Advice on PCP

BM-AK

Hi All,

I'm looking to buy a car and am a bit short to buy the car outright - but really like the car so am considering doing a PCP. The dealer says they will also be able to do something on the cars price if I go this route too.

I've never set up one before, nor do I know the full 'in's' and 'out's'!

The dealer explained it to me but I don't know if i've understood correctly and if its really a good way of purchasing or not.

I'm told that I can PX my current car as a deposit on a 2 year PCP deal. This will incur low monthly payments and at the end of the plan, I am offered a balloon payment which I can pay to buy the car or can ultimately give the car back and swap it for another based on a fixed value they offer.

The dealer says the APR will typically be between 5-6% (despite their website stating 10-11%) so not sure if the dealer is trying to pull a fast one to make me buy it?

My question is the balloon payment value the same as the guaranteed final value or can this be different? Has anyone done this and had bad experiences?

Any help or advice would be appreciated.

nomoneytoday

It's a loan to pay off the depreciation.
Say, new car is £10,000, so normal loan would be 24 x £416 plus a bit of interest.

If the car value guestimate is set say at £5000 then you pay £24x£208 + 1x£5000 instead (plus a bit of interest)
In 24 months you can either pay the £5000, give back the car, or sell the car if there's any value above the £5000.

BM-AK

Thanks for the clarification. Do you or anyone know if they allow you to set the value of the balloon payment (i.e. can you put in more money plus the PX to minimise the payments and balloon value?)

Sorry know this is a question for the dealer, but they do tend to make it sound all good so just trying to go in prepared.

nomoneytoday

The finance co set the balloon based on previous residual experience.
They are normally set slightly lower to give a credit balance towards a new car every few years.
(However many got caught out back in 2008/2009 when many cars were simply handed back AFAIK)]

lawrie28

Your not really purchasing the car with a PCP, your renting it long term. yes you get a little flexibility at the back end, with regards returning it or not, and it is a good option if you "HAVE" to have a new car. If you don't then a used car can often be cheaper. Don't forget they offer this as a way to sell cars and the finance co make money out of it as well.

A PCP is good way of getting a car and is a cash efficient way of doing it. Ask the garage for a personal Lease option as well.

I doubt the rate is 5/6% APR, maybe 5 % flat rate (big difference) but it is worth finding out if the dealer has an offer.

What is the car, and have you shopped around from dealer to dealer?

PNPSUKNET

pcp can sting you if you, a}go over the agreed millage, b}some sting you for not using the same brand tyres, c} serviced by them ; d}a little scratch, bubble wrap it now. I would go down hp route if any. The intrest he quoted would be flat rate

nomoneytoday

PNPSUKNET wrote: »

pcp can sting you if you,
a}go over the agreed millage,
b}some sting you for not using the same brand tyres,
c} serviced by them ;
d}a little scratch, bubble wrap it now.

a}If you agree to do 30,000 miles, but return the car with 130,000 why should the finance co swallow it?

b}The T&Cs should say to use a standard of tyre rather than a specific brand.

c}Many will say serviced in line with manufacturer recommendations, rather than at X Garage

d}There are agreed standards by age of the car, such as the BVRLA Fair Wear & Tear standards. Stone chips vs a scrape?

All IMHO

geoffky

bad drug is that pcp..be careful

PNPSUKNET

nomoneytoday wrote: »

a}If you agree to do 30,000 miles, but return the car with 130,000 why should the finance co swallow it?

b}The T&Cs should say to use a standard of tyre rather than a specific brand.

c}Many will say serviced in line with manufacturer recommendations, rather than at X Garage

d}There are agreed standards by age of the car, such as the BVRLA Fair Wear & Tear standards. Stone chips vs a scrape?

All IMHO

take it you have not seen mazdas pcp

serverking

geoffky wrote: »

bad drug is that pcp..be careful

LOL

The things with new cars, rented or not is their depreciation... Why not go for a 3 year old car - there's plenty about, might work out cheaper

kleapatra

I've had a Mazda PCP for 3 years (I got rid of it a few weeks ago) and I never had to put specific tyres on it or take it to a specific garage - just a Mazda dealer.