Recommendations for PCP finance deal brokers.

Beaumont176

Good evening,

Looking for some recommendations regarding PCP finance deals. My wife and I are looking to replace our car with a nearly new used car on a PCP finance deal. Most dealerships are offering finance with around +/- 10% APR.

After a search online it seems there is not many companys willing to do a PCP contract for +/- £50,000 most results are offering HP only.

I found Halifax were offering car finance but unfortunately have to have held a current account for 3 months which we are not a Halifax customer.

Any assistance appreciated.

Kind regards.

Grumpy_chap

Beaumont176 said:

Good evening,

Looking for some recommendations regarding PCP finance deals. My wife and I are looking to replace our car with a nearly new used car on a PCP finance deal. Most dealerships are offering finance with around +/- 10% APR.

After a search online it seems there is not many companys willing to do a PCP contract for +/- £50,000 most results are offering HP only.

I found Halifax were offering car finance but unfortunately have to have held a current account for 3 months which we are not a Halifax customer.

Any assistance appreciated.

Kind regards.

PCP for used car rarely achieves the same type of attractive terms that are available for PCP on new cars as there are not the same manufacturer incentives available.

Why are you changing the car?
What are your motoring needs?
Whatever the needs that are met from a second-hand car at £50k can almost certainly be met far cheaper.

Does your income and consideration of other outgoings support a £50k loan? 
It will really be treated by most lenders as unsecured lending and £50k is a lot for that.
If your income and other outgoings does support this level of loan, can you not loan yourself from savings and then repay yourself?  I assume you do have savings if considering a £50k car.
IMO, you can only afford a £50k car if you have the cash.  If you need finance, is this really the best way to burden your future self?

Beaumont176

Grumpy_chap said:

Beaumont176 said:

Good evening,

Looking for some recommendations regarding PCP finance deals. My wife and I are looking to replace our car with a nearly new used car on a PCP finance deal. Most dealerships are offering finance with around +/- 10% APR.

After a search online it seems there is not many companys willing to do a PCP contract for +/- £50,000 most results are offering HP only.

I found Halifax were offering car finance but unfortunately have to have held a current account for 3 months which we are not a Halifax customer.

Any assistance appreciated.

Kind regards.

PCP for used car rarely achieves the same type of attractive terms that are available for PCP on new cars as there are not the same manufacturer incentives available.

Why are you changing the car?
What are your motoring needs?
Whatever the needs that are met from a second-hand car at £50k can almost certainly be met far cheaper.

Does your income and consideration of other outgoings support a £50k loan? 
It will really be treated by most lenders as unsecured lending and £50k is a lot for that.
If your income and other outgoings does support this level of loan, can you not loan yourself from savings and then repay yourself?  I assume you do have savings if considering a £50k car.
IMO, you can only afford a £50k car if you have the cash.  If you need finance, is this really the best way to burden your future self?

Thanks for your reply....kind of. My OP is not looking for advice or a lecture on my personal financial situation. Or why we feel the need to purchase a car that is 50k when there are cheaper alternatives.

My wife and i have recently paid off our mortgage and would like to treat ourselves with a nice car. 

Yes we have the savings to cover the full amount and also earn enough disposable income to afford a car of this price on monthly outgoings rather than spend a large sum of savings on a depreciating asset.

Back on topic looking for recommendations where we can compare PCP deals out with the dealerships.

Grumpy_chap

Beaumont176 said:

Thanks for your reply....kind of. My OP is not looking for advice or a lecture on my personal financial situation. Or why we feel the need to purchase a car that is 50k when there are cheaper alternatives.

My wife and i have recently paid off our mortgage and would like to treat ourselves with a nice car. 

Yes we have the savings to cover the full amount and also earn enough disposable income to afford a car of this price on monthly outgoings rather than spend a large sum of savings on a depreciating asset.

Back on topic looking for recommendations where we can compare PCP deals out with the dealerships.

I did not intend the response to come across as a lecture, so sorry that it was read that way.

The question of where you can obtain a loan for £50k for a car is one that crops up periodically in these threads.  I can't recall a time when any OP has responded back with the way they managed to secure that level of unsecured finance (certainly not outside the motor-trade finance via Dealerships).
Here are two recent threads discussing £60k loan options (one for a car and one for home improvements):
https://forums.moneysavingexpert.com/discussion/6235108/finding-a-bank-loan-instead-of-pcp-for-a-car-worth-60k/p1
https://forums.moneysavingexpert.com/discussion/6375668/loan-options-for-60-000/p1
Both of those threads may be sufficiently near enough to your situation to be worth the reading time.

You have the savings available to buy the car outright, so the lowest cost solution will be to use the savings (I assume it will still leave you with an emergency fund) and then make the monthly payments back to yourself.  No hassle, no credit checking and no earning interest on which there may be taxation liability only to then pay the interest for the car loan.

