Buying a Car on PCP

VW28

Ok following my earlier post, i am now looking into PCP agreements (again!)

What originally put me off was the way they are calculated, i kept getting quoted Flat Rates!

Anyway having looked around online, i've seen a few calcualtors that break down the monthly costs and clearly show all the fees. However I still cannot work out how they have come up with the monthly figure.

Take this one below as an example (for those interetsed i'm not looking to borrow this much)

Representative Finance Example

* Duration (months):36
* Deposit £4,000.00
* 35 payments of £350.23
* Retailer cash price:£22,050.00
* Acceptance fee*:£125.00
* Optional final payment:£8,783.70 (Balloon Payment)
* Option to purchase Fee**:£60.00
* Total Amount Payable:£25,041.75
* Total amount of credit:£18,050.00
* Excess mileage (per mile):6.00 p
* Representative APR:7.6% APR
* Rate of interest:7.5% fixed

I know this isn't right but the way i see it is £22,050-£8,783-£4,000= £9,267

So a loan of 9,267 at 7.6% over 36 months is...£288.00 per month (i know there are some fees i didn't include but why is there rate so much higher??

I have seen some big debates on this on the Pistonhead website. I dont want to start an argument i would just like to know in simple terms how this is calculated.

Thanks

VW28

Ok wait.... i think i may have done it???

SO.. as outlined above the loan is £9,267 + the interest on the total loan (including the balloon payment 18,050) the interest on this over 36 months would be 2,188. So the 36 monthly payments are actually based on a loan of £11,455

therefore 11,455 at an APR rate of 7.6 over 36 months is £356.00.


Hmmm i'm still off a bit per month so is this right

lawrie28

Tis over 35 payments but 36 months.

VW28

This is true so over 35 months my calculation comes out at £371.0 per month which means I think I'm wrong!

lawrie28

I would also look at getting a Lease. The benefit is this. With a PCP, you pay a deposit, then your monthlies, and you may buy it at the end. With a lease, you do not pay much up front, certainly not the £4k in the illustration above. You would typically have a 3+35 agreement, so have 38 payments, with 3 of these being paid up front. You pay your money, and you send it back at the end. All the risk is someone elses. Yes, you can't buy it (not legally, but there are ways...), but you will also have £3k to stick in the bank from day one. This is because the lease co claim the VAT back - theres 20% deposit, as well as getting a big discount from the manufacturer - this provides the deposit so you don't have to.

If you know you will not keep the car after 3 years, then it is a really sensible option.

nomoneytoday

lawrie28 wrote: »

I would also look at getting a Lease..

I compared lease numbers on a mid range Qashqai 1.6 to a PCP:

Leasing was £12589 for 3 years
The PCP was £13390 for the same period

VW28

nomoneytoday wrote: »

I compared lease numbers on a mid range Qashqai 1.6 to a PCP:

Leasing was £12589 for 3 years
The PCP was £13390 for the same period

But generally with a PCP agreement they you make some money on the car when you trade it in - normally about 10%.

Dealers do this so that this extra cash can be used as a deposit for the next PCP agreement.

However this still doesn't answer by originally query of how the PCP monthly figures are calculated. I need to know this so i can make a comparison with other loans, without having to actually approach a dealer for them to give me a quote.

Also can you lease used cars - 1-2 years old?

andy.m_2

I wouldn't buy a car on PCP, I wouldn't buy a car on any sort of drugs to be honest

meer53

I buy my cars on PCP, i ask what the monthly payment is, if i can afford it i buy it. After 3 years i hand it back and get another.

jonjamie1970

I have been told before that paying large deposits on a PCP is sort of throwing your money into a pit, better with a minimal deposit. The 36th payment is the balloon.