Help understanding PCP quotes – how can a cheaper initial price cost more?

Danydan

Firstly, I know many would probably recommend I steer clear of PCP plans. I'm on one with my current car and it's worked out alright because I never really wanted to own it: I just needed a gas guzzler for a few years. I've had my eye on a particular make and model for a wee while and after an awful 2020 (COVID took my best mate) I've decided why not. (Though I emphasise: I'm not making this decision on emotion and I'm in financially a solid enough place to afford it.) I've priced up like-for-like used cars bought on a personal loan and the interest rate is cheaper on the PCP plan (though, of course, the personal loan is cheaper in the long run, there's no balloon payment, and I'd own the car outright from the start).

But anyway... Let's say I'm going with this PCP plan (and I haven't made my mind up but that isn't the point), I'm struggling to understand the quotes I've been given. I know that's probably by design! But I've had two quotes from major car brand dealers and, bizarrely, the cheapest initial quote has come out more expensive and I cannot see or fathom how. They're both on exactly the same make and model of car, with exactly the same extras. It gives me a feeling that one of the dealers is maybe trying to play me and rip me off, so to speak? Could anybody help me understand this?

And may as well ask the prudent minded of MSE Forums: any haggling tips? (Or any tips when it comes to car buying in general, really.)

Thanks all.

daveyjp

What are the actual figures in the quotes?

Cost of car OTR
Manufacturers deposit
Customer deposit
Term
APR
Monthly payment
GFV

AdrianC

Without seeing numbers, we cannot assist you in understanding numbers.

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AdrianC said:

Without seeing numbers, we cannot assist you in understanding numbers.

This.

However, if you really definitely don't want to own the car, you want the one where

(your cash deposit) + (monthly payment x number of months in agreement) comes to the smallest number.

If you do want the car, (PCP isn't usually the best way to buy a car though) you want the one where

(your cash deposit) + (monthly payment x number of months in agreement) + (GFV/final payment)  comes to the smallest number.

Danydan

Apologies for missing the numbers out!  Hopefully, this is all clearly laid out (and doesn’t break any forum rules):

QUOTE 1
Retail vehicle price — £20233.33
Total vehicle factory options — £ 208.33
Number plates — £20.83
Discount — £1635.00
VAT @ 20% — £3765.50
VED Cost — £220.00
First reg fee — £55.00
Part-ex — £10576.00
Settlement — £12576.00
Customer saving — £1962
RRP — £24829.99
Our price — £22867.99
Deal cost to change — £24867.99

= Options Finance =
Cash — £2000.00
Payment —£355.56
Optional Final Payment — £9809.00
Mileage — 12000
Term — 38
Amount of credit — £21867.99
Total amount payable — £24340.10
Total Charge for credit — £1452.11
Deposit allowance — £1000
Rate of interest — 2.10%
Excess mileage charge — £0.06
APR — 2.9%

QUOTE 2
Retail vehicle price — £24855.11
Total vehicle factory options — £ 229.27
Number plates — £20.83
Discount — £1983.43
VAT @ 20% — £3699.99
VED Cost — £220.00
First reg fee — £55.00
Part-ex — £10600.00
Settlement — £12576.00
Customer saving — £2380.10
Our price — £22474.99
Deal cost to change — £24450.99

= Options Finance =
Cash — £2000.00
Payment —£344.07
Optional Final Payment — £9809.00
Mileage — 12000
Term — 38
Amount of credit — £21450.99
Total amount payable — £23927.82
Total Charge for credit — £1432.83
Deposit allowance — £1000
Rate of interest — 2.11%
Excess mileage charge — £0.06
APR — 2.9%

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Option 1

Cash — £2000.00
Payment —£355.56
Optional Final Payment — £9809.00
Mileage — 12000
Term — 38
You pay
38 x 355.56 = 13511.28
+ £2000  = 15511.28

If you are buying the car £24340.10  as they are knocking off £100 somewhere


Option 2

Cash — £2000.00
Payment —£344.07
Optional Final Payment — £9809.00
Mileage — 12000
Term — 38
You pay
38 x 344.07 = 13074.66
+ £2000 = 15074.66

If you are buying it

£23927.82

Option 2 then

Herzlos

Option 2 has the bigger discount making the base car cheaper.

Danydan

I just couldn’t work out how quote 1 started lower and ended up higher.

Now I just need to see who I can haggle down a bit more..! (Any and all tips welcome!)

daveyjp

Try an online broker.

Danydan

daveyjp said:

Try an online broker.

I’ve tried a couple. Some have the make and model I like, some don’t. (I’m open to different cars, of course.) But all the ones I’ve looked at don’t deal with the part-ex side of things. I know I can sell privately but I don’t want to risk having to pay for 2 cars if the old one doesn’t sell, if that makes sense.

photome

Danydan said:

daveyjp said:

Try an online broker.

I’ve tried a couple. Some have the make and model I like, some don’t. (I’m open to different cars, of course.) But all the ones I’ve looked at don’t deal with the part-ex side of things. I know I can sell privately but I don’t want to risk having to pay for 2 cars if the old one doesn’t sell, if that makes sense.

Have you priced your car  to sell on WBAC that may be an option