Buying new car using pcp and paying cash for extra’s .

alfmurph

We have just retired and have 2 cash amounts from pension which we would like to use for extra’s like holidays and Xmas . We always run newish cars and are confident we can still afford this on pensions . Our car at moment costs £335 a month and there is one payment left on pcp .
We are looking at one with monthly payment of £279 on pcp . But there are extra’s we would like to have added costing between 2.5k and 3 k .
Could we buy the car on pcp for the £279 per month and pay the extra’s cash as it doesn’t seem so much to pay every month .
I was thinking how this would affect the guaranteed of the hand back price in 4 years .

alan_d

A far more sensible approach would be to use your cash to pay the balloon payment on the existing car, then keep it for 5-10 years. That way you would have zero monthly finance costs, just servicing & maintenance.

AdrianC

Usually, the options will be part of the deal - because it removes any arguments when it comes to an early return for whatever reason.

Usually, they're depreciated over the term, because they add very little to the residuals. Talk to the financier - I'll bet they're very used to wanting to tick the options list...

Mobeer

alfmurph said:

Could we buy the car on pcp for the £279 per month and pay the extra’s cash as it doesn’t seem so much to pay every month .

Essentially yes - you would pay a bigger initial payment. The paperwork would not be as explicit; just showing an increase in the amount to be financed and an increase in the first payment.

alfmurph said:

I was thinking how this would affect the guaranteed of the hand back price in 4 years .

Options depreciate very fast - maybe 90% in 4 years. In a PCP deal I have seen a lot of options that add to the monthly payment but not to the guaranteed value (final optional payment) essentially meaning they are 100% paid for during the PCP term.

DrEskimo

Of course you can, you can put down (nearly) amount you want to make the monthly cost any figure you want.

The question is, is PCP the cheapest way to finance the car? How much is is costing you in interest charges? Could it be much cheaper to use all the cash for the car and then borrow using credit cards/loans for the Xmas/holidays at a much lower interest cost?

Remember to look at actual cost (i.e. interest charges in £) rather than just APR.