PCP plan

t45 · 12 October 2016 at 11:08AM

Hello,
Looking to buy a new car - went to dealer and like a car priced 6800.
Tey have offered a PCP deal (I have no idea about these - ive never financed a car) and have said to me this would be good.
Car is priced 6800.
I have put down 500 deposit
Have arranged to go back and put down another 1000k as the payment
So I put down a total of 1500
They have asked that I pay 36 mthly payments of 120 followed by a balloon payment of, If I remember, about 3600 at the end of the 3 years
I am covered for alloys, paintwork, MOT for 3 years
After the 3 years I can return the car, keep the car (I assume buy it outright) or trade it in for a new car....
I said I could pay for the car outright and or put down a bigger payment and they kept saying this package would be best - think they could see I had no idea about PCP.
My question: would I be best for me to put down more money and lower my monthly payments or balloon payment?
I understand that the salesman is on commission.
Also, even though I have signed some draft paperwork and filled in a finance form that asked employment and residency questions - can I still go back to them and ask to put down more money? I feel that for some reason they are pushing me into this plan when I have said I would like
to put down more....

Oakdene · 12 October 2016 at 11:12AM

What are they offering you as extra with the PCP, sometimes you get a years insurance, 2 years free servicing etc... if they haven't offered anything then say you'll pay cash as its not worth the hassle,

missile · 12 October 2016 at 11:14AM

The dealer makes money selling you finance.
For some it can be advantageous, for many it is not.
From your figures it would appear that you will pay a total of £9,420 for a car with a sticker price of £6800? That seems a very expensive "deal"
You seem unsure of these figures, you should ask for confirmation in writing.
What is the car?
MOT is not required until the car is 3 years old.

t45 · 12 October 2016 at 11:21AM

thank you all so much.
as far as I can see they are
The car is a 2015 Fiat 500
They are offering the wheel/alloy cover, a 'gap cover' and MOT and servicing for 3 years
It all seemed very complicated to me and I have signed one set of papers and have a receipt for 500 that I paid a couple of days ago - can they hold me to this or can I:
a) pull out of the sale
b) as to pay more cash up front or buy the car outright
I will ask for confirmation in writing - thank you for flaggin that up - all I have is a receipt and I have only put down a deposit

Oakdene · 12 October 2016 at 11:27AM

Servicing will cost around £450-£500 for two services...

Its your choice but if you've got enough to buy the car outright I'd take the PCP & pay it off the next day by bank transfer to the finance that way you keep the servicing & GAP but you wont incur a silly amount of interest

neilmcl · 12 October 2016 at 11:41AM

t45 wrote: »

thank you all so much.
as far as I can see they are
The car is a 2015 Fiat 500
They are offering the wheel/alloy cover, a 'gap cover' and MOT and servicing for 3 years
It all seemed very complicated to me and I have signed one set of papers and have a receipt for 500 that I paid a couple of days ago - can they hold me to this or can I:
a) pull out of the sale
b) as to pay more cash up front or buy the car outright
I will ask for confirmation in writing - thank you for flaggin that up - all I have is a receipt and I have only put down a deposit

What's the quoted APR?

I'd reckon you likely be better off with a bank loan for that car.

I've taken out PCP finance in the past, on new cars only, but I never consider one unless I was getting somewhere between 18%-20% off the retail.

t45 · 12 October 2016 at 11:44AM

Thank you Oakdene - very helpful - im not very good at these things and do not understand the pros and pitfalls of pcps - ...
so how does this work:
I purchase the package that they have offered at 36 x 120 payments with all of the covers and then the next day do I pay off with the balloon payment?
Would it be best to wait a month and then pay it off?
So in effect I sign up to the PCP package and then pay it off but keep the covers etc....
So I would keep the servicing and GAP?
With these packages, am I right to think you can actually pay them off within the 3 year period? But what about the balloon payment?

t45 · 12 October 2016 at 11:46AM

thanks you neil - I think APR is 11% or thereabout - im really not good at any of this - the saleperson just said it's a good deal!
The car is 2015 - small fiat, had 17,000 miles
I can purchase the car outright - I kept saying this to the salesman
I have signed a paper and have a receipt for my 500 deposit and Im supposed to be going back today to put down the extra 1k
It's not a new car -
they aid that I am getting an almost brand new car at second hand price!

Oakdene · 12 October 2016 at 11:53AM

t45 wrote: »

Thank you Oakdene - very helpful - im not very good at these things and do not understand the pros and pitfalls of pcps - ...
so how does this work:
I purchase the package that they have offered at 36 x 120 payments with all of the covers and then the next day do I pay off with the balloon payment?
Would it be best to wait a month and then pay it off?
So in effect I sign up to the PCP package and then pay it off but keep the covers etc....
So I would keep the servicing and GAP?
With these packages, am I right to think you can actually pay them off within the 3 year period? But what about the balloon payment?

No, you phone up & you will pay the contract amount, which I assume will be the amount borrowed, don't wait a month as you will be paying interest but yes you do pay it off & keep the covers, The only negative to this is that the sales exec will have the commission clawed backed from them.

You can pay the balance off at any time in the 3 years but it's best to do it as soon as you can if you can afford to.

neilmcl · 12 October 2016 at 11:54AM

t45 wrote: »

Thank you Oakdene - very helpful - im not very good at these things and do not understand the pros and pitfalls of pcps - ...
so how does this work:
I purchase the package that they have offered at 36 x 120 payments with all of the covers and then the next day do I pay off with the balloon payment?
Would it be best to wait a month and then pay it off?
So in effect I sign up to the PCP package and then pay it off but keep the covers etc....
So I would keep the servicing and GAP?
With these packages, am I right to think you can actually pay them off within the 3 year period? But what about the balloon payment?

No, you don't pay of the balloon, you pay of what's owed, which in this case would be the rest of the invoice, plus potentially a small bit of interest.

The longer you wait to "settle" the finance the more interest you'll have to pay. Legally you cancel the finance altogether within 14 days and just pay off the rest of the car.

t45 · 12 October 2016 at 11:58AM

thank you - youre so helpful but im a bit of a dim wit - i can see that its best not to go down the full 3 year term an dthen pay thr 3.5ish balloon at the end.
Do I:
1. go for PCP and then next day call them up and pay - thank you oakdene for this idea and get the perks - the Gap Cover etc but no tthe long term interest acrued and the slaesman gets little commission
2. just go in and buy the car
I have signed something an d filled out sinance forms so im not sure if they can hold me to this - there was 3 salespeople standing around the desk, practically hovering when I was signing - i was by myself and it felt awful - quite pressurising - the car is lovely but Im concerned that this i snot the right package for me given that i could buy the car outright

PCP plan

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