Bank loan or PCP?

kates08

Hi, sorry I'm not sure if I've posted this on the right board.

We need to buy a new car and in the past have always put down a deposit and taken a bank loan for the remainder.

Went into a car dealership yesterday to see a few cars and the salesman started telling us about PCP and how it would be better for us because we like to change our car every 3-4 years and we would be able to get more car for our money.

He also told us that if taking out a PCP there is no point in putting down a deposit, as whether we put down a deposit or not our monthly payments would not be reduced significantly and the GFV of the car would not be affected by the deposit, therefore we would be better NOT putting down a deposit.

Everything he said seemed to make sense, but I'm aware he is a car salesman and will be trying to sell us whatever gets him the biggest commision rather than what is best for us so I wanted to get some opinions from others regarding the pros and cons of PCP?

Kate

PNPSUKNET

one big downside, you never own it

kates08

Well not if you hand it back but we'd have the option of paying the final payment or or even refinancing the final payment so we would have the option of owning it. Technically the bank currently own my house too, until 2042, so is it really that different?

PNPSUKNET

I would go for hp if you really want finance

kates08

Can I ask why you'd recommend that? Having never had car finance, I really am looking for the pros and cons of HP and PCP so that I can make an informed decision. Also, I don't really want finance, so would you recommend anything else? I need some kind of loaan or finance as I need a new car and don't have the £10,000 I need to buy one outright.

Thanks

[Deleted User]

kates08 wrote: »

Can I ask why you'd recommend that? Having never had car finance, I really am looking for the pros and cons of HP and PCP so that I can make an informed decision. Also, I don't really want finance, so would you recommend anything else? I need some kind of loaan or finance as I need a new car and don't have the £10,000 I need to buy one outright.

Thanks

why a new car?you could get a decent 2nd hand one for half of that if you shop around

CLAPTON

kates08 wrote: »

Hi, sorry I'm not sure if I've posted this on the right board.

We need to buy a new car and in the past have always put down a deposit and taken a bank loan for the remainder.

Went into a car dealership yesterday to see a few cars and the salesman started telling us about PCP and how it would be better for us because we like to change our car every 3-4 years and we would be able to get more car for our money.

He also told us that if taking out a PCP there is no point in putting down a deposit, as whether we put down a deposit or not our monthly payments would not be reduced significantly and the GFV of the car would not be affected by the deposit, therefore we would be better NOT putting down a deposit.

Everything he said seemed to make sense, but I'm aware he is a car salesman and will be trying to sell us whatever gets him the biggest commision rather than what is best for us so I wanted to get some opinions from others regarding the pros and cons of PCP?

Kate

you don't NEED a new car maybe you want one.

madness to 'always ... taken a bank loan...' why ever pay all that interest when you can avoid it.

you haven't given a single figure ... however can anyone give a view on what's best (whatever best means here)

owitemisermusa

Let's stay on point here guys.

Set aside your personal views on whether the OP needs a new car or not and answer her question, please?

OP, I'm interested in the responses to your question too!

A further Q: what about combining both? i.e take a bank loan (with a lower interest rate than dealer finance) for a large deposit and finance the rest. This is to benefit from some dealer offers that you can only get when you use dealer finace.
Thanks OP for letting me use your thread!

kates08

CLAPTON wrote: »

you don't NEED a new car maybe you want one.

I wasn't asking whether you thought I needed a new car or not, I actually wasn't necessarily talking about a brand new car. And yes, it is a necessity I'm not just buying a new car because I'm tired of my old one.

CLAPTON wrote: »

madness to 'always ... taken a bank loan...' why ever pay all that interest when you can avoid it.

As I've said, I can't afford to buy a car outright so I'm not sure where you're coming from with this. Why is a bank loan madness? How can you avoid paying interest if you have to have some sort of credit to buy it?

CLAPTON wrote: »

you haven't given a single figure ... however can anyone give a view on what's best (whatever best means here)

I was asking for a general view on whether PCP is a bad form of finance or not and whether the salesman was right in that putting a deposit downis not a good move with PCP. I also don't know what "whatever best means here" is supposed to mean?

SCO

PCP - not sure what that is but assume its a kind of contract hire. The only downside to this as far as i know is when you go to trade the car in they will charge you to fix scratches damage etc.

Bank loan - I would stay away from this, you might own the car but you are really in negative equity the minute you own the car so if you want to trade it in before end of the term you will probably have massive shortfall to make up.

Hire purchase - I would go for this option as every 2 and a half years you can trade it in for a newer one or basically wipe the dept in 2 and a half years instead on normally 5. Does it really matter if you own it?

PNPSUKNET

hp you can do whatever millage you like, you are paying towards owning something. PCP you have to service how and when they say, if you go over the agreed milleage allowance they will charge you high rates on it. Also with pcp you have a high balloon payment as you are just really renting the car.