How would you buy a used car for around 20k. PCP/Mortgage Finance?

Goudy

I have to agree, PCP isn't a good way to buy a used car.
The interest rates are never great and you don't often get a deposit contribution which a lot of new cars come with on PCP.

I wouldn't say PCP is a trick or particularly bad though.
It's obviously not always the cheapest way to buy a car but not everyone has all the options open to them and cars are far more expensive than they have ever been.
You need to consider if it's the cheapest/best way for you?

It's an option that might suit some and not others, if you have multiple options than all's good.
If your options are limited, then you work with what is on offer.

As for buying with cash being cheaper, yes maybe but it could be cheaper to take finance.
Cash in savings are effectively going to cost you 4 or 5% in lost interest, so if you could get a 0% PCP or HP deal you'd actually be better off with that than using all your savings.


PCP is proper HP, it's just the repayments and interest are repaid differently.

Take "normal" HP or loan and you repay the capital and all the interest in equal monthly repayments.

Take PCP and you defer a portion of the capital which is paid at the end, the GFV (but have options on).
You pay the remaining capital and all the interest in the monthly repayments up to that GFV point. All the interest is in the monthlies not the GFV part.

You pay the interest with both, just with the PCP you defer some of the capital but not the interest.

Obviously there is a cost to defer this capital, but it's doesn't have to be ruinous as some might suggest.
Some of this extra cost can be offset with a decent deposit contribution, but as mentioned above they are only usually offered on new cars.
What you need to work out is if it's cheaper/better then the other options open to you.

RavingMad

I bought a car using CC but had to do money transfer. So paid 5% transfer fee

A few friends use HP.  I asked one what APR was and they said 10%