PCP v Bank Loan?

Barney_Rubble_0403

Do pcp deals normally limit the borrower to a maximum amount of miles over the duration of the deal resulting in excessive mileage charges?

Mercdriver

Barney_Rubble_0403 wrote: »

Do pcp deals normally limit the borrower to a maximum amount of miles over the duration of the deal resulting in excessive mileage charges?

No. They always do in my experience.

[Deleted User]

Barney_Rubble_0403 wrote: »

Do pcp deals normally limit the borrower to a maximum amount of miles over the duration of the deal resulting in excessive mileage charges?

They do, and the more miles the higher the monthly payment because it reduces the expected value of the car at the end.

It's worth looking at the excess cost though. Sometimes it's lower than what they charge you for the extra allowance.

System

MoneySavingMole wrote: »

But why do so many people do PCP?

Non politically correct version more likely to be nearer to the truth for the majority:

It puts poor people in cars they can't afford. Its the reason why the Mondeo is being discontinued - why buy a Ford when you can get a new Audi, BMW or Merc on PCP for a few hundred quid a month? Noticed how there's been a massive rise in the number of premium German marques on the road? That's the effect of PCP.

Is there any benefit to me to go down the PCP route?

If you're the kind of person who has to have a new car every 3 years and don't do a lot of mileage, not even the UK average, and have no interest in personalising your car then PCP may be a better option for you.

Mercdriver

Tarambor wrote: »

If you're the kind of person who has to have a new car every 3 years and don't do a lot of mileage, not even the UK average, and have no interest in personalising your car then PCP may be a better option for you.

I'd say this is more like a lease proposition: lease what is available at the lowest possible monthly rate.

Socajam

Birdman2015 wrote: »

Because he/she wants a car that costs 25K. Not too difficult eh?

Don't worry we will see the OP on here in the not too distant future asking the question: "was I mis-sold on the loan for the car"?

Robby1988

Bank loan all the way...

- You can walk into a car dealership with money in your pocket as a cash buyer.
- You will own the car outright rom day one.
- The car will have no finance attached to it, so you can sell/do as you like with the car at any point should circumstances change.
- Once the loan is repaid, if the car is still running fine you can keep it going free of the burden of monthly payments.

PCP gives you lower monthly payments but is a financial trap, very few people want to pay the final payment at the end or walk away empty handed, so end up changing cars every few years for the sake of it and forever forking out monthly payments for eternity.

MoneySavingMole

k6chris wrote: »

None of my business, but why do you want to spend £25,000 on a car?

Because I can? I like the vehicle, I can afford to and I guess I'd rather drive a nice car than save the money?

MoneySavingMole

Socajam wrote: »

Don't worry we will see the OP on here in the not too distant future asking the question: "was I mis-sold on the loan for the car"?

Quite the opposite tbh...

As my original post would suggest, I've considered other options and I'm merely seeking opinions before going ahead with it.

I appreciate some of the input on the thread - and it appears my initial thoughts about PCP were right.. it's popular because everybody is living a champagne lifestyle on a lemonade budget. A great analogy from somebody was that's why we don't see Mondeo's anymore...

But, as I also mentioned on my original post, I prefer to buy my vehicles - hence, having £10,000 of equity in my existing vehicle, which I'm leaning towards re-investing in to my next.

Thanks for the input, though. I'll be sure to not be 'mis-sold'.

MoneySavingMole

DrEskimo wrote: »

Your numbers aren't right.

The personal loan of £20k over 48months at 2.8% is £440 per month.
Total cost (£10k + (£440*48)): £31,120

The PCP of £20k over 48months at 4.9%, with a £10k GFV is £275 per month.
Total cost (£10k +(£275*47) + £10k): £33,925

You're correct. I do apologise.

I got a little bit confused as I've compared buying vehicles from 25-30k... so, I've looked at loans from 15-20k... plus my vehicle... which would give me 25-30k.

A loan of 15k over 48 months was about £330pcm... A loan of 20k over 48m was £440... over 60m was around £358...

Thanks for your input - it is appreciated! :money: