PCP or personal loan on used car? help please!
Discussion
I know this has been done a lot on here as I've searched through the forum but I still cant get my head round it.
My girlfriend ordered a used Mini from a main dealer yesterday but after going through the figures we arent sure the deal she got was the best.
Car is £12500 and they gave her £2500 trade in on her old car as a deposit.
So £10000 left to finance.
Going with PCP over 3 years she would pay £211 a month which totals £7600.
The final value payment guide as qouted by the dealer was around £5000 so in total she will have paid £12600 if she decides to buy it and not hand it back.
The dealer quoted 4.2% interest but we're not sure where this comes from. She could get a personal loan of £10000 at a rate of 6.7% paying £309 per month totalling £11,004 over 3 years, or pay £237 a month over 4 years and still only pay £11,334 over the term.
I realise the PCP payments are a lot lower, is that the only advantage or are we missing something?
Thanks.
My girlfriend ordered a used Mini from a main dealer yesterday but after going through the figures we arent sure the deal she got was the best.
Car is £12500 and they gave her £2500 trade in on her old car as a deposit.
So £10000 left to finance.
Going with PCP over 3 years she would pay £211 a month which totals £7600.
The final value payment guide as qouted by the dealer was around £5000 so in total she will have paid £12600 if she decides to buy it and not hand it back.
The dealer quoted 4.2% interest but we're not sure where this comes from. She could get a personal loan of £10000 at a rate of 6.7% paying £309 per month totalling £11,004 over 3 years, or pay £237 a month over 4 years and still only pay £11,334 over the term.
I realise the PCP payments are a lot lower, is that the only advantage or are we missing something?
Thanks.
Personal loan is the way do go, assuming credit rating is good and you can get the advertised rate of 6.7%
PCP does give you lower monthly payments due to the balloon payment but you will pay more overall as you are paying interest in the deferred amount.
4.2% (aprox 8.4 APR) quoted from dealer will be base rate where 6.7% is APR.
PCP does give you lower monthly payments due to the balloon payment but you will pay more overall as you are paying interest in the deferred amount.
4.2% (aprox 8.4 APR) quoted from dealer will be base rate where 6.7% is APR.
Where are you going to get the £5k balloon payment from? If you save it up over the 3 years, this adds £138 you need to save monthly. This means (to have the car completely paid for after 3 years) the loan is cheaper per month.
If you finance the £5k, you'll be paying for the car over a longer period (and possibly paying more).
If you finance the £5k, you'll be paying for the car over a longer period (and possibly paying more).
Depends really on what you want to do with it after 3 years. Ideally she wants to be in a position to maintain her deposit for the next one so consider which option is likeliest to achieve that. You'd need the car to be worth £7500 after the 3 years in the PCP case so you need to see how likely that would be. If they only offer £5000 then poof, her deposit's gone. PCP will also be subject to mileage and condition obligations which they will hammer her for if not met.
For another £98 a month it would make sense to take out the personal loan and after 3 years it's hers and she can do what she likes with it.
For another £98 a month it would make sense to take out the personal loan and after 3 years it's hers and she can do what she likes with it.
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