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  • FIRST POST
    • Money_Or_Cars
    • By Money_Or_Cars 4th Jan 18, 1:56 PM
    • 8Posts
    • 0Thanks
    Money_Or_Cars
    PCP effect on mortgage
    • #1
    • 4th Jan 18, 1:56 PM
    PCP effect on mortgage 4th Jan 18 at 1:56 PM
    I am looking into getting a new car on PCP. I can easily afford the monthly payments and totally understand what I'll be getting myself in for.

    I have always had cars on finance (HP) and usually change my car every few years, hence the reason I'm considering going for a PCP deal which I believe will suit me better.

    BUT, will this have an effect when it comes to applying for a mortgage? I'm 23 years old, and I'm able to comfortably keep saving for my deposit and pay for a car. I'm just worried it may come back to haunt me in a few years when I want to apply for a mortgage.

    Anyone have any experience of this?

    Thanks.
Page 1
    • debtdebt
    • By debtdebt 4th Jan 18, 2:01 PM
    • 480 Posts
    • 311 Thanks
    debtdebt
    • #2
    • 4th Jan 18, 2:01 PM
    • #2
    • 4th Jan 18, 2:01 PM
    It wouldn't have a negative effect unless you defaulted on the payments.
    • Herzlos
    • By Herzlos 4th Jan 18, 2:15 PM
    • 7,314 Posts
    • 6,592 Thanks
    Herzlos
    • #3
    • 4th Jan 18, 2:15 PM
    • #3
    • 4th Jan 18, 2:15 PM
    It'll go against you in terms of affordability - it's a monthly commitment to pay for the car, though it's no different to an HP commitment.

    When are you intending on buying and how long is the PCP? Might be worth keeping current car until mortgage has completed.
    • Money_Or_Cars
    • By Money_Or_Cars 4th Jan 18, 2:21 PM
    • 8 Posts
    • 0 Thanks
    Money_Or_Cars
    • #4
    • 4th Jan 18, 2:21 PM
    • #4
    • 4th Jan 18, 2:21 PM
    As I get a lot of enjoyment from cars, I can see myself changing cars every time I come to the end of a loan agreement, thus always having an outgoing payment for a car - which is why I'm looking at PCP.

    I have a 4 year saving plan in place which should get me up to 24k (house deposit). The PCP deal is also 4 years.

    Is it only the monthly commitments that are taken into account when applying for a mortgage? Or would they be looking at the total debt of the car?
    • Herzlos
    • By Herzlos 4th Jan 18, 2:55 PM
    • 7,314 Posts
    • 6,592 Thanks
    Herzlos
    • #5
    • 4th Jan 18, 2:55 PM
    • #5
    • 4th Jan 18, 2:55 PM
    It'd cover both. Predominantly that you can afford the payments should rates go up significantly, so the monthly PCP payments will be the bigger factor.

    If the PCP runs out when you're about to apply for the mortgage, it might be best to make do without a new finance agreement until the mortgage has completed.
    • neilmcl
    • By neilmcl 4th Jan 18, 4:30 PM
    • 11,084 Posts
    • 7,908 Thanks
    neilmcl
    • #6
    • 4th Jan 18, 4:30 PM
    • #6
    • 4th Jan 18, 4:30 PM
    As I get a lot of enjoyment from cars, I can see myself changing cars every time I come to the end of a loan agreement, thus always having an outgoing payment for a car - which is why I'm looking at PCP.

    I have a 4 year saving plan in place which should get me up to 24k (house deposit). The PCP deal is also 4 years.

    Is it only the monthly commitments that are taken into account when applying for a mortgage? Or would they be looking at the total debt of the car?
    Originally posted by Money_Or_Cars
    If you've no interest in keeping the car then why take out a finance deal at all, just lease it.
    • jimjames
    • By jimjames 4th Jan 18, 5:22 PM
    • 12,646 Posts
    • 11,312 Thanks
    jimjames
    • #7
    • 4th Jan 18, 5:22 PM
    • #7
    • 4th Jan 18, 5:22 PM
    It will also delay you being able to save enough for your deposit as well as impacting affordability for mortgage
    Remember the saying: if it looks too good to be true it almost certainly is.
    • pogofish
    • By pogofish 4th Jan 18, 6:26 PM
    • 8,615 Posts
    • 8,948 Thanks
    pogofish
    • #8
    • 4th Jan 18, 6:26 PM
    • #8
    • 4th Jan 18, 6:26 PM
    When did mortgage issues become a subject for the motoring forum..?
    • jimjames
    • By jimjames 4th Jan 18, 7:57 PM
    • 12,646 Posts
    • 11,312 Thanks
    jimjames
    • #9
    • 4th Jan 18, 7:57 PM
    • #9
    • 4th Jan 18, 7:57 PM
    When did mortgage issues become a subject for the motoring forum..?
    Originally posted by pogofish
    OP has also posted on the savings forum. But it's a fair question about the issues of buying a new car on PCP.

    There are plenty of threads here that explain why it's a bad idea
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Herzlos
    • By Herzlos 5th Jan 18, 12:46 PM
    • 7,314 Posts
    • 6,592 Thanks
    Herzlos
    I should also mention; getting enjoyment from cars doesn't require buying a new one on a finance deal. You can get some amazing cars for relative pocket change; whether big luxobarges like an XJ or something sporty like an MR2, Supra or XKS.
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