Paying off PCP early?

Biffy_Clyro

Hi there,

I'm not sure if this is the correct place to post this, but as it is relating to car finance I thought here would make most sense!

In June 2019, I took out a PCP 0% finance deal on a brand new Volvo V40. I pay £300.30 a month, for a total of 48 months. Originally, my intention at the end of the PCP was to part exchange and take out a new deal, using any equity and money I'd saved as a deposit on a new car. The settlement figure at the moment is around £20k.

I'm now in a position where I could pay off the finance in full. However, I'm not sure if this is the best option, as it is 0% interest and I'm only a few months into the deal.

I've done a bit of research and come up with the below, the last option I think is the most sensible but would welcome any advice:

- Continue as is (money would then probably end up in savings or go further towards buying a house/the deposit, of which I already have plans for)
- Pay off the settlement figure now
- Pay a lump sum towards the monthly repayments (unsure what effect this would have on the rest of my monthly payments?)
- Put £20k into an account to earn interest, and use that to pay the monthly payments, and have enough at the end to pay the balloon payment (or use as a hefty deposit on next car)

Thanks!

AC

DrEskimo

I would go with option 1. Keeping the £20k in a savings account for the duration without it going down will give you the most interest.

Just don't expect much....You can divide the money up into various accounts to improve the overall rate, otherwise the only account I know of for £20k with no restrictions or requirements is the Marcus Online account that offers 1.5% for the first year, then 1.35%.

Depending on timelines, you should probably research LISA if you are intending on using the money to buy your first home.

marlot

You can get about 2% a year interest on a 2-3 year fixed term savings account. It's a little but hey, this is a money saving site.