Pay off PCP car or upgrade to new car

no_one

Hi,

My car PCP is coming to an end in April with the following details

Car Renault Capture 2017 model.
Milage is close to 16k was allowed 20k (5k per year)
The car will be 3 years old in April.
Initial deposit £3k
Monthly payment £155
Optional final payment £6900.

My question is whether I should pay the final payment and own the car or should I upgrade for the new car and continue the monthly payment?
The only reason I can think of to upgrade is that I can use the final payment money towards buying a house which I am thinking to do this year.

Also, I don't like paying interest (options are 4.9% APR) so I would go for 0% which is only on the basic model of new Renault Capture.

Ectophile

Unless the car's a lemon, I would definitely buy it. That way you end up with a nearly new car you own outright. There are no longer any mileage limits, and you don't have to worry about every little dent and scrape costing money when you hand it back.


the alternative is to go back to paying every month for a car that isn't yours.

tonyh66

and you will have to find a new deposit, because there will be little or no equity in the existing car to transfer to a new one.

Goudy

You obviously understand your options in regards to the end of your PCP deal, which isn't always the case.

You can of course settle the £6900.
If you have the savings, it's probably worth using that as the interest on savings these days is terrible.
If you haven't, you need to explore a cheap way of borrowing it as you have already paid them interest on this part of the deal already, you don't really want to pay more if you can help it.

You can of course hand back and walk away.
This will leave you with nothing to pay expect a collection fee and any undue damage, but it will also leave you without a car and perhaps some leverage on a new deal.

You can trade in and take a new deal and with some effort get a bit more than you bargained for.
Forget the doom mongers telling you you'll need to find another deposit, you will normally qualify for another deposit contribution from the manufacturers for another PCP deal. Shop around a few different makes and models that suit and see which offer the most.

Same goes for interest rates, they are always subject to status anyway even 0% ones, so shopping around and asking for a better rate is worthwhile.

Often certain professions like teacher, nursing, nhs staff or some memberships to organisations like unions, British Cycling and the likes can get you bigger deposit contributions and lower interest rates, so it's worth checking these out.

Don't think that because you owe the GFV (£6900) that your trade in is a burden, it can be made into an asset when negotiating a new deal, be open to any dealer that you want more for it to use as towards you next deal, after all you can just pay it off and keep it, then they have no sale at all.

I have always managed to negotiate a trade in higher than the GFV on any deal I have traded in, you just need to shop around dealers and ask them to better it, they'll know what you owe and it's free to ask.
They always have some leeway in trade in values, the sale price of the new car, particularly one's built in stock already and in most cases interest rates, you just need to bite into each as much as you can.

It's not always a good idea to tell them all your expectations up front, work on them one at a time, start with trade in value and once you're certain that's the best offer move on and be up front if you've been offered a better deal elsewhere, you don't need to lie to them, just tell them how near or far they are from getting your business compared to someone else, it tends to gee them up if they think they are near and they'll want to push for the sale.

If you're motivated and you can motivate the dealers, you should be able to work out a good deal pretty easily.

BTW, there's a new Captur out this year, very soon in fact, so a good deal on a current model Captur is certain.

AdrianC

Let's say your car was written off tomorrow. You're looking around for a replacement. You see a 16k mile 3yo Captur to the same spec as yours for just under £7k, and you implicitly trust the vendor and the car's history. Would you buy that rather than a brand spankin' new one?

Having this car for the last three years has cost you £3,000 + (£155 x 36) = £8,580. That's just under 54p/mile for the mileage you've covered - excluding insurance, maintenance, fuel, etc etc. So, all in, around 70p/mile, if not more...

If you buy it for £6,900 and it lasts another 12,500 miles - just over two years - before you throw it away - not sell it, bin it with £0 coming back to you - then the basic ownership has cost you the same per mile as it has to date.

foxy-stoat

Buy it outright, you wont want another finance agreement and debt if you can help it if you want to a mortgage soon.

Or hand it back and buy a car for £3000 outright.

no_one

Thank you lovely people for some great insights. I haven't spoken to any dealer yet, but I am 90% sure I will keep the car and pay off the final optional payment as it will save me monthly EMI and as I said before, I don't like paying interest especially if it's for luxury and the 0% APR is only on very basic model so doesn't make sense.
It will also save me £350 per month (150 for EMI and 200 I was putting aside for the final month).

I will update this thread in April (or earlier) on what I ended up doing. Thanks again for your inputs.

tonyh66

no_one wrote: »

Thank you lovely people for some great insights. I haven't spoken to any dealer yet, but I am 90% sure I will keep the car and pay off the final optional payment as it will save me monthly EMI and as I said before, I don't like paying interest especially if it's for luxury and the 0% APR is only on very basic model so doesn't make sense.
It will also save me £350 per month (150 for EMI and 200 I was putting aside for the final month).

I will update this thread in April (or earlier) on what I ended up doing. Thanks again for your inputs.

Well done for putting £200 p/m aside for the final payment, most people on PCP don't bother, I think your making the right choice.