PCP with apparent low income

andalusite

In the past I have purchased cars with cash and run them for several years. I am now retired and looking to move to an EV car.

I intend to purchase using a PCP. My thinking is that the technology continues to evolve and I do not know what the residual value of EV is, so I can to some extent protect myself from those uncertainties.

I have looked at PCP deals from some franchises and independent financing. I understand that the quoted APR is only representative and it may be different in the financing ultimately offered.

I signed up to Clearscore and Experian for my credit scores which were both very high: 973 and 999 respectively. From reading on the forums an interpretation of my 999 Experian score is that it reflects an absence of credit history….hmmm...I have two credit cards (used to have three) which I use regularly and always pay off in full every month. I am a house owner. The Experian report stated the probability of me being able to obtain a loan is very low because my income is low.

I receive income from two relatively small DB pensions, which amount to less than the personal allowance. However, I have other cash available from ISAs, online investments and sale of an inherited property. As far as I know none of these are considered as income in the application for a PCP.

Apart from mortgages I have never applied for a loan. When I apply for a PCP I do not want to be rejected and the failed application appear on my credit history. I have access to sufficient cash to manage the monthly payments and yet that may not be apparent in my application.

Will the PCP application permit me to show I have other sources of money and can therefore manage the repayments?

[Deleted User]

Your high credit scores mean that you have either have a good, poor, or mediocre credit history, or some where else on the credit spectrum. But with a low income, you'll struggle to get credit.

Purchasing with cash would be the sensible option, but if you really need credit, then a search or two will no harm. No failed application will show on your files.

DrEskimo

andalusite said:

In the past I have purchased cars with cash and run them for several years. I am now retired and looking to move to an EV car.

I intend to purchase using a PCP. My thinking is that the technology continues to evolve and I do not know what the residual value of EV is, so I can to some extent protect myself from those uncertainties.

I have looked at PCP deals from some franchises and independent financing. I understand that the quoted APR is only representative and it may be different in the financing ultimately offered.

I signed up to Clearscore and Experian for my credit scores which were both very high: 973 and 999 respectively. From reading on the forums an interpretation of my 999 Experian score is that it reflects an absence of credit history….hmmm...I have two credit cards (used to have three) which I use regularly and always pay off in full every month. I am a house owner. The Experian report stated the probability of me being able to obtain a loan is very low because my income is low.

I receive income from two relatively small DB pensions, which amount to less than the personal allowance. However, I have other cash available from ISAs, online investments and sale of an inherited property. As far as I know none of these are considered as income in the application for a PCP.

Apart from mortgages I have never applied for a loan. When I apply for a PCP I do not want to be rejected and the failed application appear on my credit history. I have access to sufficient cash to manage the monthly payments and yet that may not be apparent in my application.

Will the PCP application permit me to show I have other sources of money and can therefore manage the repayments?

Whether PCP as a form of 'asset value protection insurance' is worth it is entirely dependent on the cost of the loan, and the guaranteed value offered. PCP (and indeed leases) are not automatically 'good'. It depends on the deal.

If it has large interest costs and a low guaranteed value, you are needless paying additional interest cost for no reason, possibly thousands of pounds.

How much will the PCP cost you interest, and what value are the finance company offering for the car you are interested in? Unless you have reason to believe the EV will be worth much less than the expected value minus the interest cost, you stand to gain very little economically, and indeed stand to lose quite a lot if it maintains a value higher than the expected value (which is substantially more likely).

Your general thesis that EVs are evolving quickly, so residuals could plummet is also not well evidenced either. The same arguements were made to me 3yrs ago whilst I was looking at a used Renault Zoe (41kWh, battery owned). I bought it outright and even before the used car bubble it was holding its value better than comparative ICE. Developments in EV technology over the next 3-5yrs are well known, and certainly wouldn't make current EVs worthless. Had I took a PCP or lease I would have paid thousands more than my current cost of ownership.

Basically just apply the same rules of car ownership. Go used to reduce depreciation costs, use cash (or take PCP then pay off to take advantage of finance incentives) to reduce interest costs.

[Deleted User]

andalusite said:

In the past I have purchased cars with cash and run them for several years. I am now retired and looking to move to an EV car.

I intend to purchase using a PCP. My thinking is that the technology continues to evolve and I do not know what the residual value of EV is, so I can to some extent protect myself from those uncertainties.

I have looked at PCP deals from some franchises and independent financing. I understand that the quoted APR is only representative and it may be different in the financing ultimately offered.

I signed up to Clearscore and Experian for my credit scores which were both very high: 973 and 999 respectively. From reading on the forums an interpretation of my 999 Experian score is that it reflects an absence of credit history….hmmm...I have two credit cards (used to have three) which I use regularly and always pay off in full every month. I am a house owner. The Experian report stated the probability of me being able to obtain a loan is very low because my income is low.

I receive income from two relatively small DB pensions, which amount to less than the personal allowance. However, I have other cash available from ISAs, online investments and sale of an inherited property. As far as I know none of these are considered as income in the application for a PCP.

Apart from mortgages I have never applied for a loan. When I apply for a PCP I do not want to be rejected and the failed application appear on my credit history. I have access to sufficient cash to manage the monthly payments and yet that may not be apparent in my application.

Will the PCP application permit me to show I have other sources of money and can therefore manage the repayments?

If you read the forum you'll know the credit "score" is a complete gimmick that lenders never see. If you have 2 cards and these are used regularly and paid off in full then that is fine.

Your income is income - pensions, salary, that sort of thing. Savings are not income because you can just spend them. If you have the money form a house sale and other investments, why even look at PCP given your low income is likely to prevent you getting it anyway? Either buy cash or look at a lease (which might have the same issue) so you're not having to worry about the values are. PCP you get a GMV when you take it out so you'll know roughly what it will be worth

Aspiration

Obviously cannot advise If PCP is right for you, but When I purchased a new EV car recently I didn’t need to put any income on the form. It just asked if I could make the repayments and whether I considered my self to have any financial problems.