pcp finance or loan

samhawtin8 wrote: »

I'm after a new car but what the best cheapest way to get one!! pcp finance or take out a loan and and but the car out right. I've recently paid off debts to help with my credit score so I don't want to make a mistake that could damage my score.

The only ways in which a car loan could adversely affect your credit score are (a) if you default on the agreement, or (b) if you want to apply for a mortgage and your car loan creates a "dent" in your affordability calculation.

In terms of "cheapest", it is a complex question, and depends in part on information that you have not provided: what car, how old, kept for how long, what usage, how many miles per year?

There's also the question of what "cheapest" means in this context? Cheapest for monthly payments, low/no deposit, cost per year, cost per mile? Eventually own the car, or not own it? Replace frequently or keep for the long term?

To clarify, when you say you want to buy a 'new' car - do you mean brand new, or simply 'new' to you (ie a used car)? The latter would be the cheapest option.

as usual lots of judgmental posts and not much help

The car dealers love PCP and a lot of the cars leaving the showroom are financed in this manner, the attraction for the buyer is low monthly payments so you get in a new car for low monthlies but are faced with a large balloon payment if you want to keep the car at the end of PCP term

dealers love PCP because most people just hand the car back and jump in a new car after three years selling their sole to the dealer for another term

dealer finance has higher monthly payments but if you can get zero or very low APR with some dealer and manufacturer contributions and want to keep the car for the duration then this may be a better way to buy the car as it is yours at the end of the agreement with no large balloon payment

if the dealer finance is not being offered at low or zero APR then a low cost loan may be the way to go if you have a good credit rating and can get a 2.8% apr loan then this may be cheaper than the dealer finance offering

but as said there is no real cheap way to buy a car but you have to way up your options and your needs and go with what is best for you

I personally like to save for my cars and usually try and keep them around five years so as soon as i buy a new car i start saving for the next car and five years down the line i have the means to replace my current car