car purchase

aayush

Hi
Am thinking of getting a new car but need some advice car costs around £19k if take PCP monthly is 300.84 over 49 months  
would be able to get a loan from my bank and would it be cheaper ? any idea what repayments would be ?

Archie_Duke

You may well pay more per month, as a PCP or PCH will mean either that you don’t own the car at the end of the 4 years, or there’s a big ‘balloon payment’ to pay at then end to own it. With a straight car loan you’re simply paying a regular amount to pay down said loan.
Do you have any sort of lump sum to pay a deposit to reduce the loan you want, or a car to trade in? What’s it’s value for Part Exchange if you do?
Probably worth you reading this website to give you some solid information before you step onto a dealer forecourt or website
https://www.moneyhelper.org.uk/en/everyday-money/buying-and-running-a-car/whats-the-best-way-to-finance-buying-a-car

aayush

the repayment is with part exchange so would it better if I asked what is my part exchange with finance as pcp
as the present car is 3 yrs old 
And on £24k t present thus think getting personal loan is out ?

DrEskimo

Why are you considering a new car at £19k when you earn £24k?

what’s wrong with the current car that you need to change?

in any case we need the specific details, including:

cost of car
any deposit (cash and/or part exchange)
term
APR
final payment 
monthly cost

aayush

DrEskimo said:

Why are you considering a new car at £19k when you earn £24k?

what’s wrong with the current car that you need to change?it is aslo on pcp 7kwill be due next year 

in any case we need the specific details, including:

cost of car 19105.00
any deposit (cash and/or part exchange)
term
APR
final payment 
monthly cost

Finance Deposit Contribution (FDC) £ 1250.00 Total Deposit (incl FDC) £ 4250.00 Balance £ 17855.00 Annual mileage used for quote 5000

PCP Payment Options 49 months x £271.60 £9855.00

DrEskimo

aayush said:

DrEskimo said:

Why are you considering a new car at £19k when you earn £24k?

what’s wrong with the current car that you need to change?it is aslo on pcp 7kwill be due next year 

in any case we need the specific details, including:

cost of car 19105.00
any deposit (cash and/or part exchange)
term
APR
final payment 
monthly cost

Finance Deposit Contribution (FDC) £ 1250.00 Total Deposit (incl FDC) £ 4250.00 Balance £ 17855.00 Annual mileage used for quote 5000

PCP Payment Options 49 months x £271.60 £9855.00

Not sure where the £19,105 figure is coming from? If the balance to finance is £17,855, and the deposit (inc. FDC) is £4,250, then the car is £22,105.

According to those figures you financing £17,855 at around 9% APR at a total interest cost of £5,036.80. A personal loan at 5.1% for the same amount over the same term would be around £1,800, so a third of the cost, but a highly monthly (£410/month) as there will be no large final payment. So a significant saving.

The real question is if your earnings are only £24k, is it really sensible to finance a £22k car that is anticipated to cost £12k in depreciation and £5k in interest over the next 4yrs? That's £4,250/year before you even consider fuel, insurance, maintenance and servicing just for a car.

Either keep your current car, or if that is also on finance, trade it in, take the equity (£3,000?) and buy a cheap run about whilst saving he £260/month into an easy access savings account. Use your income to build wealth, not to run expensive depreciating metal or line the pockets of multi-billion pound finance companies.

aayush

please see below 
full break down hope it of help 

macman

If you have a 3 year old car and you are doing less than 5K miles per annum, why do you want to trade it in and have to finance 19K to purchase a new car?  It's insane. You are borrowing near to your net annual income against a rapidly depreciating asset.
Your existing car has just passed the point of peak depreciation and you still owe nearly £10k in finance on it.

Archie_Duke

macman said:

If you have a 3 year old car and you are doing less than 5K miles per annum, why do you want to trade it in and have to finance 19K to purchase a new car?  It's insane. You are borrowing near to your net annual income against a rapidly depreciating asset.
Your existing car has just passed the point of peak depreciation and you still owe nearly £10k in finance on it.

It may be that the 3 year old car is coming to the end of an existing PCP contract, and will therefore be about to trigger the final payment for @aayush to keep it. If it’s owned outright, I agree with you, OP should look to keep it rather than shell out on another finance agreement.

DrEskimo

aayush said:

please see below 
full break down hope it of help 

Very helpful.

So yes its exactly as I outlined above. It's a £22,105 car, as you need to include the £3k equity you are bringing into it to help pay for it.

I would look at getting a £10k loan and just settling the finance you have on your current car. You have a chance to buy a perfectly good 3yr old car that is worth probably north of £15k from a dealer (considering they are offering £13k in trade in) for just £10k. A car you know inside out and has only been driven by you presumably?

It will cost a fraction in interest and depreciation relative to this new car deal.

Dave_5150

If you decide to source your finance elsewhere then you will need to add the £1,250 FDC back in too to give a total to finance of £19,105