Finding a Bank loan instead of PCP for a car worth £60k+

bailey_uk

My parents are pricing up a new car worth £60k

Deposit is 15k or maybe stretch to 20.

I have cast an eye over the potential The PCP agreement and its showing
5.9% APR
48 Months
£625 a month payments
Settlement figure £21k

The interest for this deal amounts to £7700 which I think is a lot of money.
I have been banging on about a bank loan to replace PCP but, are loans of 40k for a car easy to find around the 3-5% mark? Ive had a quick look and only seem to find mortgages?
Or do they tend to increase to nearer 8-10% for that sort of money if its for a car?

cheers

[Deleted User]

bailey_uk said:

My parents are pricing up a new car worth £60k

Deposit is 15k or maybe stretch to 20.

I have cast an eye over the potential The PCP agreement and its showing
5.9% APR
48 Months
£625 a month payments
Settlement figure £21k

The interest for this deal amounts to £7700 which I think is a lot of money.
I have been banging on about a bank loan to replace PCP but, are loans of 40k for a car easy to find around the 3-5% mark? Ive had a quick look and only seem to find mortgages?
Or do they tend to increase to nearer 8-10% for that sort of money if its for a car?

cheers

Personal loans of £40k aren’t easy to find full stop.  I know a couple of lenders go to £30k but I’m not sure any lender is going up to £40k at the moment. 

What incentives would your parents lose by opting for a personal loan over car finance from the dealer? 

Grumpy_chap

I assume, if your parents are looking at a £60k car, they are reasonably comfortably off.

Are they asking for your financial advice, is it normal for your parents to come to you for financial advice, or are you just offering unsolicited advice?  If the latter, then leave it at the fact you have mentioned a bank loan may work out cheaper and let your parents take that information to do with what they will and get the car in the way they best see fit.

The question about availability of a bank loan for £60 to acquire a depreciating asset depends on many factors that are not covered in the OP. 
What other debts does the applicant have?
What income does the applicant have?  How secure is that income?
What assets does the applicant have?
What other financial obligations and liabilities does the applicant have?

DrEskimo

You may find that the dealer offer HP finance at a competitive rate. Even if the APR is slightly higher, it may still be cheaper.

Why such a high price car when they only have £15k though? Go second hand for the same car at half the price.

tacpot12

Why not buy a car for £15K and not pay any interest, or buy a car worth £40K using a £25K personal loan which is easy to find. 

bailey_uk

Grumpy_chap said:

I assume, if your parents are looking at a £60k car, they are reasonably comfortably off.

Are they asking for your financial advice, is it normal for your parents to come to you for financial advice, or are you just offering unsolicited advice?  If the latter, then leave it at the fact you have mentioned a bank loan may work out cheaper and let your parents take that information to do with what they will and get the car in the way they best see fit.

The question about availability of a bank loan for £60 to acquire a depreciating asset depends on many factors that are not covered in the OP. 
What other debts does the applicant have?
What income does the applicant have?  How secure is that income?
What assets does the applicant have?
What other financial obligations and liabilities does the applicant have?

Good points and to answer your main question, no its not normal for them to ask my advice. 
I was applying the logic from my own personal experience on a car worth 24k, in which a bank loan has saved me over 2k of interest. So if a loan of 40k was available to them at 3-4% then it would almost certainly of saved them a considerable amount of money.

DrEskimo said:

You may find that the dealer offer HP finance at a competitive rate. Even if the APR is slightly higher, it may still be cheaper.

Why such a high price car when they only have £15k though? Go second hand for the same car at half the price.

15 was just the illustrative example but 20-25 would be fine. if the aforementioned bank loan was a common thing to find.

macman

A mortgage or PCP is a secured loan. A personal loan is not, so the interest rates are correspondingly higher.
You cannot really compare the the two, as a PCP is designed to enable you to borrow a much higher sum than a conventional loan or HP deal, while paying a relatively low monthly sum. Dealers of course love them, as most punters never make the balloon payment, hand the car back after 3 or 4 years and repeat the whole cycle again. More sales commission and more finance commission. 
Even if they could get a personal loan for £45K, 4 years at the same rate as the PCP (5.9%), it would cost them £1,051 per month, rather than £625. So, for those (unlike yourself) who only look at the monthly repayment cost, it's easy to see the attraction.

CSL0183

Few options...

There are a few banks that will lend upto £50k or even more (TSB being one) but the interest rates are likely to be high at 6%+. You could look at getting two £20k loans though at 3%. Just apply for them at the same time so they don’t show up on the Credit searches. Use a soft search tool like money saving supermarket loans to see eligibility for these loans. 

You could also look at used (ex demo) type cars or even cars upto a year old that have already took that initial depreciation hit. Used car finance rates are generally higher though but a lot of banks are now doing competitive PCP finance (such as Halifax) that can offer Used rates at 4-6% often beating the 7-9% rates the manufacturer will offer. 

The third option would be to see how much the lease deals are working out at. (Often cheaper than PCP’s) - Rent the car for x amount and then hand it back at the end of the term. Tax is included in the monthly figure which alone is £40pm on £40k+ cars. 

Good luck. 

macman

As referred to above, it's worth pointing out that the biggest cost by far when you buy a new £60k car is depreciation. After 4 years, it'll be worth typically 40% of the purchase price. So, averaged out over the full loan term, that's costing you £9k a year, or £750 per month. Which makes the actual repayments look like chickenfeed.

finalfantasist

CSL0183 said:

Just apply for them at the same time so they don’t show up on the Credit searches. 

The moment a search is done any subsequent search, even seconds later, will show the first search.

bengalknights

Might actually be cheaper to lease than own the car depending on depreciation