Cheap Personal Car Loans

edited 30 November -1 at 1:00AM in Loans
11 replies 12.6K views
Former_MSE_AmyFormer_MSE_Amy Former MSE
49 Posts
edited 30 November -1 at 1:00AM in Loans

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  • zx81zx81 Forumite
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    The link goes here -

  • DCFC79DCFC79 Forumite
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    zx81 wrote: »
    The link goes here -


    Someone at MSE towers needs to get the page sorted.
  • I have read a fair number of articles now on PCP and all say the same thing - it makes it cheaper to drive a newer car as it defers the a lot of the interest to the backend of the agreement.

    I would like some clarity on this if possible as it seems to me, from the calculators I have used, that the cost of credit is calculated from the car price less any deposits and does not deduct the GFV prior to the interest being calculated.

    As such, a more expensive car will be more expensive on monthly payments through PCP regardless of the residual value - is this correct?
  • edited 10 June 2017 at 2:48PM
    SystemSystem Forumite
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    edited 10 June 2017 at 2:48PM
    Correct. You're still paying the depreciation on it and that will be higher on a more expensive car. My Mondeo I bought at 2 years old was just 40% of its new value. In comparison most small hatchbacks at that age would be likely to be well over 60% of their new value.

    The only cheap car finance is 0% offers but even then you tend to find that you need a 50% deposit and that deposit will be money that you no longer have which will be losing returns it could have earned so the 0% finance with 50% deposit is actually potentially costing you around 3%.
  • MobeerMobeer Forumite
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    PCP doesn't really "defers a lot of interest compared to the backend"; it defers more of the capital due to be repayed. As a result each month with a PCP deal you pay less than with a loan (or hire purchase), but at the end of the PCP deal you have to make a large capital payment in order to keep the car. Each PCP monthly payment is comprised of relatively more interest and less capital repayment than a loan.

    Your interest calculation is correct.

    A more expensive car will almost always be more expensive than a cheaper car on any loan, hire purchase or PCP arrangement, if all else is equal. This assumes in particular that the two cars have the same interest rate (APR). Sometimes more expensive new cars can work out cheaper including interest payments than apparently cheaper used cars because the new car manufacturer will offer discounted interest rates and incentives.

    A particular car may be cheaper on a PCP deal where the manufacturer and\or dealer offer incentives to take out the PCP deal.
  • antrouserantrouser Forumite
    19 Posts
    This useful discussion has missed one point. The GFV is the estimate of the value of the car at the end of the agreed lease term. So cars that hold their value well will have higher GFV and that means there is less to be paid off during the term. Obviously the payment to purchase the car afterwards will be higher, but you don't have to purchase it. So PCP can be a good way to buy a quality car that holds its value and these can look better value than more ordinary cars.
  • Simo_BSimo_B Forumite
    1 Post
    There is a fourth option at the end of the PCP and that is to re-PCP the vehicle. This can be done until the car is 7 years old.
  • wooie649wooie649 Forumite
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    MoneySaving Newbie
    I am considering utilising the voluntary hand back for my car. I have now paid over 50% of the cars value, so can hand it back at no extra cost. However it is not yet the end of my agreement. The dealer who I financed the car with advised me that if I do this it will show as a negative mark against my credit report for 6 years. Is this true?nd how much of an impact will this have on my credit score? If anyone has any advice it would be appreciated. Thank you
  • edited 30 January at 9:36AM
    zx81zx81 Forumite
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    edited 30 January at 9:36AM
    No it's not true that it's a negative mark. It will show as settled. And any drop in your score as a result is irrelevant.
  • edited 31 January at 11:17AM
    macmanmacman Forumite
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    edited 31 January at 11:17AM
    Your credit score is a fictitious number that lenders don't even see.
    Your dealer may lose commission if you VT and therefore cannot be relied on to give you an unbiased opinion.
    NB: it's not 50% of value, it's 50% of the total credit taken.
    No free lunch, and no free laptop ;)
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