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Pcp finance ballon payment?
Jessicaanne
Posts: 3 Newbie
in Motoring
At the end of my pcp car finance, if I want fro keep the car can I refinance the car to pay off the final lump sum? Can this be done for another 36 months?
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Comments
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You'd have to ask the dealer, a loan might be more likely.
With mine the option is to hand back the car for guaranteed value against a new car or the balloon payment.
I guess it would make sense for them to offer more finance given the interest they could make but I'd bet there is some reason why they won'tSam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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Most PCP finance companies will allow you to refinance but as mentioned it may be cheaper to look at a bank loan.curlywurlytalktalk wrote: »I doubt the same PCP provider will refinance the same car.
As others have said, your best bet would be to get a secured or personal loan for the outstanding figure over 36 months.
OP, speak to your finance company and dealer.0 -
How would I get a loan? From the bank is it?0
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Jessicaanne wrote: »How would I get a loan? From the bank is it?
What bit of this did you miss?
it may be cheaper to look at a bank loan0 -
It took me a long while to decode the catch with PCP deals, how they were a cheap way to buy a car, then realising that they are not.
Had two different deals and the main dealer was extolling how theirs was the best as it had the same monthly payments and a higher end valuation. The end valuation being high is actually a bad thing as the cost to change to a new PCP deal is an arbitrary deal at the time, they can adjust the deal they are prepared to offer, so if they've given a high value the dealer can give you a poorer deal the next time, but if you intend to keep it the lower the PCP final valuation the better. The high valuation is purely a device to make the finance work for a cheap monthly payment and any loss is likely to be underwritten by the manufacturer. Bank underwritten PCP deals are going to be based on a more realistic valuation. In our case the bank used a lower APR and a lower end valuation than the dealer to get the same monthly payment. The bank way gives you more genuine equity - if you hand the car back the value makes little difference, you just get a further option of a possible discount while being locked in to a specific dealer.
Anyway be very careful on the valuation and check that it is a realistic value. If you think about it, the buy out value should be negotiable as if they have over-valued the car, then when they take it back they will have to take a loss to sell it on anywhere so don't dismiss handing it back and negotiating to buy it at a realistic book price.
You can get a loan from any bank, not just the one that did the PCP deal. Rates for loans for specific purchases like cars may be better than a loan for unspecified amounts. At the end of 6 years the car will not be worth a vast amount, so you need to consider whether the monthly payments for a loan are significantly less than doing another PCP deal - basically accepting you are renting a car rather than investing in an asset.0 -
IanMSpencer wrote: »It took me a long while to decode the catch with PCP deals, how they were a cheap way to buy a car, then realising that they are not.
Had two different deals and the main dealer was extolling how theirs was the best as it had the same monthly payments and a higher end valuation. The end valuation being high is actually a bad thing as the cost to change to a new PCP deal is an arbitrary deal at the time, they can adjust the deal they are prepared to offer, so if they've given a high value the dealer can give you a poorer deal the next time, but if you intend to keep it the lower the PCP final valuation the better. The high valuation is purely a device to make the finance work for a cheap monthly payment and any loss is likely to be underwritten by the manufacturer. Bank underwritten PCP deals are going to be based on a more realistic valuation. In our case the bank used a lower APR and a lower end valuation than the dealer to get the same monthly payment. The bank way gives you more genuine equity - if you hand the car back the value makes little difference, you just get a further option of a possible discount while being locked in to a specific dealer.
Anyway be very careful on the valuation and check that it is a realistic value. If you think about it, the buy out value should be negotiable as if they have over-valued the car, then when they take it back they will have to take a loss to sell it on anywhere so don't dismiss handing it back and negotiating to buy it at a realistic book price.
You can get a loan from any bank, not just the one that did the PCP deal. Rates for loans for specific purchases like cars may be better than a loan for unspecified amounts. At the end of 6 years the car will not be worth a vast amount, so you need to consider whether the monthly payments for a loan are significantly less than doing another PCP deal - basically accepting you are renting a car rather than investing in an asset.
Lot depends on your credit rating and the deals on offer.
Mine is on 0% finance and I intend to pay the balloon at the end meaning no worries about mileage or guaranteed values and of course no interest payments so means I have the cash in the bank earning me interest. It helps I am not some snob demanding a new car every few years, I will run this one until 10 years old as I did with my previous carSam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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Lot depends on your credit rating and the deals on offer.
Mine is on 0% finance and I intend to pay the balloon at the end meaning no worries about mileage or guaranteed values and of course no interest payments so means I have the cash in the bank earning me interest. It helps I am not some snob demanding a new car every few years, I will run this one until 10 years old as I did with my previous car
Is it really zero APR if the underlying deal means that at the end of 3 years your balloon payment is £3k more than a different arrangement? On the same spec car, there was a £4k difference on two deals for an Audi Q3 for us with the same monthly payment. Lots of people only look at the monthly figure and don't consider what the balloon payment, guaranteed value and notional initial purchase price represent.
I remember the days of cash in the bank really earning interest and we went for paying cash rather than PCP though appreciate not everyone gets the choice.
It takes a lot of picking through PCP to work out what you really have after 3 years, especially if you throw nearly new into the mix - it takes a lot of zero APR to compete with 40% off list for an 11 month old car - especially when you get £2k cashback deals from manufacturers if you borrow money where you are told you can cancel the loan after a couple of months and keep the discount what's the APR on a 3 month loan for £7k which gains you a 2k discount that you pay off in the 3rd month - about -20% APR!
I hate buying cars - far too hard!0 -
IanMSpencer wrote: »Is it really zero APR if the underlying deal means that at the end of 3 years your balloon payment is £3k more than a different arrangement? On the same spec car, there was a £4k difference on two deals for an Audi Q3 for us with the same monthly payment. Lots of people only look at the monthly figure and don't consider what the balloon payment, guaranteed value and notional initial purchase price represent.
I remember the days of cash in the bank really earning interest and we went for paying cash rather than PCP though appreciate not everyone gets the choice.
It takes a lot of picking through PCP to work out what you really have after 3 years, especially if you throw nearly new into the mix - it takes a lot of zero APR to compete with 40% off list for an 11 month old car - especially when you get £2k cashback deals from manufacturers if you borrow money where you are told you can cancel the loan after a couple of months and keep the discount what's the APR on a 3 month loan for £7k which gains you a 2k discount that you pay off in the 3rd month - about -20% APR!
I hate buying cars - far too hard!
All depends on what you want, a new car, to the spec I wanted, the garage had an "ex-demo" which was also their loan car for people having services for about 4k less - not the same spec, no idea how many people drove it or how they treated it etc. No 0% finance deal
GV is irrelevant as I am not trading in
For me it was the difference of paying 20k in cash for the ex-demo or having 20k in the bank for 3 years and getting the car I wanted to the spec I wantedSam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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Why does buying a new car every few years make someone a snob?
I think the default answer would be that realistically, no-one 'needs' to buy a new car every three years, and the only real reason for doing so is because they 'want' one.
Now, wanting a new car can be for any number of reasons, but a significant proportion of buyers just 'want' a bigger number in the middle of the VRM to demonstrate that they have a new car.
Personally, I couldn't give two hoots if someone 'wants' to buy a new car every six months. It doesn't make them a snob; IMHO it makes them a fool, soon parted from their money.
Different story if you can afford to buy a new car outright every three years, but the number of people who can, as a proportion of new-car buyers, is vanishingly small.0
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