0% APR PCP deal for new car

natscat84

What's the catch?

My husband and I were looking at getting a new car with much lower running costs than the one we have at the moment (and that he can't drive as it's a manual)

We've just been offered a PCP deal of 0% APR, paying £129 per month on a 36m term, with an annual mileage limit of 10,000, and a 5 year warranty. Insurance is about 2/3 of what I'm paying now for my current car, it's tax exempt and gets about 1.5x more mpg than my current car, not to mention it being new and not needing MOT-ing - my last MOT cost me £400 just to get it to pass the bloomin' thing!

We're planning on keeping the car for about 4-5 years, the monthly payment is well within our budget and we only average about 5-6000 miles a year.

Anyway, as my dad always told me, if it sounds too good to be true, it usually is. I've never done PCP before, always paid up front cash for my cars. So, what's the catch in this deal?

chanz4

The downside is the final purchase payment, you also have to service 100% as they say and not even scratch or damage it. Go for regular finance if doing it this way

silo24

chanz4 wrote: »

The downside is the final purchase payment, you also have to service 100% as they say and not even scratch or damage it. Go for regular finance if doing it this way

Surely you can take advantage of the 3yrs 0% and then you just need to finance the remaining balance when it becomes due?

If you fully intend to keep the car, you make the payment and they don't inspect it.

It will all boil down to what the final payment (balloon) will be. If you are paying a low monthly for the 36 months, it could be that the balloon is worth more than the car and you need to factor this in.

Not so clear cut to say 'regular' finance is the answer as this will be interest bearing from day 1 and you are unlikely to get much of an additional discount from the dealer by NOT taking a manufacturers PCP promotion (if that's what this is).

natscat84

silo24 wrote: »

Not so clear cut to say 'regular' finance is the answer as this will be interest bearing from day 1 and you are unlikely to get much of an additional discount from the dealer by NOT taking a manufacturers PCP promotion (if that's what this is).

Yeah, this is what I was wondering - the cost of the car, if we were to buy it cash tomorrow, is exactly the same as what we'd pay if we took the PCP plan since it's on a 0% special offer. The balloon payment at the end is Total cost of car - (deposit + 36 payments)

Which is why I'm wondering what the catch is, since this doesn't appear to be making the company (access Toyota) any money, and I'm naturally suspicious about any deal that doesn't make the person offering the deal any money!

silo24

Dealers get incentives on a number of sides.

If they sell a certain number of cars before the end of a Quarter, they get a volume bonus from the manufacturer.

Manufacturers also put 0% finance deals together in order to help dealers shift cars.

With a Company like Toyota, who generally build cars to forecast, it is often more important to shift the volume as they know they have more cars coming in next week....You don't often see this with BMW/Audi/Mercedes and others who build your car to order.

I would expect that as we are now towards the middle of March, i.e. heading towards the end of Q1, there will be a few incentives on the table for you.

You might even be able to persuade them to give you a bigger discount.

cepheus

So what is the cost of the car new, say via

http://www.honestjohn.co.uk/deals/?cat=new&make=Toyota

and how do they calculate the value after 36 months?

natscat84

Hmm... having spoken to my dad, it seems like I may be looking at a lease rather than PCP.

Basically, the Access Toyota plan is:

The car we're looking at is the Aygo Fire, which the guy in the dealership is knocking off £750 off, giving us a service package and giving us free A/C - cost if I paid cash for it: £10,210

The Access Plan is:

Trade in my car for maximum deposit - £1950
36 x monthly payments of £129.95 (totalling £4678.20)
Then either:
I pay off £3581.80 (which they say is the guaranteed future value) at the end of the 3 years and thus own the car
I pay nothing else and leave the car with them
I pay nothing else and take on a new Toyota for a further three years, with the deposit against the new one being the guaranteed future value of the previous car

So basically, even if I bought the car outright at the end of the 3 years, I'd not be paying anything more than if I went with cash tomorrow and bought it outright.

Which makes me suspicious. If I borrowed that much from the bank, they'd be looking at charging me £5k in interest!

I guess that Toyota is pinning their hopes on me not saving up the money at the end and thus taking another car from them at the end of the term. And, like another poster said, they're probably desperate to make a sale for the quarter, hence the special offers.

silo24

Not a bad deal, although I suspect they still have decent money in it for them.

You can probably improve on this deal..... ask for free metallic paint.

Rule 1: Shy kids get nowt!

natscat84

silo24 wrote: »

You can probably improve on this deal..... ask for free metallic paint.

I would.... except the metallic colours are black and BURNT ORANGE!!! I prefer the flat white out of all of them!

cepheus

Well these are the details from Drive the Deal, not sure if this is the exact model sorry about the formatting

http://www.honestjohn.co.uk/deals/?cat=new&make=Toyota&mod=AYGO&pg=2
Toyota AYGO
1.0 VVT-i Fire 3dr [AC]New
£9,212
save £883
View terms and conditions Toyota are offering PCP finance at 0% APR Representative over 2 to 3 years with a deposit of between 0% - 20% of the cost of the car. The dealer that we put you in touch with will arrange the finance if required. Subject to Status. Written quote available on request

natscat84

Thanks - sorry, should have said - it's the 5dr model (for future baby seat access) and the MMT automatic (as husband is American and can't drive a stick shift) which bumps the price up a little. But thanks for looking for me anyway!