How to compare car PCP between dealers?

abssorb

Hi

One of the options I'm considering for purchasing a car (today! ) is PCP, and I can't find a way of comparing between dealers.


It's an approved used car, two almost identical cars, similar prices from two main dealers and the PCP figures differ considerably between the two.

They both say I can't just go by APR. Which is a shame as that would be ideal. I've googled for a comparison tool, but they're all about comparing products offered by the comparison site. What I'm hoping for is a way of comparing two dealer offers against each other.

Over 3 years, One dealer is offering 8.9% APR with a final value of 11563 at £318 per month, the other is offering 9.4% APR with a final value of 12663 at £299 per month.

It seems to me the latter is the better deal, even though it has a higher APR figure. :huh:

Foxy-Stoat_3

£416 is the total difference. The first one is the cheaper deal overall.

abssorb

That's very helpful to have an end result. Thanks. Does this mean that in fact, APR is actually a sound comparison?

I was hoping to find a tool / excel formula. I have many quotes to compare, the ones above were just an example, plus they seem open to haggling and I need to be able to check their offerings with something at my fingertips

sinizterguy

abssorb wrote: »

That's very helpful to have an end result. Thanks. Does this mean that in fact, APR is actually a sound comparison?

I was hoping to find a tool / excel formula. I have many quotes to compare, the ones above were just an example, plus they seem open to haggling and I need to be able to check their offerings with something at my fingertips

It's only directly comparable when the balloon figure is somewhat similar.

Best way is to calculate total cost of ownership over the period you expect to keep it (i.e. do you expect to pay that balloon or just hand in the keys and walk away).

Foxy-Stoat_3

abssorb wrote: »

That's very helpful to have an end result. Thanks. Does this mean that in fact, APR is actually a sound comparison?

I was hoping to find a tool / excel formula. I have many quotes to compare, the ones above were just an example, plus they seem open to haggling and I need to be able to check their offerings with something at my fingertips

Just a calculator:

£318 x 36 = £11,448 + £11,563 = £23,011
£299 x 36 = £10,764 + £12,663 = £23,427

If you took out the second one and saved the monthly difference of £19 x 36 = £684 and put that towards the final payment it will still cost you more to settle at the end.

jaydeeuk1

If its a newish car, eg 6 months/year old and the manufacturer runs 0% PCP on new cars, have a look on drive the deal, will probably be cheaper or at least very little in it to get a new car - you're instantly saving 10% each year!

SeanG79

APR and total repayable can be compared, but essentially, it's up to your individual circumstances as to which option is best for you.

Do you intend to keep the car at the end of the PCP? (the final payment is important) or are you looking for the cheapest monthly payments.

Also remember the balloon attracts interest throughout the agreement.

Foxy-Stoat_3

SeanG79 wrote: »

Also remember the balloon attracts interest throughout the agreement.

Does it?

Thought the balloon payment is fixed.

SeanG79

Balloon payment is fixed, but interest is calculated on outstanding balance, on a reducing capital amount, so for the duration of the agreement that fixed amount has attracted interest.

Essentially if you borrowed £20,000 and had the same APR on two agreements, but agreement A had a £10,000 balloon and agreement B had a £5,000 balloon, you will pay significantly more in interest with agreement A compared to agreement B.

RDG

Thanks SeanG as I was reading this thread and thought do they realise that the balloon payment attracts interest.

It is a common misconception that on PCP deals you are only repaying the difference between the cost and the balloon payment. As stated above the higher the balloon payment the more interest you pay over the term.

If you look at my previous posts I posted up a spreadsheet which allows you to see exactly where your money is going for PCP agreements. Using this you should be able to compare deals based upon how much you actually pay.

abssorb

SeanG79 wrote: »

Also remember the balloon attracts interest throughout the agreement.

This is the killer. Although I'll only benefit from about £7800 of "actual" finance, I'll be paying £4290 in interest. I also pay all the interest, on the balloon payment as well over the term.

APR feels wrong for this type of product as a worthwhile comparison tool.