Why take out PCP?

[Bursar]

I'm looking at buying a new car, and the dealer is suggesting a PCP plan, but I'm struggling to see what the benefits are.

If I don't want to keep the car at the end of the term, I'd be much better off with PCH.
If I do want to keep the car, then I'd be better off buying it outright.

Am I missing some upside that makes it worthwhile?

[Dave Hedgehog]

Low monthly payments and low deposit

That what it gives you


As with all types of loans add all the figures together to work out a total cost

[Sheepshanks]

Bursar said:

If I don't want to keep the car at the end of the term, I'd be much better off with PCH.
If I do want to keep the car, then I'd be better off buying it outright.

Probably the main advantage is you don't have to make the choice above - you can do either at the end of the PCP.

Also PCH isn't very flexible - it varies by deal, but worst case if your circumstances change and you want to terminate early you could be liable for most of the outstanding amount.

PCP vs outright purchase - generally there's a deposit contribution or some other incentive to use PCP. Often it's worth taking it and then withdrawing or settling the PCP. Don't tell the salesman you're going to do this.