Going to see car at main dealer tomorrow

velvetti

Thanks for all the helpful replies.

Any thoughts on PCP vs personal loan question? Am I being silly to not take the PCP option even it offers lower interest rate compared to the personal loan?

Thanks again

Alanp

I also won’t go down the pcp route, I’d rather pay cash even if I have to get a small bank loan, there’s something about never owning the car and having to make monthly payments, yes you can buy it at the end of the agreement and I guess it does work for some people,just not me, you might also need to consider getting gap insurance, though not from the dealer, you can get it cheaper elsewhere..

daveyjp

Unless it is either 0% or you secure a dealer contribution to reduce the price and then pay off the whole loan immediately, general advice is to avoid PCP on a used vehicle.

Goudy

Generally PCP on used vehicles attracts a higher rate of interest but main dealers can offer good terms on late used stock.

Usually there will be some sort of incentive to take the PCP finance. That could be a deposit contribution (a discount on the total price) or free servicing. These schemes are offered by the finance company and/or manufacturer if new.

Some people use PCP to gain these incentives and settle within the first month or cancel the finance before it starts, but be careful if you cancel, they may remove the incentives.

PCP just HP but the payments aren't even and you have some more choices when the contract is coming to an end. Just like HP your rights over the car are just the same.

As you seem to think you have some protection with a bank loan, have you thought about how the bank might recover their money if the worst happens on your unsecured loan? I imagine it might cause you more financial stress than a car finance company repossessing a car.

No one can really advise you the best route, but it worth running the figures carefully after you find out if there are any incentives available, the cheapest route might surprise you.

There was a recent post regarding using saving against a bank loan and to be truthful, there wasn't much in it as the savings lump sump was earning full interest where the bank loan's capital reduced month by month which effected the total interest paid even though there was around 3% difference in the rates.

Herzlos

https://forums.moneysavingexpert.com/discussion/comment/82061908#Comment_82061908

PCP essentially just defers about half of the capital.

So using made up numbers to make the maths easier: £10k deal over 4 years:
With HP you'd pay £10k over 4 years: £208/month + interest.
With PCP you'd pay £5k over 4 years at £104/month, and then pay £5k at the end.

With both you're paying interest on the outstanding balance, which would be an average of £5k on HP and £7.5k on PCP. So even if the PCP was at a lower APR you'd potentially still be paying more over the term.

PCP does have the option that instead of paying the remaining £5k, you can just give the car back, which means that if the car is only worth £4k the finance company takes the loss. If it's worth more than £5k you can buy it and then sell it to get the profit.

jimjames

One more question: I’m planning to get loan from bank and buy cash instead of pcp as i don’t want to navigate pcp terms and conditions regarding servicing and maintenance. The bank loan eate might be higher than pcp but at least I’ll have full ownership of the car and autonomy over how to maintain it. Am I being overly cautious?

I don't know the situation with Toyota but other manufacturers offer incentives for using their PCP regardless of whether you keep it long term. My car was 8 years old when purchased but the PCP gave me 2 years complete warranty and 2 years of servicing. I've already had warranty work that would have cost £1500 which is 10% of the car's price. I paid off the PCP finance within a few days of getting the car, the incentives were unaffected.