PCP for Used Car

[PC80]

Hi folks

Does anyone know of a finance company that offer PCP (personal contract plan/purchase) financing on used cars?

I can find such finance on recent used cars, such as a 1 or 2 year old car with a main dealer. But what about cars that fall into one or more of these categories:

• Already more than 3 years old
• Not with a main dealer
• Private sellers

There's lots of companies offering unsecured car finance, but you have to finance the entire amount of the car, unlike a PCP where you finance part of it and then have the option to buy at the end (i.e. balloon payment). PCPs account for about 80% of new car finance, yet it seems elusive once you go beyond a nearly-new car.

Any thoughts?

cheers.

[phil4]

I've certainly done it on used cars, usually less than 3 years old though.

I think the reason for not usually offering it on older cars is down to the final value, and possibly being harder to predict.

That being said a quick google suggest Capital Car Finance - will offer on upto 5 years old

[BUG4LIFE]

Zuto.

[PC80]

Thanks Phil. I took a look at their website and they do say they can do financing up to 5 years old, but it's not clear if that includes the PCP, or just the lease purchases (with no balloon). I've emailed them to ask. Cheers.

[PC80]

Zuto is a possibility. I also checked out their website and again it''s hard to be sure. It says you can finance any car from any dealer, which is promising, but again it's not clear if you can finance an older car with a PCP (as opposed to hire purchase / loan) and it looks like you can't finance a purchase from a private seller.

[Nickp82]

Just to clarify(and apologies if I'm stating the obvious) but you are aware you are still financing the whole amount of the car with a PCP (minus any deposit)?

The balloon payment is still part of the loan and you pay interest on it.

[nickfrog]

OP - why would be the advantage of a PCP compared to an unsecured loan at around 3% ?

[GolfR12]

PC80 said:

Hi folks

Does anyone know of a finance company that offer PCP (personal contract plan/purchase) financing on used cars?

I can find such finance on recent used cars, such as a 1 or 2 year old car with a main dealer. But what about cars that fall into one or more of these categories:

• Already more than 3 years old
• Not with a main dealer
• Private sellers

There's lots of companies offering unsecured car finance, but you have to finance the entire amount of the car, unlike a PCP where you finance part of it and then have the option to buy at the end (i.e. balloon payment). PCPs account for about 80% of new car finance, yet it seems elusive once you go beyond a nearly-new car.

Any thoughts?

cheers.

Oracle Finance. If buying privately, you will have cover the cost of the RAC inspection which is provided by the finance company and also purchase some sort of warranty.

[jsims1]

We use Close Brothers Motor Finance at our used car dealership and we can do PCP deals on used cars up to 4 years old or 50,000 miles (at the start of the agreement) but that is only for cars on our forecourt not private sales.

[PC80]

Nickp82 said:

Just to clarify(and apologies if I'm stating the obvious) but you are aware you are still financing the whole amount of the car with a PCP (minus any deposit)?

The balloon payment is still part of the loan and you pay interest on it.

Hi Nick,

Yes, you're right that the whole amount is financed and must be serviced. What I meant to say was that there's only "capital" repayments on the loan that doesn't cover the residual. Hence the lower monthly payments.

Edited by PC80 on Monday 6th November 20:02

[Andy OH]

As another poster mentioned, try Oracle Finance

[PC80]

nickfrog said:

OP - why would be the advantage of a PCP compared to an unsecured loan at around 3% ?

Main advantage is that I wouldn't have to finance the entire amount of the car's sale price, so the monthly payments would be lower. Of course, I wouldn't own the car at the end though.

There are plenty of nice cars available on the second hand market but they would incur a hefty monthly charge, or a 5-6 year loan, to finance the entire selling price. With a PCP I can get the car for a lower monthly price, and be able to move on after 3 years to something else, albeit I'd have no deposit unless I save cash separately.

It would also eliminate the depreciation risk on a 2nd hand car, whilst giving me the upside should it really hold its value.

E.g. a £20k second hand car: Ignoring interest this would be £555 per month (36 months), but with a £8k residual on a PCP it would be £333 per month. I couldn't afford £555 per month but I could afford £333. It means I can have the £20k car for three years instead of one that only cost £12k to start with, although the higher interest rates on PCP would eat into some of this saving. And if circumstances changed and I could afford £555 per month, I could just save up the difference as a deposit on the next car.

Does this sound right to you all, or am I missing something?

Thanks to those who recommended other finance such as Oracle. EDIT: Oracle looks great, but I think they're mainly for £40k-plus cars.

