Advice on pcp

class2ldn

Hi all, got a query about a car I'm looking to get.
Now to start I've got a bmw which according to the dealer has around 3k negative equity on it so that needs to be dealt however I don't have 3k to just pay it off.
Now that car is a petrol and the one we are looking at is a diesel so will be saving on fuel for a start plus its a newer car.
Now the price of the new one Is 17990. The dealer came back and said they can't finance negative equity but what they could affectively do is absorb that by upping the car value to 19 k. This includes them knocking 1k off so 16990 then me putting 1k in so 15990 plus my 3k negative is 19k ish.
Now they've come back with a figure of 356 a month with a gfv of 6277.
I'm currently paying 317 on my bmw.
My issue is they won't tell me what Apr that's at.
I've put a deposit down as I really like the car the tax is cheaper insurance etc but how do they not know what the Apr is?
Now to me I'm effectively paying 30 quid a month extra to pay off my car which over 4 years is around 2800 with my 1k deposit included. Cheapest loan I could find was around 75 a month over the same term so my thinking is if I take out the finance and then get a personal loan over 5 years which works out 20 quid a month cheaper dependant on being accepted on tge lower Apr.
I could do this now but then I wouldn't get the 1k off the car so effectively be paying 20k instead of 19.
The value of the car in 4 years will be at least 6k but Ive worked out that il owe much less then that on a loan so if i was to sell the car and then pay the loan off I should have more left over then on a pcp deal typically has at the end.
Does this seem sensible?
I've still got to clarify the Apr tomorrow.

Nearlyold

How much do you actually owe on your current car?

class2ldn

15422 is my latest settlement been offered 12k as part ex.

chanz4

so private its worth 17422

Cornucopia

It is a legal requirement for the APR to be accurately stated. I know that the car industry is way behind the finance industry on this, but it is still the Law.

I would not even consider doing business with a dealership that cannot muster the IT capability to provide an APR for any/every finance deal that they are proposing. PCPs are particularly sensitive to APRs, because (a) they can vary hugely - from 0% to 20% or more, and (b) the entire balloon/MGFV payment has interest applied for the entire duration of the term.

Have you understood what PCP actually means? At the end of the deal, it is very unlikely that there will be significant equity in the car. The MGFV is both a guaranteed price for the vehicle AND the amount owed on it. Therefore, the most likely scenario is for there to be a little left over to put towards a deposit, and no more.

It's not entirely clear what your downpayment on the new car will be, but taking it as the £1K cash you are putting in and assuming a 3 year term, then the new car will be costing you nearly £14k and you will potentially walk away at the end with no car and little or no cash.

That doesn't sound that sensible to me, but you know your own finances, and how the need/desire for this new car fits into them.

There's nothing intrinsically wrong with PCPs (I have one at 0%/£156 per month for a car that was not much cheaper than yours), but they need careful examination.

mrsammyp

I really don't like PCP, I feel like you are forever in an endless cycle and always in negative equity.

I would definitely have a hard think about whether it's worth changing the car so early on, having the new car's value over inflated isn't good if you change your mind again later on.

See what other dealers would offer you in cash for your car, just so you know how your part-ex offer sits in comparison.

It's a fair chance that the personal loan rates you have looked at, wouldn't actually be the rate offered, however, in either case there is no reason why you couldn't take up the BMW finance and then pay this off with a loan afterwards.

class2ldn

Well the Apr worked out at 10.3 %.
Now my issue is that if i get a loan and I don't get the headline rate then monthly I won't be seeing any benefit. The bonus is that after 4 years I'd probably owe a lot less to the loan then my car would be worth so I could sell the car, pay the loan off and use the rest as a deposit if necessary for the next one. If i do a settlement within a month I'd pay no interest atall but whether I'd be accepted so soon and at a decent rate is the issue???
Unfortunately you can't find out the rate until you get accepted. Guess as long as it's not anymore a month then what I'm paying then it's not such an issue with the benefit of owning the car and having some money hopefully left over after about 4 years from selling it to pay the loan off.

class2ldn

Also just to add the bmw is due it Mot next month (50) ish then tyres for the front and being runflats they are around 180 each so 360, a service is nearly due that's about 300 and new tax which is 205. Avoided all that on this new car as it's a 14 plate so still in manufacturer warranty, no service due until August, mot doesn't need to be done until may 2017 so overall I think it's not bad. Also it had some issues after a break in and theft attempt which would have been possible more expense. The fuel on the diesel is so much better.
Done the deal today so picked the car up and really pleased with it. Just need to figure out how much of a loan I would have left to pay after about 4 years if it was a 5 year agreement.

class2ldn

Just as an example sainsbury are offering 3.5 which over 60 months is 342 a month if I borrowed 18800
That works out that after 4 years I'd have paid 16416 but the total is 20492 with interest so if i settled this after 4 years how do I know how much I'd owe still? Just need to know whether I'd have a decent enough return from the car to pay the loan off.

ElkyElky

class2ldn wrote: »

Now that car is a petrol and the one we are looking at is a diesel so will be saving on fuel for a start plus its a newer car.

That's not necessarily true these days. Petrols can be incredibly efficient nowadays and with petrol prices being lower than diesel, you'll probably find you won't make much (if any) of a saving on fuel.

That being said, my 15 BMW drinks petrol like there's no tomorrow but I don't know how my car compares to the diesel version of it. Ironically, my Land Rover uses much less fuel.

class2ldn

Well its definitely cheaper on the fuel. Averaged 48 mpg on way back over 40 miles bmw was showing 29.1 lol.
Also with the price of diesel so low its definitely cheaper. Time shall tell I guess