ways of buying new

[anonymous-user]

As I understand it there are numerous way to get yourself in a new car.

1 - pay the full amount upfront. The car is yours for as long as you want to keep it.

2 - Take out a bank loan for part/full amount and then the car is yours for as long as you want to keep it.

3 - Take out a loan that is secured on the car ie Finance. You stop paying then the car gets taken from you. You never actually own the car until the debt is cleared

4 - This one is the one that I am unsure about how it works - the personal contract plan. Can someone fill in the detail? The way I understand it, its an elaborate way of renting a vehicle with may caveats sewn in to limit the 'usage' you get from it.

Is the last one a branch for those who want to taste the wine but can't afford to buy the bottle?

[KTF]

With PCP you are basically paying the depreciation.

At the end of the term you can pay the balloon and drive off, hand it back and walk away, or use any difference between the guaranteed value and what its currently worth as a deposit on the next car on the same scheme.

[valiant]

Think of PCP's as leasing with a guaranteed value at the end of the agreement. You then decide to either walk away, pay the final balloon payment and it's yours or use any equity (difference between what it is worth as a trade-in and the guaranteed final value) towards a deposit for a another new car.

PCP's get you into a new car for lower monthly payments as you are deferring a large chunk until the end.

If you like to chop and change every 2-3 years it can a good way into a new car but if you intend to keep it then normal HP might be better.

Many different deals available with things like deposit contributions and low APR to muddy the waters so you have to do the maths and see what works for you.