PCP interest rates

WaywardDriver

Towelman said:

Hi, thanks for your advice everyone. So the car is £23495. I deposit £4000 leaving 19, 495. Interest is quoted at 3.56% fixed for the duration or 6.9% APR. The total interest charge is £3768.79. There are 42 monthly payments of £275.12 and a balloon payment of £11708.75. Total payable £27263.79.  Maybe i'm missing something but its confusing  

Based on these figures the Excel formula I gave earlier, gives a monthly payment of £274.95 which is within a few pence of your £275.12. So the APR of 6.9% is correct.

Total payable = £4,000 + 42*£274.95  + £ 11,708.75 = £27,256.52

Towelman

here you go....

Nearlyold

Nowt to do with the interest calculation, but did you realise that's an example of a Fixed Sum agreement, you may or may not like to know that it doesn't have Voluntary Termination rights.

daveyjp

If you don't understand it don't sign it.

Towelman

Interesting, so thanks for the formula. So i would basically be paying £1300 approx in interest for the balloon payment, which I hadn't realised. The "amount of credit" and "total charge for credit" headings are a little deceptive but I'm glad I went through it closely, as you say if you don't understand it don't sign it. I think most people would!
So lets look down the loan route, would rather not be tied into it anyway! Thanks everyone

WaywardDriver

Quick look at Mazda site shows new car PCP offers of 0% and 1st 3 payments free. Price your spec on a new car?

bazzyb

The flat rate quoted on a PCP is next to useless as this will only be for the revolving rate which is applied to the capital being repaid via the monthly payments during the contract term. There will also be a static rate involved which is a higher flat rate applied to the balloon element.  

For these reasons it is only worth looking at the APR for PCP (and generally speaking on any other form of consumer finance). The flat rate will just confuse matters. 

Towelman

I did look at the 0% deal, its what made me look there originally, but having looked at 6 different options (i'm swimming in proposals) a 9 month old car made more sense as the 0% is on new cars.  Of course you lose driving off the forecourt.  It does feel all the different interest rates bring everything to about the same price!

Towelman

Nearlyold said:

Nowt to do with the interest calculation, but did you realise that's an example of a Fixed Sum agreement, you may or may not like to know that it doesn't have Voluntary Termination rights.

So am i right in saying I would need to pay up to 50% of the agreement to terminate?  I get this is likely to be later that halfway through the agreement. More reason to get a loan, or just stick with my old car!

bazzyb

Towelman said:

Nearlyold said:

Nowt to do with the interest calculation, but did you realise that's an example of a Fixed Sum agreement, you may or may not like to know that it doesn't have Voluntary Termination rights.

So am i right in saying I would need to pay up to 50% of the agreement to terminate?  I get this is likely to be later that halfway through the agreement. More reason to get a loan, or just stick with my old car!

With a ‘normal’ PCP based on HP or CS then yes, 50% of the total including the balloon. However Santander also offer what is essentially a loan with a balloon and call it a PCP - you can still hand the car back at the end instead of paying the balloon but because it’s technically a fixed sum loan you aren’t able to VT at all.