How would you set up a PCP if you were potentially keeping the car for 4/5 years?

IAMIAM

Small Deposit? Large Deposit?

In addition, I will probably complete 15k miles for a couple of years, then say 8-10k for the next couple of years (moving). Is it wise to set up the pcp over 60 months, at 10k miles per annum with a view to trading in around 48 months and/or at 50k miles.....(I'll be getting a 1 year old car circa 10-15k miles on the clock)

daveyjp

All down to the vehicle in question, but in general I wouldn't buy a used car on a PCP.  You rarely get any financial incentives and 60 months is a very long time to be paying for it.  What if after 4.5 years it suffers an expensive repair?  Can you afford both the repair and the PCP?

My advice would be to find a cheaper low mileage 3-4 year old model and buy it outright.

Arunmor

OP you need to do a lot more research, your proposed plan will probably be the most expensive.  Do the numbers.

Mildly_Miffed

PCPs on used cars are rarely great deals. You may even find a PCP on a new car better value.

Also, the balloon after 5yrs will be a very small proportion of the amount financed.

Look at all the options, run the numbers.

jimjames

Can you pay it off? Best option generally seems to be to take out the PCP to get the finance incentives and then pay it off within 14 days. (well actually it appears to be that you have to inform them within 14 days but have 30 days to make payment)

Arunmor

jimjames said:

Can you pay it off? Best option generally seems to be to take out the PCP to get the finance incentives and then pay it off within 14 days. (well actually it appears to be that you have to inform them within 14 days but have 30 days to make payment)

Aye but he's looking at second hand.

Ectophile

How long is the manufacturer's warranty?  Taking out finance that's longer than the warranty is a risky thing to do.

DrEskimo

Arunmor said:

jimjames said:

Can you pay it off? Best option generally seems to be to take out the PCP to get the finance incentives and then pay it off within 14 days. (well actually it appears to be that you have to inform them within 14 days but have 30 days to make payment)

Aye but he's looking at second hand.

You can get PCP incentives on second hand. I got £1,000 deposit contribution and 2 free services from Renault when I bought a second hand car from one of their dealers. As above, settled the finance days later.

The OP is convinced that having a PCP will reduce their financial risk by providing an option to hand the car back to the finance company at the end of the agreement. Across a number of their threads asking different variations of the same overarching question on PCP finance, I have tried to explain that this approach is very likely to result in them needlessly spending more for no benefit, but they seem set on taking this approach.

I think it would be useful if the OP actually posted a real example of a car and finance agreement they are looking to do to work through actual figures. This will confirm whether using a PCP would be beneficial or not.

Goudy

Mildly_Miffed said:

PCPs on used cars are rarely great deals. You may even find a PCP on a new car better value.

Also, the balloon after 5yrs will be a very small proportion of the amount financed.

Look at all the options, run the numbers.

Yes interest rates on used PCP deals tend to be higher than on new and more often than not, manufacturers own finance houses offer better deals on new cars, many with deposit contributions and other benefits.

You'll also get the full warranty and other perks like breakdown cover for at least 3 years if not more these days.
A car on expensive finance out of warranty can cause a massive headache.

It's a new car, so hasn't 10-15k on the brakes, tyres etc and it'll not want a MOT for three years.

It's worth running the figures for both and add up all the other little bits and pieces that come with both to get a good overall figure of what both would cost you over the 4 years.


Your deposit and contracted mileage will effect what you pay in two ways
The higher the deposit, the less you borrow overall obviously.

The mileage effects the GFV.
The more miles, the less the GFV will be after 4/5 years which means your monthly payments will be slightly higher.

It's no use fiddling with the mileage if you plan to hand it back when the GFV is due, you'll just pay excess mileage charges. 

jimjames

Arunmor said:

jimjames said:

Can you pay it off? Best option generally seems to be to take out the PCP to get the finance incentives and then pay it off within 14 days. (well actually it appears to be that you have to inform them within 14 days but have 30 days to make payment)

Aye but he's looking at second hand.

Second hand is still possible with PCP, just done one myself for 8 year old car. APR wasn't great at 14% but irrelevant as paying off.

Arunmor

jimjames said:

Arunmor said:

jimjames said:

Can you pay it off? Best option generally seems to be to take out the PCP to get the finance incentives and then pay it off within 14 days. (well actually it appears to be that you have to inform them within 14 days but have 30 days to make payment)

Aye but he's looking at second hand.

Second hand is still possible with PCP, just done one myself for 8 year old car. APR wasn't great at 14% but irrelevant as paying off.

What was the benefit to you?