PCP Financing Advice

motorguy

bpk101 wrote: »

How can i negotiate a £29k list price down to £22k with a dealer, what are these discounts i'm asking for or am i simply just calling up cold and asking what their best price is?

If i'm to look at alternative financing options other than PCP which some have mentioned, i need to find the best price for the car first then look at financing options i presume.

What's considered a good discount on a £29k listed price and how do i get this discounted price?

As per what DrEskimo has put.


Its what i do when buying new - check the online brokers then ask your local dealer to price match.

bpk101

DrEskimo wrote: »

Once you know what sort of price you can achieve, it's a case of working out how much money you have saved and want to put towards to the car, and what the cheapest way to finance the remainder (if there is any) given what your budget allows.

So if i'm understanding correctly, first get the best price for the car (as if i was to buy it outright) and only then discuss financing options based on this best price? Makes perfect sense, i was approaching it the other way round i guess and going straight in for the best finance deal but of course this will likely be based on the higher list price.

Can i ask though, if i use this tactic i.e. get a heavy discount from say £29k to £23k and then turn around and say 'actually i want to finance it instead, what's your best financing deal?' aren't they likely to just pull the discounted price and say the discount only applies to a cash purchase and not financing?

k6chris

bpk101 wrote: »

So if i'm understanding correctly, first get the best price for the car (as if i was to buy it outright) and only then discuss financing options based on this best price? Makes perfect sense, i was approaching it the other way round i guess and going straight in for the best finance deal but of course this will likely be based on the higher list price.

Can i ask though, if i use this tactic i.e. get a heavy discount from say £29k to £23k and then turn around and say 'actually i want to finance it instead, what's your best financing deal?' aren't they likely to just pull the discounted price and say the discount only applies to a cash purchase and not financing?

You are likely to get the best price if you take finance, not the otherway around. Just watch the APR, otherwise you are giving all the discount back. Upto say 3% APR is reasonable (similar to bank loan) - more than that and they are clawing back discount.

bpk101

k6chris wrote: »

You are likely to get the best price if you take finance, not the otherway around. Just watch the APR, otherwise you are giving all the discount back. Upto say 3% APR is reasonable (similar to bank loan) - more than that and they are clawing back discount.

The best APR offers we've had so far are 4.99% on a brand new car, 11.9% on a used car (both PCP)!

Is APR something you can negotiate on?

k6chris

bpk101 wrote: »

The best APR offers we've had so far are 4.99% on a brand new car, 11.9% on a used car (both PCP)!

Is APR something you can negotiate on?

If you have a good credit rating and you are ready to say 'yes' if they get the right deal, then yes!

daveyjp

bpk101 wrote: »

So if i'm understanding correctly, first get the best price for the car (as if i was to buy it outright) and only then discuss financing options based on this best price? Makes perfect sense, i was approaching it the other way round i guess and going straight in for the best finance deal but of course this will likely be based on the higher list price.

Can i ask though, if i use this tactic i.e. get a heavy discount from say £29k to £23k and then turn around and say 'actually i want to finance it instead, what's your best financing deal?' aren't they likely to just pull the discounted price and say the discount only applies to a cash purchase and not financing?

Never discuss how you are paying until you have negotiated the price.

Then if there is a PCP deposit contribution this applies to the price negotiated.

DrEskimo

bpk101 wrote: »

So if i'm understanding correctly, first get the best price for the car (as if i was to buy it outright) and only then discuss financing options based on this best price? Makes perfect sense, i was approaching it the other way round i guess and going straight in for the best finance deal but of course this will likely be based on the higher list price.

Can i ask though, if i use this tactic i.e. get a heavy discount from say £29k to £23k and then turn around and say 'actually i want to finance it instead, what's your best financing deal?' aren't they likely to just pull the discounted price and say the discount only applies to a cash purchase and not financing?

On most of those sites, they will give you a cash and a finance price. Sometimes the PCP finance deals attract the higher discounts as they include finance deposit contributions from the finance company. But I typically find that the cash price is actually better, or they are just the same.

There is nothing about the finance that makes it a 'deal'. The discount they offer is the 'deal'. The only thing you should look at is the cost of the finance. How much will it charge in interest. It's also important to look beyond the APR and look at actual amount, as different finance products (i.e. PCP vs. straight bank loan) have different structures, so APR is not comparable.

If the finance deal does come with a much better discount, then it is possible to take the finance and then settle it the next day. However if you need a bank loan to do this, the logistics can be tricky.

motorguy

daveyjp wrote: »

Never discuss how you are paying until you have negotiated the price.

Then if there is a PCP deposit contribution this applies to the price negotiated.

Totally agree.

When we buy a car we split the transaction in to three :-

• Getting the car we want at the best price
• Getting the most for our own car
• Getting the finance (if any required) at the cheapest rate

And it is not a foregone conclusion will get all three of those transactions, nor even two for that matter.

bpk101

Thanks for the advice so far, has been really helpful!

There's a bit of math i can't quite get my head round though, i'm sure i'm missing something obvious so let me know.

An example...

Nissan Qashqai discounted price £27,915

Deposit of £4000
Dealer Contribution of £2250
Makes the Financed Amount £21,665

PCP (4.99% APR) of £302 over 48 months + our initial deposit = £18,496

We can then pay the optional balloon payment / GFV of £10,392 and own the car for a total amount paid of £28.888.

This is only £973 more than had we bought it cash at the very start. With regards to depreciation the car will still be worth the same amount at the end of the 4 years had we bought it new or financed it.

Is this right?

(ps: i have found a much better deal on a new Qashqai via Carwow but i'm just using the above figures as an example as i have them to hand).

AdrianC

Is the £2,250 "dealer contribution" only available on PCP? Because, if it's available anyway, then that takes the "more than if we bought cash" figure to £3,223.

You're borrowing £21,665, and you're repaying £24,888. You can choose to pay the last £10,392 of that off by simply returning the car.

What precise spec of Qashqow are you looking at? Because the "discounted" sounds very close to list, if it's not a seriously top-end one.