Low Likelihood of being offered PCP

olster318

I have been looking at purchasing an Electric Vehicle. I have done the calculations and I would save upwards of £250 a month with a second hand electric car (it is a Tesla Model 3 as the charging infrastructure is superior). 

I currently drive a VW Golf Estate on a low cost personal loan (Tesco Bank) which I have never missed a payment on. If I sell the Golf, I will have about £10,000 deposit to place on a low mileage second hand vehicle with low monthly payments…. Or so I thought. 

I went to do a “free eligibility checker” through a Garages third party site (dealership linked me to NewVehicle.com) which said that I would have a high chance of being offered HP but a low chance of being offered PCP. 

I am in my mid twenties (24) and have a good credit rating and have had loans, credit cards to build up a credit history. I try to use a sensible amount of the credit limit each month and pay it back. 

 A few years back I did buy a new car on PCP (£380 per month) although I had to sell this as I purchased a house with my fiance and do have a mortgage in my name. 

My last employer also messed up my tax which meant I have been on a 683L tax code for the majority of the last financial year which has recently been resolved and start the 2023 FY on a standard tax code. I have also started a new higher paid job in January. 

I know the balloon payments with PCP are based on value and have considerably weighed this up. 

What would be the reasons the eligibility checker is saying I’m unlikely to be offered a low cost PCP (£160 per month)? 

I’m certainly not rushing into making any decisions and am waiting till September to make any decisions. This will also mean I’m a year older. 

Thanks in advance. 

Grumpy_chap

olster318 said:

I have been looking at purchasing an Electric Vehicle. I have done the calculations and I would save upwards of £250 a month with a second hand electric car (it is a Tesla Model 3 as the charging infrastructure is superior). 

I currently drive a VW Golf Estate on a low cost personal loan (Tesco Bank) which I have never missed a payment on. If I sell the Golf, I will have about £10,000 deposit to place on a low mileage second hand vehicle with low monthly payments…. Or so I thought. 

I went to do a “free eligibility checker” through a Garages third party site (dealership linked me to NewVehicle.com) which said that I would have a high chance of being offered HP but a low chance of being offered PCP. 

I am in my mid twenties (24) and have a good credit rating and have had loans, credit cards to build up a credit history. I try to use a sensible amount of the credit limit each month and pay it back. 

 A few years back I did buy a new car on PCP (£380 per month) although I had to sell this as I purchased a house with my fiance and do have a mortgage in my name. 

My last employer also messed up my tax which meant I have been on a 683L tax code for the majority of the last financial year which has recently been resolved and start the 2023 FY on a standard tax code. I have also started a new higher paid job in January. 

I know the balloon payments with PCP are based on value and have considerably weighed this up. 

What would be the reasons the eligibility checker is saying I’m unlikely to be offered a low cost PCP (£160 per month)? 

I’m certainly not rushing into making any decisions and am waiting till September to make any decisions. This will also mean I’m a year older. 

Thanks in advance. 

There are a few factors that may affect this.

The ones you can control are to check all three of the credit reference agencies (there are free access routes available) to see that the data they hold is correct.  It is just the data that matters showing your credit history - ignore the "credit score" number they present to you.

You can also ensure that you are on the electoral roll - lenders tend to see that as a sign of stability.  Having own home and mortgage will help in that regard.

Potential lenders will often assess your affordability based upon you having the new car loan in addition to the existing finance on the Golf.  That may just put you outside the criteria for finance to be granted in your favour.  That may be more likely as lenders may not link the personal loan as being tied to the current car in the same was as they might with a PCP.

Have you set out your own budget and understand how much available funds you would have each month for the TM3?  If not, have a look in the DfW (Debt-free Wannabee) part of this forum and use one of the SoA (Statement of Affairs) templates available.  There is no need to share the outcome - just use it as your own tool.  Ignore the fact the SoA templates are indicated as for those in debt crisis - it is a comprehensive tool that can assist anyone at any time.

You have not given any details on income, mortgage outgoings, so no-one can advise in that regard.  The individual lender eligibility tools tend to be a bit more accurate than the aggregator-site eligibility tools.  The fact that HP looks a bit more likely may be linked to total cost - PCP costs more in the long run, all other things being equal, because of the higher credit balance carried for longer.

Ultimately, you will have a £10k deposit (after clearing the Golf) and will need to borrow at least another £15k on top for a late model low mileage TM3.  That is quite a lot of car finance to have, which might be the basic issue here when set against income and other financial commitments.

born_again

3rd party site giving best guess.

PCP on 2nd hand in reality is best avoided, as they attract large interest rates. Compared to other credit. 

Goudy

You have to remember the website you checked is there to help sell finance products.
It may suggest you aren't suitable for certain products from a finance company point of view.

I would guess your £10k deposit might be throwing the "eligibility checker" off the PCP deal trail.

Each company that offers PCP finance will have a minimum and maximum deposit percentage, often between 10% and 25%, so you could try reducing the deposit on the checker to between that and see if it quotes you, even if it's just a matter of interest.

What you often need to do with a large deposit is cough up a smaller one and pay off a lump sum once you have the finance in place.
You can pay off lump sums on your agreement at any time, this will reduce the monthlies you continue to pay.

But writing that, I have to say a PCP deal on used cars don't usually mean they are cheap, they usually attract higher interest rates.
Plus, used electric car prices are taking a hammering at the moment, which it going to reflect in it's GFV.

Finance companies rarely get GFV's wrong, so your deal may reflect a low GFV, which means your monthlies will be slightly higher.