I am not sure that I agree with the logic of paying the monthly from disposable income but not wishing to spend savings on a depreciating asset.  Going with the finance route that you suggest will still mean that you suffer the same depreciation plus you will suffer the interest payments on top.

You did mention that you are considering nearly new car and finance is around 10% rate.  Car finance offers are not common at the very attractive rates that were available until recent normal times plus finance offers on used cars are generally not as attractive as those on brand new cars (because of the lack of manufacturer incentives).  Depending on how old the nearly new car would be, have you considered the total cost of a brand new car which may have more appealing finance rates / incentives versus the nearly new option?  In some cases it can work out cheaper.

There is also the need to consider that finance at 10% rate may soon be considered a low rate given the financial situation we are all looking at.

If you do choose to go down the finance route, then do remember that PCP works out more expensive in total than a regular loan at the same interest rate over the same period because of the balloon payment that carries interest through the entire term.

You mentioned that you have paid off your mortgage.  Is it fully paid off, or do you have any small residual balance?  I ask because if you have a small residual mortgage and the mortgage offers the scope to draw-down the over-payments, then that may be the cheapest way to finance the car.

Good luck in finding a solution and, if there is a unique option that you are able to take advantage of, then please do share when all is done as the thread then becomes more valuable for others in the same boat.

Beaumont176

@Grumpy_chap Thanks for taking the time to supply the information, highly appreciated. Ive never thought of the idea of effectively giving yourself a loan via savings. This would be something we can consider. 

Indeed as you mention the logic is a little sketchy. I understand this and try to think of this type of scenario as a mobile phone contract on steroids.

I had previously bought a car outright and within 10 months i had lost £5,000. I then converted to PCP finance which the £5,000 i lost in depreciation would allow us to pay for the same car over 20 months. So this is the reason why im reluctant to pay for the vehicle out of savings and rather take out a PCP.

Yes our mortgage is fully paid out. What we paid previously for a car + mortgage payments would now be equal to car payment. Allowing us to keep our financials relatively in shape. 

For me there is no roundabout way with cars you will lose money its more trying to lose the least amount of money over the term hence why it would be nice to beat the dealers Interest rate of 10% which as mentioned in the current climate could be challenging.

DrEskimo

Beaumont176 said:

I had previously bought a car outright and within 10 months i had lost £5,000. I then converted to PCP finance which the £5,000 i lost in depreciation would allow us to pay for the same car over 20 months. So this is the reason why im reluctant to pay for the vehicle out of savings and rather take out a PCP.

Unfortunately your slight misunderstanding in how PCP works has clouded your judgement here...

Whilst you may have paid £5,000 over 20-months, it doesn't mean you could just hand the car back after 20-months with nothing more to pay. You would have had to get a settlement figure (amount still owing on the finance) and get a trade valuation for the car, which would be exactly the same, regardless of whether you had finance on it or not.

As a car typically depreciates heavily initially (recent times being an exception!), whereas the finance is paid in a linear fashion, so you typically owe more on the finance than the car is valued. So if you were to want to change at 20-months into a 3 or 4 year agreement, you would be also liable for any shortfall on top. So your costs aren't limited to just the monthly cost and deposit.

This graph illustrates the point well:



Basically, whether you bought your original car outright or on PCP would have not made a blind bit of difference. The depreciation is the same. You just add interests costs on top by going with PCP.

Beaumont176

DrEskimo said:

Beaumont176 said:

I had previously bought a car outright and within 10 months i had lost £5,000. I then converted to PCP finance which the £5,000 i lost in depreciation would allow us to pay for the same car over 20 months. So this is the reason why im reluctant to pay for the vehicle out of savings and rather take out a PCP.

Unfortunately your slight misunderstanding in how PCP works has clouded your judgement here...

Whilst you may have paid £5,000 over 20-months, it doesn't mean you could just hand the car back after 20-months with nothing more to pay. You would have had to get a settlement figure (amount still owing on the finance) and get a trade valuation for the car, which would be exactly the same, regardless of whether you had finance on it or not.

As a car typically depreciates heavily initially (recent times being an exception!), whereas the finance is paid in a linear fashion, so you typically owe more on the finance than the car is valued. So if you were to want to change at 20-months into a 3 or 4 year agreement, you would be also liable for any shortfall on top. So your costs aren't limited to just the monthly cost and deposit.

This graph illustrates the point well:



Basically, whether you bought your original car outright or on PCP would have not made a blind bit of difference. The depreciation is the same. You just add interests costs on top by going with PCP.

Thanks for the above information. 

MrFrugalFever

If you are looking at an ex-demonstrator or ex-company used car they will likely attract lower APR than 10% as they are seen as nearly new.