PCP on 2nd hand car-is it worth it?

glossgal

Hi Folks,
Would really appreciate some advice re; buying an approved used car on finance, looking at 2-4 year old models (a few makes in mind, nothing concrete yet) with budget of 8k max. Have about 3k to put down inc part ex. Am mainly confused about whether PCP is worth it if you want to keep the car rather than hand it back and if there's any way to use the finance to buy some time and settle early?

Our ideal intention would be to get finance and pay it off early preferably within 6-12 months-all dealers have said early settlement and overpayments are no problem, no fees etc and made out its all a breeze -usual patter-but can't help thinking there's a catch somewhere? Certainly I see no point in getting finance on a used car to hand it back after 3 years when for a little extra could get brand new and do the same. I'm pretty clueless how early settlement would work in practice though because don't understand how the interest is worked out - can anyone help me out with an example at all based on my budget? Have been quoted 5 % flat rate by one dealer but pretty sure that would sting me if paying up early??

Oh and yes I know I should just save up for a year and buy outright but I'm feeling rebellious :-)

CrazyClum

glossgal wrote: »

Hi Folks,
Would really appreciate some advice re; buying an approved used car on finance, looking at 2-4 year old models (a few makes in mind, nothing concrete yet) with budget of 8k max. Have about 3k to put down inc part ex. Am mainly confused about whether PCP is worth it if you want to keep the car rather than hand it back and if there's any way to use the finance to buy some time and settle early?

Our ideal intention would be to get finance and pay it off early preferably within 6-12 months-all dealers have said early settlement and overpayments are no problem, no fees etc and made out its all a breeze -usual patter-but can't help thinking there's a catch somewhere? Certainly I see no point in getting finance on a used car to hand it back after 3 years when for a little extra could get brand new and do the same. I'm pretty clueless how early settlement would work in practice though because don't understand how the interest is worked out - can anyone help me out with an example at all based on my budget? Have been quoted 5 % flat rate by one dealer but pretty sure that would sting me if paying up early??

Oh and yes I know I should just save up for a year and buy outright but I'm feeling rebellious :-)

I bought my last car (3 years old) on Hire Purchase and paid it off within 8 months. Every time I made a lump sum payment it knocked my monthly payments down and knocked the interest off so I agree its no issue to pay off early.

Just remember there is probably a £150ish fee to take the finance out and another £150 fee to 'finish the agreement' so factor in this extra £300 - I think I paid an extra £500 over the 8 months including this so not the best deal.

missile

Have you compared the overall cost of PCP to a loan from a bank?

Be careful getting finance from the dealer, they get a mark up and will gloss over any negative aspects.