pcp or cash??

stu68

Hi this is my first post so bare with me.

I am buying a new car and have had a call from dealer saying that if I take out their PCP finance I can save money?

I was paying cash for the car but the dealer says that if I stick the money in a high interest savings account and use their finance over 3 years I will make more money in the saving account that I will pay them in interest.

They say the flat rate is 4.35 (could not get a APR out of them) I would pay them £580 a month and in 3 years time £12000 balance but working out the monthly payment and the balloon figure I will be paying them £5000 over the odds and I cant see that much saved if any by putting my money in a saving account?

Maybe I am looking at it the wrong way, any advice:question:


Stu

nomoneytoday

4.35% flat and interest on the balloon will give an APR in the region of 8 or 9%
You can earn 5% ish if you stick the money in the bank

QED it costs more to finance.
p.s. Its illegal not to state the APR in the key facts document..

peterg1965

The reason they want you to take their finance is because they will make a lot of commission from the finance house. If quoted a flat rate, multiply by two for an approximate APR. In your case about 9% APR. Paying by cash will save you more in interest charges than you will ever make in a savings account, even a tax free one.