PCP to bank loan.

laggingdiversion

Hi guys,
New on here so be easy on me..
I have a PCP car on 6,000 miles, 13 months in and due to circumstances and a new job I've estimated I will be doing in excess of 20,000 miles per annum. Now... in my head... the excess mileage and the fuel costs will be too much for me on my PCP car so ive decided to get a diesel on a bank loan so I can run it for as much miles as I can as well as being more fuel efficient. My question is, will whatever I am looking to replace my current car with be, garage/dealerships car minus my car plus my outstanding finance or my early settlement amount?

Also I know this question is due to personal circumstances but will my APR rate be affected by taking out a bank loan for another car as my current PCP finance is still in action till its paid off by garage/dealership and me paying it off with the bank loan?

Hope this reads well.
Thanks in advance.

DrEskimo

Yes, so you need to get an idea of what your car is worth as trade in (get lots of quotes) and what this is relative to your current finance settlement. Its likely you will owe more than it's worth, so will have to factor that in to the purchase price of the next car too.

I would do the maths though, as the cost to change from your current car to another new car will likely outweigh any savings in fuel from a diesel. What you need to do is compare what the current trade value of your car is, and predict what that will be worth in say 3yrs + fuel costs. Now compare that to what a new diesel will cost to purchase minus what you think that will be worth in 3yrs + fuel.

Buying another car will typically come with a dealer 'premium' whereby they will sell it to you for £2-£4k more than you can get in trade in value. You've already paid that on your current car. So unless your current car is predicted to depreciate much more heavily than whatever diesel you are looking at, then your unlikely to make the difference back in fuel savings.

laggingdiversion

Thanks.

I had an idea I would owe money on my car anyway.
I'm not sure you understood me well, sorry if what I wrote was hard to interpret.
If I was to keep my current car and do 20k a year I'd need to pay the excess mileage amount which will eventually become a bit unrealistic for me to pay out. (Roll on the comments, why finance etc.)
My next car I will be keeping for five years, and with the mileage I am going to be doing it'll make sense for me to change. From my calculations *rough* I will be saving £300-400 a year on fuel costs.
Also, it is not going to be a new car as I am buying used.

DrEskimo

Why not just buy your current car...either now (and potentially save interest) or at the end of the deal?

The mileage charges are only applicable if you hand the car back to the finance company (essentially trade it in to them for the agreed balloon payment) at the end of the term.

foxy-stoat

Yes, any new finance will be take your personal financial commitments into account.

If you think you can win by buying your current 13 month old car and trading it in for another then I would try and save for the balloon payment now, then buy your current car at the end of the agreement and decide what to do then.  Just hope you don't have a total loss claim in the meantime.

Unless your current car achieves less than say 30mpg you will be losing all day long.

MinuteNoodles

Keep the current car, pay the balloon at the end then there's no excess mileage charges. You've already financed the most expensive year of depreciation. 

What is the current MPG of your car and the one you're looking at? I used to run a 2.0L MX5 doing 37MPG and a diesel Mondeo doing 55MPG and over the 17,000 miles a year I do the difference between doing it all in the MX5 or the Mondeo was £164 a year so I think you may want to redo your maths.

Also you need to look at the total cost of ownership. My current car is a 2019 diesel Focus. I got it because of the savings on fuel over the petrol version however I didn't do my research properly. What I didn't know is the service interval for the diesel is 10,000 miles but the service interval for the petrol is 18,000 miles - this is basically because diesels suffer fuel contamination of oil more than petrol engines. The money I've saved on fuel gets eaten up by the extra costs on servicing. Net benefit financially is a whole whopping £0.

Andyjflet

Just call the finance company, get a cost to purchase now which will be interest up to the end of the month, then take a loan for that amount and pay it off, then mileage isnt an issue. 

laggingdiversion

DrEskimo said:

Why not just buy your current car...either now (and potentially save interest) or at the end of the deal?

The mileage charges are only applicable if you hand the car back to the finance company (essentially trade it in to them for the agreed balloon payment) at the end of the term.

I can't do 20,000 miles in my city car.
It just doesn't run well at all on the motorway.

I am talking about the mileage charges as if I was going to do the full term.. which is what I do.

laggingdiversion

I understand all your points.
Thank you and will be taking them all in consideration.

MinuteNoodles

laggingdiversion said:

I can't do 20,000 miles in my city car.
It just doesn't run well at all on the motorway.

It can do 20,000 miles a year just as well as any other car. Might not be as comfortable as a larger car but it's up to doing the mileage.

Given its got more power, better suspension, steering and just about anything than what were considered sales rep mileage munchers in the 1970s and 1980s that people weren't complaining about using to travel up and down the country it's perfectly capable of being driven on the motorway.

[Deleted User]

laggingdiversion said:

DrEskimo said:

Why not just buy your current car...either now (and potentially save interest) or at the end of the deal?

The mileage charges are only applicable if you hand the car back to the finance company (essentially trade it in to them for the agreed balloon payment) at the end of the term.

I can't do 20,000 miles in my city car.
It just doesn't run well at all on the motorway.

I am talking about the mileage charges as if I was going to do the full term.. which is what I do.

Mileage charges are irrelevant if you just pay off the PCP at the end. 

My car finishes in Jan. Ive already told them Im keeping the car and will pay the balance ( luckily with pension lump sum ) but ordinarily Id just get a loan to pay off the balloon payment