What is best to do at end of PCP agreement?

startingout2016

I bought a car on PCP finance nearly 3 years ago. 

The car is currently worth today via a WBAC valuation £13k. The settlement figure for the balloon payment will be £7.8K

I pay £180 per month and this ends next spring. 

I have been saving up along side to clear the balloon payment at the end. I was on target to have saved this but an emergency wiped out £3k from it. 

I expect to have £5.5k in savings by the time the agreement comes to an end leaving me short by £2.3k.

Am I best financing the £2.3k? I currently have an empty credit card that is a low interest rate of 6.4% apr, or would I be best financing in a different way? 

Although interest rates are low, borrowing such a small amount from the bank seems to put me in a bracket of a higher APR. 

At one point I had considered using the 'equity' from the car into a new agreement as I am comfortable paying £180 for use of a car, but because used car prices have increased so much even if I took out a new agreement using the same deposit as I did previously on an identical car it would cost much more per month, so I dont see any financial sense in trading up. 

Grumpy_chap

Do you have an option to obtain a zero percent credit card for the £2k extra that you'll need to buy the car at the end of the term?  If you then keep up the £180 per month to pay down the credit card, it'll be over and done within the year.

Brie

It may actually be worthwhile looking at getting a bigger loan to secure the lower APR.  That is if a 0% card is not available.  

Sandtree

Duration and value drive the APR and you always have options of over paying.

Based on the balloon being less than the residual value it clearly makes sense not to hand the car back and so either find a way to finance the balloon or sell the car and realise the difference in values.

Do PCP finance companies accept credit cards? Do credit card companies consider it a purchase or a cash advance?

durhamcowboy

Hi, sounds like I’m in a similar position to you, my PCP is with Santander who have said that they can extend it by one year but they would be no option to return the car at the end of the period. Might be worth a try?