PCP final payment mileage penality

laskoibence

Good Evening, just a quick question.
I am looking to buy a brand new car on PCP to keep my monthly payments as low as possible. This is why I would go for the lowest mileage. 8k a year.
It would be 36 months PCP, I do want to keep the car at the end of the term. Does it matter if I do more then 24.000 miles by the end of the contract?
Is there any penality to pay if I want to keep the car, but it will have 40-50k miles instead of the agreed 24k?

Thanks for the help.

DrEskimo

If you pay to keep the car then the mileage is irrelevant.

How much is the PCP finance costing you in interest (the actual amount in £)?

Presumably you will be either saving up the final balloon payment over the course of the PCP finance to purchase the car at the end? Have you looked into whether you could save money just using a standard personal loan?

Getting a lower monthly cost but paying thousands more in interest is not going to help you in the long run....

WaywardDriver

No penalty but for lower mileage and lower monthly payments, the final balloon will be higher. So the total payable is much the same for 8k v 15k.
You can try various permutations on the manufacturer's website, I used Skoda's.

NottinghamKnight

OP - As others have said it won't mane much/ any difference if you buy the car but will you have the cash at that point, how secure is your employment?

daveyjp

How are you going to pay the balloon payment after 3 years?

[Deleted User]

If you buy the car at the end, there are no penalties for mileage - that only affects the GMV (and thus the monthly payments) as a 3 year old car with 24,000 miles is a better sale for the garage than one with 48,000 miles. Ensure your insurance matches your actual mileage
If you look after the car and intend to run it for years then it's a perfectly good plan (though if you pay interest on the PCP it's not necessarily very MSE).

ontheroad1970

If you keep the monthlies lower by underestimating your mileage, then it is very likely that you will pay more interest as the interest is charged on the balloon also.  If you have no interest in handing the car back, see if you can do a straight HP where you pay off capital and interest, paying off more capital than you do with a PCP, or get a personal loan where you will likely get a decent APR if your credit history is good.

laskoibence

daveyjp said:

How are you going to pay the balloon payment after 3 years?

Cash, the dealer offered 2.9% PCP deal, bmw.

AdrianC

If you're intending to pay the balloon and buy the car, then keeping the monthlies low is actually counter-productive to the total cost.

Remember, you pay interest on the total amount outstanding, including the balloon. So if you pay less off during the term, the balloon is higher, and so is the total interest payable.

Also, if the car is written off or stolen during the term, the insurers will pay out on the basis of a higher mileage vehicle, but the finance settlement will be on the basis of a lower mileage one, so the gap between the two will be higher - making gap insurance even more of a requirement.

Mutton_Geoff

laskoibence said:

daveyjp said:

How are you going to pay the balloon payment after 3 years?

Cash, the dealer offered 2.9% PCP deal, bmw.

Car dealers have a nasty habit of quoting straight interest rates, not APR which is lower. Make sure you do check like for like.