Edited by PC80 on Monday 6th November 16:29

[Zetec-S]

If you're a Halifax customer they offer PCP on used cars (supposedly most UK dealers).

[hondansx]

I use Oracle.

[Mandat]

PC80 said:

Main advantage is that I wouldn't have to finance the entire amount of the car's sale price, so the monthly payments would be lower. Of course, I wouldn't own the car at the end though.

There are plenty of nice cars available on the second hand market but they would incur a hefty monthly charge, or a 5-6 year loan, to finance the entire selling price. With a PCP I can get the car for a lower monthly price, and be able to move on after 3 years to something else, albeit I'd have no deposit unless I save cash separately.

It would also eliminate the depreciation risk on a 2nd hand car, whilst giving me the upside should it really hold its value.

E.g. a £20k second hand car: Ignoring interest this would be £555 per month (36 months), but with a £8k residual on a PCP it would be £333 per month. I couldn't afford £555 per month but I could afford £333. It means I can have the £20k car for three years instead of one that only cost £12k to start with, although the higher interest rates on PCP would eat into some of this saving. And if circumstances changed and I could afford £555 per month, I could just save up the difference as a deposit on the next car.

Does this sound right to you all, or am I missing something?

Thanks to those who recommended other finance such as Oracle. EDIT: Oracle looks great, but I think they're mainly for £40k-plus cars.

Edited by PC80 on Monday 6th November 16:29

Just to correct one incorrect assumption.

With PCP, the loan that you take out is for the full value of the car (therefore you are financing all of it), however you are only paying back a proportion of the loan whilst the balloon payment is deferred to the end of the term.

This means that you will have lower monthly payments but your overall interest charge will include the cost of borrowing the balloon amount as well. Since the balloon amount is not being reduced over the term, the interest payments will add up to a fair bit more than compared with HP or a bank loan.

I would recommend that you look at that overall cost to borrow the amount of money that you need, and calculate the different interest amounts between bank loan & PCP, which will then allow you to make an informed decision either way.

One other point to consider; if you want a PCP-esq loan, consider taking a bank loan for a longer time period ( say 5 years) to give you lower monthlies, and then when you sell the car at 3 year, you will have the residual value to pay off the balance on the bank loan. Again, you'll need to work out the figures for this to ensure that it will work for you.

Edited by Mandat on Monday 6th November 17:20

[PC80]

Thanks Mandat.

[VAGLover]

PC80 said:

Hi folks

Does anyone know of a finance company that offer PCP (personal contract plan/purchase) financing on used cars?

I can find such finance on recent used cars, such as a 1 or 2 year old car with a main dealer. But what about cars that fall into one or more of these categories:

• Already more than 3 years old
• Not with a main dealer
• Private sellers

There's lots of companies offering unsecured car finance, but you have to finance the entire amount of the car, unlike a PCP where you finance part of it and then have the option to buy at the end (i.e. balloon payment). PCPs account for about 80% of new car finance, yet it seems elusive once you go beyond a nearly-new car.

Any thoughts?

cheers.

My mate got a 9 year old Porsche 911 on PCP, with a 40% residual

[PC80]

VAGLover said:

PC80 said:

Hi folks

Does anyone know of a finance company that offer PCP (personal contract plan/purchase) financing on used cars?

I can find such finance on recent used cars, such as a 1 or 2 year old car with a main dealer. But what about cars that fall into one or more of these categories:

• Already more than 3 years old
• Not with a main dealer
• Private sellers

There's lots of companies offering unsecured car finance, but you have to finance the entire amount of the car, unlike a PCP where you finance part of it and then have the option to buy at the end (i.e. balloon payment). PCPs account for about 80% of new car finance, yet it seems elusive once you go beyond a nearly-new car.

Any thoughts?

cheers.

My mate got a 9 year old Porsche 911 on PCP, with a 40% residual

I'd guess that's with Oracle? I think for cars like this the risk of negative equity for the lender is very low. Values are normally at least static and the car tends to be cherished.

[VAGLover]

PC80 said:

I'd guess that's with Oracle? I think for cars like this the risk of negative equity for the lender is very low. Values are normally at least static and the car tends to be cherished.

That sounds about right, I was surprised but it seems common
Interest rate was circa 4%

[PC80]

VAGLover said:

That sounds about right, I was surprised but it seems common
Interest rate was circa 4%

You'd probably like one of my cars - Blackberry Corrado VR6. There isn't much Corrado chat on Pistonheads these days sadly.