What to do at the end of PCP

guineapiggirl13

I've got a Sandero stepway on PCP. The 3 year term will be up in Nov. It's v low milage and I have around 3.5-4k in equity.

Initially I was planning on upgrading to a bigger car (new family member!) but this would mean a big uplift in monthly payments and even bigger second hand cars are pricey, meaning I'd need a decent loan size (and therefore monthly payment). 

I'm thinking maybe the best thing to do is get a loan to buy my current car in November, space wise it's tight but we've coped so far. 

What's the best thing to do financially? I know probably not get a car on PCP in the first place, but as that's already happened I'm wondering what to do from here. Thanks!

Grumpy_chap

guineapiggirl13 said:

I've got a Sandero stepway on PCP. The 3 year term will be up in Nov. It's v low milage and I have around 3.5-4k in equity.

Initially I was planning on upgrading to a bigger car (new family member!) but this would mean a big uplift in monthly payments and even bigger second hand cars are pricey, meaning I'd need a decent loan size (and therefore monthly payment). 

I'm thinking maybe the best thing to do is get a loan to buy my current car in November, space wise it's tight but we've coped so far. 

What's the best thing to do financially? I know probably not get a car on PCP in the first place, but as that's already happened I'm wondering what to do from here. Thanks!

Financially, the best thing is almost certainly to buy the Dacia and keep it until dies.  The question is then ensuring you have the most cost-effective method to meet that balloon payment.

IF you were to change cars, how much bigger would you be going to?  The Sandero Stepway is one of the larger small SUV cars and has quite a lot of space inside.

guineapiggirl13

Well we were thinking of something a bit more spacious in the back, rather than necessarily more boot space. But I'm not sure any space uplift would be significant to warrant such an monthly price increase given, as you say, the stepway isn't that small. 

Thanks for your help, I just wanted a second opinion! 

facade

At the moment, buying your car is the best option.

You are getting it for way below current retail price, as second hand values have shot up, which is why you have £3.5K in equity- and then a dealer would mark it up at least £1000 for retail.

Flight3287462

Now is not the time to be buying new cars or second hand cars prices are inflated due to Covid, parts supply etc.

You are in a great position to pick up car at below retail so my advice is keep it for a year at two at least whilst keeping an eye on car prices and then you will be in a better position to get a decent deal or as has been suggested keep running until it dies.

guineapiggirl13

Thanks everyone! Looks like the Dacia will be sticking around for a while yet 👍

DrEskimo

As above, the way to think about it is you are looking to buy a car, and to treat the offer you have to buy your current car on PCP as just one option. 

Given you can buy it at a good price and also know it’s entire history, it will be hard to beat with anything on the open market, providing it still meets your needs. 

If you need additional finance to pay it off though, remember to factor in that any lender will consider your current PCP in addition to any further borrowing. 

What rate are you paying on the PCP? If you can secure a lower rate unsecured loan May as well go ahead with it today to save on interest. No need to wait till November. You can settle the PCP in full whenever you like. 

Goudy

If it meets your needs, keep it.

As already written, you can pay off the PCP anytime you like so you need to work out the cheapest way to do this.

It might be cheaper to wait until October if what you have to borrow to pay it off is more expensive than the PCP interest as your new borrowing will be less.

If your new borrowing is cheaper, it's worth settling now as you will get a rebate on some of the interest on the PCP deal, but it won't be much, just the interest on a couple of months as they can charge you around two months interest to settle.

There probably won't be much in it, but you can ask for a settlement figure from the finance company and work it out.

It might be worth waiting until October and try and save a few quid between now and then, then you won't have to borrow as much to settle the GFV in November.