PCP early payoff questions

darcyscorpion

Hello. I have recently got PCP through a finance company for a car over 4 years. I have now seen that loans are at least 3X cheaper and was wondering if there is any way to get a loan to pay off the credit for the PCP deal? Do you have to get a loan to cover the full PCP plus the bubble payment at the end? or can you just hand the car back after you have paid for the credit, if this is a viable option?
thankyou

BoGoF

Nothing to stop you applying for a loan.....no guarantee you will get it or if you do no guarantee you will get the rate you see, especially with existing finance. You would need to borrow enough to pay of all the existing finance including balloon payment.

tonyh66

You can get a loan 3x cheaper than a pcp over 4 years? go for it and tell me where to get one.....

jbainbridge

My understanding is you'd need to pay off the whole lot. PCP finances the whole car .. you just get an opportunity to had it back before you've paid off the whole amount.

AdrianC

Can you give more details, OP, because I don't think you're comparing apples with apples here.

Are you considering financing just the depreciation, not the balloon, with a loan? Because it doesn't work like that...

With a PCP, you're financing the entire cost of the car. You then repay the depreciation element, plus interest on the whole borrowings, over the term.

Let's say...
You finance £20k with a PCP.
There's £10k of depreciation over 3yrs.
You pay £10k/36 monthly payments plus monthly interest on the entire remainder of the £20k.
At the end of 3yrs, you still owe £10k. You can buy the car off them for £10k or hand it back to settle the debt.

With a loan, I think you're looking at financing just £10k, and forgetting about the £10k "balloon". Who's paying that in the interim?

It is possible that you're looking at used car PCPs, which do tend to be higher interest, of course. But you'd still have to get a fantastic loan rate to be paying just 1/3rd of those interest rates...

foxy-stoat

tonyh66 wrote: »

You can get a loan 3x cheaper than a pcp over 4 years? go for it and tell me where to get one.....

Thats because the OP is not factoring in the balloon payment - as they asked about handing the car back when they have finished paying off the loan.

Call up the finance company and ask them for a settlement figure - then get yourself a personal loan to cover it, if you can.