car pcp finance apr question

dan~_2

Hello,

I've seen a used car I want/like/need.

With the online max deposit I can put down the monthly payment is 300 over 48 months at 9.9% apr.

Currently the dealer has 0% apr, what will this bring the monthly payments down to? My brains is struggling.

Also with pcp's they like to set a certain amount of miles and if I go over I pay per mile, but what if I can less each year?

I believe there's something called future value which is what you pay if you wish to keep the car. This value changes if I set my annual mileage to 6k and 10k a year and this value is set in the contract and can't change.

But what if I say i'll do 10 but actually end up doing 6k? T car would technically be worth more if i've only done 24k miles instead of predicted 40k.

I intend to keep the car as it's only 7k at the end and believe you pay more on pcp rather than hp, but as hp is considerbly more each month, should the worst happen with job etc then pcp is best in my eyes for ease of payment.

thanks

Nasqueron

If it's 0% APR you just pay the list price

I think you're a bit confused on the future value (Guaranteed Market Value). The GMV is the price the dealer agrees the car will be worth at the end of the PCP so you can use it towards a new car and you know in advance what value you will have. It is also the size of the balloon payment at the end if you want to keep the car.

PCP mileage rate just affects the GMV at the end of the deal - they base a final value on you doing say 8000 miles a year so they have a 3 year old car with 24,000 miles on to sell. If you did 30000 miles then obviously car is worth a bit less so they charge you.

If you intend to buy the car at the end, IGNORE the GMV and the mileage rate, you will not be charged for the miles you do if you buy the car, it ONLY affects the GMV for purposes of trade-in

If you do under it will not make any difference - they are unlikely to pay you of course though it might give a little room for negotiation if you want to trade the car in at the end instead of keeping it

dan~_2

Thanks for the reply,

Just to make sure my maths is correct

If the car is £300 per month with 9.9% apr then i do the following the following to find out 0% apr

300x12=3600
9.9% of 3600 = 356
3600-356 = 3244
3244/12 = 270 per month on 0% apr deal

daveyjp

It may not seem it now as you are seeing the £300 a month as affordable. However 48 months is a long, long time to pay for a car and then have to pay even more to own it, or start all over again, having saved another deposit.

Mobeer

dan~ wrote: »

Thanks for the reply,

Just to make sure my maths is correct

If the car is £300 per month with 9.9% apr then i do the following the following to find out 0% apr

300x12=3600
9.9% of 3600 = 356
3600-356 = 3244
3244/12 = 270 per month on 0% apr deal

Interest is charged on the full amount borrowed, not just your payments. Try using an online calculator like: http://www.pcpcal.co.uk/

e.g
Price 18600, GMFV 10000, APR 9.9, Months 48 = £300.21/month
Price 18600, GMFV 10000, APR 0.001, Months 48 = £179.18/month

[note the interest rate needs to be >0 for that site to work]

dan~_2

Oh i see now.

Looking at that link it works out at £244 a month.

The car is used and 23000, max deposit i can put down is 4259 (wont let me go higher) and optional final purchase value was 7000 after the term.

As its going to be much lower than i thought i wont need to haggle but ill still try!

And yes thats still quite a bit to pay for 4 years but ive managed to sweet talk the wife into paying half, to make it seem even better.

chanz4

get a bank loan from Tesco bank around 3%

Nasqueron

dan~ wrote: »

Oh i see now.

Looking at that link it works out at £244 a month.

The car is used and 23000, max deposit i can put down is 4259 (wont let me go higher) and optional final purchase value was 7000 after the term.

As its going to be much lower than i thought i wont need to haggle but ill still try!

And yes thats still quite a bit to pay for 4 years but ive managed to sweet talk the wife into paying half, to make it seem even better.

If the dealer is offering 0% on a used car then take that, then all you pay is the deposit, x number of months of xxx a month and then the final payment and you pay 100% of the car total rather than 110% or 120% or whatever if you are paying interest on it

Cornucopia

dan~ wrote: »

Also with pcp's they like to set a certain amount of miles and if I go over I pay per mile, but what if I can less each year?

You will lose the benefit of that if you return the car at the end of the contract.

I believe there's something called future value which is what you pay if you wish to keep the car. This value changes if I set my annual mileage to 6k and 10k a year and this value is set in the contract and can't change.

Yes, because the value of the car will depend to an extent on the mileage after you have completed the contract.

But what if I say i'll do 10 but actually end up doing 6k? T car would technically be worth more if i've only done 24k miles instead of predicted 40k.

Yes. You have a number of options at the end of the contract term, and the agreed mileage is only relevant to some of them, and not others. If you are planning to keep the car, then the agreed mileage is not going to affect you.

I intend to keep the car as it's only 7k at the end and believe you pay more on pcp rather than hp, but as hp is considerbly more each month, should the worst happen with job etc then pcp is best in my eyes for ease of payment.

If you are comparing 0% finance deals, then it makes no difference whether you go for PCP or HP - it will change the payments, but the overall situation will be the same.

It seems like a big commitment to take on if there is any concern about "ease of payment". How much of the PCP contract period is covered by the car's Warranty?