Car finance Vs PCP

john jako · July 31, 2017

Looking at buying a new motor as everyone knows the current is a disaster. However I'm abit dense with all things cars and money. PCP could just be another name for finance for all I know. So I thought I could ask my very helpful fellow blues. WTF am I thinking.

I've only ever had finance. Not wealthy or lucky enough to have inheritance so need to rally on over priced loan deals.

These PCP deals look good for money at first glance but they seem to have some downsides. Annual mileage??

Basically what's the best way to buy a car if you can't buy it outright?

The binman chronicles · July 31, 2017

john jako said:
Looking at buying a new motor as everyone knows the current is a disaster. However I'm abit dense with all things cars and money. PCP could just be another name for finance for all I know. So I thought I could ask my very helpful fellow blues. WTF am I thinking.

I've only ever had finance. Not wealthy or lucky enough to have inheritance so need to rally on over priced loan deals.

These PCP deals look good for money at first glance but they seem to have some downsides. Annual mileage??

Basically what's the best way to buy a car if you can't buy it outright?

PCP is good if you want to keep the repayments low. You will have to keep to a certain mileage (& condition) if you want to give it back though at the end. If you can try and get the dealer to pay for your deposit then it's far better than leasing. At the end of the agreement your car should be guaranteed to be worth x amount, usually they try to give a bit of equity to take out another PCP on a new car or you pay the balloon value to keep the car.

Other things to note with PCP is that If you want to keep the car at the end you have to think how long you will be paying the car off, if it's on a 3 or 4 year deal, then it could take 3 to 4 years to pay off the balloon loan you could be looking at a 6 to 8 year repayment period. (if you don't sell it by then) This means you pay far more in interest than you would with a normal HP loan.

dublinbluenose · July 31, 2017

Unless you are looking at changing the car every 3 years then give pcp a big swerve. The examples they give are usually when a large deposit it trade in is involved. Payments can be high when you are on your 2nd one and you have no asset to trade in.