Replacing car finance with a loan

m0t

Tomorrow I'm going to pick up a shiny new car which I've bought on PCP finance, the reason for this was getting a deposit contribution and some free services. I've got to make at least one payment to keep those.

The loan rate is very high in comparison to a bank loan (although the monthly payment is lower because of the balloon).

My plan is once I have sold my existing car to settle the PCP with cash and then take out a loan to replace the cash and pay off monthly. I wanted to do it this way because I'm assuming that having a pcp agreement will impact the rate I can get on a bank loan. Will have a settled pcp also impact the rate or will I get the same % that I'm seeing now?

[Deleted User]

m0t wrote: »

Tomorrow I'm going to pick up a shiny new car which I've bought on PCP finance, the reason for this was getting a deposit contribution and some free services. I've got to make at least one payment to keep those.

The loan rate is very high in comparison to a bank loan (although the monthly payment is lower because of the balloon).

My plan is once I have sold my existing car to settle the PCP with cash and then take out a loan to replace the cash and pay off monthly. I wanted to do it this way because I'm assuming that having a pcp agreement will impact the rate I can get on a bank loan. Will have a settled pcp also impact the rate or will I get the same % that I'm seeing now?

What rate are you seeing now? A representative APR or a firm offer following a full application?

foxy-stoat

As long as you pass the affordability then you can do this, although the bank will access this with the new loan. The reason you will put on the application is to repay another debt.

Good luck and report back with your rate that you get offered.

DrEskimo

m0t wrote: »

Tomorrow I'm going to pick up a shiny new car which I've bought on PCP finance, the reason for this was getting a deposit contribution and some free services. I've got to make at least one payment to keep those.

The loan rate is very high in comparison to a bank loan (although the monthly payment is lower because of the balloon).

My plan is once I have sold my existing car to settle the PCP with cash and then take out a loan to replace the cash and pay off monthly. I wanted to do it this way because I'm assuming that having a pcp agreement will impact the rate I can get on a bank loan. Will have a settled pcp also impact the rate or will I get the same % that I'm seeing now?

Sounds like a plan, but a couple of things:

1/ It's likely that there is no requirement to make any payments on the finance to keep the benefits the offer as part of the deal. You are usually free to settle it whenever you want. I suspect if you look over your T&Cs, you will see no mention of a minimum requirement to keep the benefits?

2/ Do you need to take out the loan...? Is the loan just to have money sitting in your account, or have you got an intended purpose for it? Why not just use the monthly cost of the loan to build the cash reserve back up over the coming months/years. Ideally, you would have a separate emergency fund that is there for unexpected costs, that would not have been used to buy the car.