almost definately depreciate more than £5k in three years so your £5k is going to be eaten up one way or another.

doughuelas

Lemonade_Pockets wrote: »

To do a complete U-Turn because i somehow missed the words deposit and Range Rover sport. (I'd got it in my head you were buying a used car worth £5k total)

Yes PCP is probably best option, if the car is eligible i reckon at that price it maybe to old still. There will be a issue with APR as they are generally high on PCP's for used cars. But these are negotiable so this is another angle as well as asking for straightforward discount. Alternatively if they give you discount check they aren't hiking the APR up to compensate.

PCP's are great if they don't cost any more than HP because they give you some gaurantee against the market value. However the amount of deposit you put in has no effect on your equity at the end of the agreement all it does is reduce your payments.

There is little point going for a baloon agreement.
Two scenarios:
Balloon is to big which is great for your monthly payments but means your short when it comes to sell. So you will have to find the money sooner or later
Or
Balloon is to small in which case it doesn't reduce payments so there isn't really any point since you can settle HP at any time.

The car will almost definately depreciate more than £5k in three years so your £5k is going to be eaten up one way or another.

ok thanks

i had a scenario in my head like

purchase £20k
deposit £5k
balance = £15k
balloon £7.5k
balance = £7.5k over 3 years
= to approx £250 per month

at the end of the 3 years the car should still be worth more than the 7.5k balloon payment

or have i got it completely wrong and it doesn't work like that?

thanks

plane_boy2000

Your example is correct, but I think you will struggle to get a PCP on anything that old - its usually a product for new cars. I imagine in the current low C02 climate we live in the GFV will be low so you might be better off just buying it outright with a loan or HP

marmitedog

You will be charged interest on the full amount borrowed, regardless of how the deal is packaged. In your case this is £15k.

At 10% flat, this is approx £5k over 3 years.

£5k interest plus the £7.5k capital gives £12.5k to pay back or approx £350 pcm.

At the end you will have paid out £17.5k and you can walk away or pay the £7.5k balloon and have a vehicle worth c£10k.

If you keep the vehicle it will have cost you £25k or £700 pcm.

All figures approx but you get the idea.

A RRS at £20k will be a bit of a dog (or high mileage), possibly meaning big bills to budget for too.

doughuelas

marmitedog wrote: »

You will be charged interest on the full amount borrowed, regardless of how the deal is packaged. In your case this is £15k.

At 10% flat, this is approx £5k over 3 years.

£5k interest plus the £7.5k capital gives £12.5k to pay back or approx £350 pcm.

At the end you will have paid out £17.5k and you can walk away or pay the £7.5k balloon and have a vehicle worth c£10k.

If you keep the vehicle it will have cost you £25k or £700 pcm.

All figures approx but you get the idea.

A RRS at £20k will be a bit of a dog (or high mileage), possibly meaning big bills to budget for too.

thanks for the advice

re the RRS for 20k your prob right i have to be more realistic and say £23k at least

what would you suggest to be the way that would make the most financial sense to get one, 2nd hand or brand new PCP?

Lemonade_Pockets

I would expect a new one to be somewhat north of £500 a month with £5k deposit.

I would speak to someone like Oracle Finance who may be able to give you better idea of what works out most affordable.

PCP does throw up some funny quirks depending on the residual values of the vehicle your buying. But its generally hard to speculate as a fag packet calculation.