PCP Advice Please

iandv

Hi

I have just ordered a new car over 2 year options (PCP) mainly because it was offering an additional £1500 deposit contribution. I am also putting £2000 deposit down with monthly payments of £221 with the remaining £5000 from part ex going into my bank account. Cost of the new car is £19,675

The GMFV is £13,500 after the 2 year period. And usually I change the car after the 2-3 year period

My question is would I be better asking for an early settlement from the PCP after month one and take out a loan for approx £12,000 over 5 years approx £221pm plus put down the £5,000 remaining from the part ex to pay for the early settlement.

Then after the same 2 / 3 year period would I be better off financially when I come to change the car for a new one?

As after 2 years at £221 I would have a balance remaining of approx £8,000 on the loan, which would be the same as the PCP if I added on the additional £5,000 to cover the GMFV

F1F93

iandv wrote: »

Hi

I have just ordered a new car over 2 year options (PCP) mainly because it was offering an additional £1500 deposit contribution. I am also putting £2000 deposit down with monthly payments of £221 with the remaining £5000 from part ex going into my bank account. Cost of the new car is £19,675

The GMFV is £13,500 after the 2 year period. And usually I change the car after the 2-3 year period

My question is would I be better asking for an early settlement from the PCP after month one and take out a loan for approx £12,000 over 5 years approx £221pm plus put down the £5,000 remaining from the part ex to pay for the early settlement.

Then after the same 2 / 3 year period would I be better off financially when I come to change the car for a new one?

As after 2 years at £221 I would have a balance remaining of approx £8,000 on the loan, which would be the same as the PCP if I added on the additional £5,000 to cover the GMFV

I'd avoid the loan tbh. After 2 years, there would be no finance on the car (I'm assuming the loan would not be secured) so you could part ex it etc to get a new one. The car will be worth £14-15K probably, as they are usually fairly generous with the GMFV. But then you are still paying the £221 a month - and if you want a car that's more than £15k then you'll either have to top it up with cash or get a new finance deal on the rest - neither of which is ideal if you're still paying off a loan for the old one.

Whereas if you keep with the PCP, after 2 years you can part ex the car in for a new one - as I said before the car will probably be worth slightly more than the GMFV, so you should have a little bit of equity to use as a deposit on your next car, and assuming its the same value as this one your monthly payments will be similar.
Plus you have £5,000 in your bank gaining interest.

The only advantage of the loan is that you own the car - so you don't have to give it up after 2 years. Although that said, you could just get an £8000 loan after 2 years to cover the GMFV anyway, so really there is no advantage of the loan :rotfl: