Audi PCP - is this a good deal?

[edardr]

Hello,

This is my first post, apologies if I'm in the wrong place or this is not on-topic.

Looking at an Audi A1 TDI 3dr Sport on PCP as a second car in the household. Car has done 40K, it's in great condition, and price is £10,750.

Putting down £2250, so the credit is £8500, and the term is 3 years. The API Audi are quoting is 14.7%, which seems very high to me (payments will be £144/m).
but they claim that their fixed finance rate of 5.4% is non-negotiable (also includes two services).

Is that true, and does this APR seem reasonable? Wondering whether to turn the screws a bit more as I expect they will want to sell today (end of month/year etc).

Cheers.

[DuraAce]

Depends what the final payment/GFV is I guess........

What's the total amount payable? Weigh that up against a a traditional loan.

[edardr]

GFV is around 6.2K. I'm certainly going to do a PCP deal, but it just seems that 14.% APR is very high in this case. Is that a typical APR for PCP deals on used cars? I don't remember my VW APR being his high. I assumed (I guess) that PCP APR should be around 10-12%?

[Patch1875]

You can get bank loans for 4% I'd be looking at that.

[edardr]

Patch1875 said:

You can get bank loans for 4% I'd be looking at that.

Sure, and this is not a question about the cheapest way to finance a car. Obviously buying the car is cheaper. With a bank loan you would have to buy the entire car (£85000) thus the monthly payments over the same term would be higher.

My question is simply — is 14.7% APR high for a used car PCP deal with Audi, when compared to **other** PCP deals. Hope that makes sense.

[Emeye]

If the car is £8500 after the deposit and the GFV is £6200, then you are only financing £2300 are you not? - I had a quick look and the APR for borrowing £1 - £2,999 from Nationwide is 14.9%

4% deals are based on borrowing £7,500 - £14,999

[Emeye]

Emeye said:

If the car is £8500 after the deposit and the GFV is £6200, then you are only financing £2300 are you not? - I had a quick look and the APR for borrowing £1 - £2,999 from Nationwide is 14.9%

4% deals are based on borrowing £7,500 - £14,999

ETA PCP interest rates are usually more on secondhand cars than new ones.

[edardr]

Emeye said:

If the car is £8500 after the deposit and the GFV is £6200, then you are only financing £2300 are you not? - I had a quick look and the APR for borrowing £1 - £2,999 from Nationwide is 14.9%

4% deals are based on borrowing £7,500 - £14,999

Sort of. You actually are taking the whole amount (£8500) as credit. This includes the balloon payment at the end. So you are also paying interest on the 6.2K also.

This is why I'm so keen to ensure the APR is not overly high for this type of PCP deal.

[Emeye]

edardr said:

Emeye said:

If the car is £8500 after the deposit and the GFV is £6200, then you are only financing £2300 are you not? - I had a quick look and the APR for borrowing £1 - £2,999 from Nationwide is 14.9%

4% deals are based on borrowing £7,500 - £14,999

Sort of. You actually are taking the whole amount (£8500) as credit. This includes the balloon payment at the end. So you are also paying interest on the 6.2K also.

This is why I'm so keen to ensure the APR is not overly high for this type of PCP deal.

Which ever way you look at it, it seems an expensive deal.

Have you considered leasing? I found this after a quick google - there may be better deals out there.

https://www.contracthireandleasing.com/car-leasing...

[edardr]

Emeye said:

Which ever way you look at it, it seems an expensive deal.

Have you considered leasing? I found this after a quick google - there may be better deals out there.

https://www.contracthireandleasing.com/car-leasing...

Yeah thought about it, but leasing seems expensive also. At least with PCP, if you're buying an Audi/VW or similar you usually have a grand or so equity at the end of the term.

With leasing you literally have nothing, though you do get a new car.

[sw67]

Look at a bank loan over 60 months - santander loan £158 x 60 and only £3792 balance atter 36 months.

[Gruber]

edardr said:

Emeye said:

Which ever way you look at it, it seems an expensive deal.

Have you considered leasing? I found this after a quick google - there may be better deals out there.

https://www.contracthireandleasing.com/car-leasing...

Yeah thought about it, but leasing seems expensive also. At least with PCP, if you're buying an Audi/VW or similar you usually have a grand or so equity at the end of the term.

With leasing you literally have nothing, though you do get a new car.

You're going down this PCP route because it might give you a grand in equity at the end?!

And yes, 14.9% is high.

Borrow the money from your bank over whatever period you can afford the repayments. You then have complete flexibility over when you sell it, and when you sell it all the proceeds (net of any remaining loan balance) are yours. Unless there's a complete collapse in the used car market, the total cost will work out considerably cheaper than your 14.9% PCP deal.

[Gruber]

Emeye said:

If the car is £8500 after the deposit and the GFV is £6200, then you are only financing £2300 are you not? - I had a quick look and the APR for borrowing £1 - £2,999 from Nationwide is 14.9%

4% deals are based on borrowing £7,500 - £14,999

That's wrong. He's financing the full £8500. He's just not repaying the capital on the £6200 until the end (when he either pays it off or hands the car back).

[Emeye]

Gruber said:

Emeye said:

If the car is £8500 after the deposit and the GFV is £6200, then you are only financing £2300 are you not? - I had a quick look and the APR for borrowing £1 - £2,999 from Nationwide is 14.9%

4% deals are based on borrowing £7,500 - £14,999

That's wrong. He's financing the full £8500. He's just not repaying the capital on the £6200 until the end (when he either pays it off or hands the car back).

I've always thought PCPs were just dealer backed man maths anyway! I always look at the total paid rather than the monthly figure that many people seem to focus on.

So you pay back the interest on the £8500 over the term?

[S5V8]

14% APR is high and I wouldn't go this route. The other rate they are quoting you at 5.4% is the flat rate which dealers often quote which people assume is the APR.

Cost wise here is a comparison

Audi Way

2250 deposit
£144 x 36 = £5184
GFV 6200
total cost= 13634 but includes two free services for for ease lets say that the services cost a total of £634 so the cost this route is £13000 for the car only.

personal loan way

trick is to take a 5 year loan as after 3 years you will be left a balance just like a pcp

2250 deposit
£155.90 x 36 = £5612.40 (sainsburys bank loan 3.9% APR 5 years £8500)
balance left on loan or GFV = £3741.60
total cost = 11604

therefore the personal loan route is £1396 cheaper.

This provides greater flexibility too.

[loskie]

Sainsburys Bank

[oldnbold]

S5V8 said:

(sainsburys bank loan 3.9% APR 5 years £8500)

Unfortunatly not all people qualifying for a loan will be offered the 3.9% rate, if I remember correctly they only have to offer that rate to 51% of people who qualify for a loan in order to advertise it. I luckily did get the low rate with them when I needed a loan a few years ago.

Most people will qualify for the PCP unless they have a very bad credit rating as it's secured against the asset with plenty of equity.

But agreed 14% APR does seem very steep.

[edardr]

Thanks all. I think my question (whether 14.7% was high for PCP has been answered).

Personal loan seems to be the best (and cheapest solution).

[Dr G]

Tell the dealership to quote you on a 5 year HP also; they're very flexible these days with regard to over payments and they should be buying that money in at <3% flat.

If their '15% APR' is not negotiable tell them to swing and go to another broker. Two free services on an A1 is £3-400 quid tops.

[Little Lofty]

14% is very high! I think you can get a credit card for that sort of rate. As suggested get a bank loan over a longer term to keep the monthly similar, the balance at the end is just the same as a balloon, but at least the car is yours to sell so you could sell it privately for a bit more than you'd get for it as a P/x. I'd be tempted to get a bank loan and then buy privately, which would save you even more. The Audi warranty is good piece of mind but don't expect the car to be like brand new just because it's from an Audi dealer, their cars are no better than any other dealers or private cars out there.