PCP and Personal Loan

Thrugelmir

MalMonroe said:

DrEskimo said:

The issue will be whether you can get accepted at a good rate whilst having the outstanding PCP.

In principle though, if the personal loan will cost you less than the PCP in interest costs (look at costs, not just APR) then yes. If not just keep paying the PCP and put the additional cost you would have paid on the personal loan on paying down the PCP.

My PCP has 0% interest for two years, so not all loans will be better than that. Best to shop around, as I suggested to the OP.

The interest cost will be built into the retail price of the vehicle. Buy for cash and negotiate a decent discount. 

[Deleted User]

Hamiltonc said:

Thanks all
We intend to keep car at end either way. Just exploring best way of doing that. If you do encounter finance issues it be the same issue whether PCP or loan. Which one is more understanding? Is it bad to refinance a loan? 

The best way to do it is use the savings you put aside for the balloon payment (you did do that, right?) not get into further debt. If you don't have the cash, you will either have to borrow as low as possible and get it done quickly, over paying as much as you can / are allowed to.

MalMonroe said:

I have a car on PCP and the interest rate is 0% for two years. I pay £55 per month and the (small hatchback) car's four years old. I pay no road tax.

Having had a personal loan in the past, I would definitely NOT have one ever again, nor would I recommend it to anyone else. It just seemed to drag on for ever and the interest was ridiculous. 

As you are intending to be in debt anyway, why not just change your car when the PCP period is over, upgrade to a newer model?  But look around for deals that offer 0% interest for two years, similar to mine. 

Taking out another PCP deal and paying for a second car for 3-4 years is not the best way to deal with it, it'll be cheaper to get a loan at whatever the lowest rate they can get and over pay as much as possible. I have a large hatchback, I don't pay any road tax either as there is no such thing.

SallyDucati

I recently did this, getting a personal loan out to pay off the PCP finance.  I had always planned on paying balloon off with a loan at the end of the period, checked the interest payable (not 0% PCP) for both and I'm paying the same amount of interest but over a longer period and will fully own the car at the end.  It was the first PCP I've ever taken out and don't think I will do another.  
One advantage in my eyes is that the car isn't linked to the finance so can't be repossessed by the finance company, if I did get into financial difficulties I could sell the car.

ogzemn

I think the main thing here is figuring out which financing option makes more sense in the long run if you're planning to keep the car. Paying off the remaining PCP balance with a personal loan could be a reasonable choice, but I wouldn't focus only on getting lower monthly payments. The total repayment amount and interest can sometimes make a bigger difference than you'd expect.

That's why I think it's worth comparing different borrowing options before making a decision. Once you start looking beyond traditional bank loans, you realise how much financing options can vary from one country to another. I came across KredAqro's https://kredaqro.com/kreditler/ page, which covers different types of loans available in Azerbaijan. Obviously, those aren't directly applicable to refinancing a PCP agreement in the UK, but it's interesting to see how different lending models work.

Personally, I'd start by getting the exact PCP settlement figure and comparing it with the total cost of a personal loan for the same amount. At the end of the day, it's not just about keeping the car, but also making sure you're not taking on more debt than you really need to.

MEM62

I think the main thing here is figuring out…….

What the point is in adding to a thread that is six years old.

Whatever decision the OP made is long paid for by now.