Car Lease PCP Advice

MacCarQ

Good morning everyone

Leaving my company car scheme and taking the allowance, I have found, through an online broker, a deal for a new car that claimed to be a personal lease.
After placing my order, having the credit check etc I am having some doubts over it.
Basically, I wanted a 3 year lease with maintenance, minimal deposit down and reasonable monthly payments.
When my agreement arrived (all online through a portal) it said my agreement was 60 months with a balloon payment. When I queried this I was told I could either keep if for the full 60 months or hand it back after 3 years as I will have paid more than half...so PCP then, not lease?

While I see the logic as it keeps the monthly payment down, how does "handing it back after paying half" affect my credit rating and/or my ability to then enter in to a new agreement at the end of the 3 years?

Would this also likely to work out an expensive way of financing?

I think the thing that bothers me most and makes me uncomfortable about the whole thing is the lack of transparency from the beginning. It was never sold as PCP, and my questions are brushed off quite nonchalantly.

First time opting out after years of a company provided car so all new to me . All I do know is I need to decide quickly to utilise the 14 day cooling off.

All help and advice greatly received.

Thanks

saveupandbuy

Don't be fooled by all this 60 months nonsense, they think it sounds a lot shorter time than 5 years.

bigisi

saveupandbuy wrote: »

Don't be fooled by all this 60 months nonsense, they think it sounds a lot shorter time than 5 years.

How does that help the OP with their question?

bengalknights

On your credit record it will show the full value of the finance (ie before return etc) with a PCP.

A lease would only show the lease value/

MacCarQ

Thanks

So how will it show once the vehicle is returned after half the payment? Will it show as settled in part or full? Will that affect future applications?

and as a second question, would this affect me then going on to enter a new "lease" or PCP agreement with a different provider when needing a replacement car, regardless of how it shows on my file?

Hope that was clear, it was in my head

Niv

Giving up your company car and getting the allowance will be the best decision you make in years. After a decade or so in the company car scheme I opted out and couldn't be more pleased with the control I now have back.


I decided to go for PCP, it worked for me as I needed reliability and did not have the ready cash for the standard of car I required. Worked out well as the interest rate is 0% so apart from depreciation I am not paying anything with respect to 'wasted money'. But also, the allowance more than pays for the repayment and the running costs so once the PCP ends I will buy the car and use the savings to save for a new car in future. I do not want to end up in a cycle of new PCP every three years or so.

MacCarQ

Sadly, my company will not allow me to own a car over 5 years old (although any they give me can be up to 8 years old, go figure )

Eventually owning isn't likely to ever be an option for me, but since i get easily bored with any car I prefer the shorter 3 year term so i can keep changing; not financially sound, but time will tell if I change my way of thinking.

My real concern is how starting a PCP and then terminating it after half is paid is then viewed by future providers and on my credit file.

Niv

H. MacCarQ. I cant really answer your core question with 100% confidence however what I can say is if you are replacing one PCP with another with the same garage I cant imagine that will have a significant if any impact as it would be a mutual agreement. I know I have been asked for the last 6 months if I want to renew my pcp for example.


Another thought for future maybe is not to buy a brand new car but to get one 6-12months old as you can still have it for a number of years to comply with your company policy but also save a few quid from the deprecation etc. - Do look carefully though as sometimes the interest rates on second hand compared to new can be significantly higher (from my experience). It actually worked out cheaper for me to buy the new car as opposed to the second hand one (6 months old)!

abz88

When the PCP is finished (60 months) or you decide to come out of it early you ask for a settlement figure, you can pay this to own outright or if you want a new PCP deal you take the settlement offer to a car dealership as part of your next deal.
The way it worked when I ended my last PCP and went onto a new one (different dealerships) was that the new dealer paid off the PCP settlement figure, deducted that from the resale value of the car and used that amount towards the deposit on my new PCP. If your settlement figure is more than the resale value of the car, then you will either have to make up the difference or the new dealership will swallow it to make a sale.
Having PCPs has never negatively affected my credit rating. Its a debt that I make the required payments on (similar to a mortgage it shows you can manage debt effectively)

MacCarQ

Thanks abz88, but my concern is that the so called lease company I am going through is telling me to simply hand it back after my requested 3 year lease period and owe nothing since the laws around PCP mean so long as I have paid half or more of the original loan I will owe nothing.

that in itself is fine, but what adverse affect might that have on my credit score and/or future ability to enter another agreement...if I were the potential loan company in future I might be dubious about agreeing a loan to someone who would drop out half way through potentially leaving me out of pocket.

AnotherJoe

Id be very worried that the 60 months would turn out to be much more difficult to get out of than they are saying, and woudl first of all want that explictly in writing, and secodn i probably wouldnt trust that. You asked for 36 months they offeredyou 60. Doesnt smell right to me.
If you want 3 years go for that, not 5, and either PCP or a lease. A lease (which is what I'm currently on) is very simple, you know exactly what you are paying, and there's no hassle for future value etc.

You do not make any money (in theory) at the end because you cant trade in your old car worth (say) actually £12k when you only have to pay £10k to own it, but that will likely be compensated for in the lower lease value anyway.