Home brew PCP type thing
Discussion
My good lady always likes to have a newish car so usually gets something on a PCP. I'm looking at the APR and thinking typically it's a bit high, say around 6%, and although I understand there's some weird way of calculating it with PCP I wonder if there's a better solution.
My idea is to get a personal loan at about 3.8% but over say 7 years. Sell the car privately after 3 years, and pay off the loan balance.
Putting aside the joys of private car selling, does this make sense? It does to me, but I'm pretty thick..
My idea is to get a personal loan at about 3.8% but over say 7 years. Sell the car privately after 3 years, and pay off the loan balance.
Putting aside the joys of private car selling, does this make sense? It does to me, but I'm pretty thick..
Very likely to give you a lower total cost of ownership because of the lower interest charges. You’ll be missing a guaranteed future value, which is generally set pretty low, so don’t worry about that. Will also remove a forced decision point in 3 years time, generally to the disappointment of the dealership. 5 year HP used to be very common until manufactures created PCP to shorten the replacement and sales cycle. Crack on.
You're pretty much spot on get a loan at a lower APR, buy an Ex Demo also look for the ex demo's that have a Dealer/Manufacturer contribution on them (this does mean signing up to their finance but you can normally clear this within 28 days) & that'll pretty much mean you've hit the jackpot.
stinkyspanner said:
Ok thanks, is that from the dealer? Or a broker?
Brokers, just look on Broadspeed for price with no negotiation. You need to decide on car you want then do the prices.I've seen a lease deal for a skoda octavia vrs, 6387 total over 2 years.
If you bought new would cost you 24,054 after discount. After 2 years worth 18k, so would cost 6k over 2 years. But add cost of loan and selling car hassle a lease would be better off. But you might get maintenance included in buying it.
There was a lease deal for a Audi A5 Coupe 35 TFSI Sport, £7304 over 2 years.
They can be had new with discount, 27k, 22% discount off rrp. Worth 20-22k After 2 years. So 7k cost but again cost of loan etc would be slightly better off leasing, with no hassle.
Maybe not the car you want but an example.
Caddyshack said:
Ask the finance guy at the dealer if the apr includes any cancellation / early exit fees built in. I don’t know anything about leases but often an apr has to assume the exit fee so if you don’t plan to break the deal the apr may be nonsense.
Finance companies haven’t been able to charge early settlement fees for almost a decade. There will be an option to purchase fee but these are generally minimal - like £10.I've always considered bank loans to be the best option, in terms of both interest rates and flexibility, because the car is not tied to the loan.
However, I say this with all due respect, perhaps anyone who needs to take a loan over seven years to buy a depreciating asset, is maybe borrowing beyond their means? It's all down to attitude to debt, but to me a sensible approach was always to figure out what loan I could afford over three years (which used to be pretty standard), and then look for a car in my price range. The car was mine after three years and usually I could afford to trade up. No stress over making payments, or being stuck with a car that's worth a lot less than I owe.
However, I say this with all due respect, perhaps anyone who needs to take a loan over seven years to buy a depreciating asset, is maybe borrowing beyond their means? It's all down to attitude to debt, but to me a sensible approach was always to figure out what loan I could afford over three years (which used to be pretty standard), and then look for a car in my price range. The car was mine after three years and usually I could afford to trade up. No stress over making payments, or being stuck with a car that's worth a lot less than I owe.
Ok thanks all, and on the last point-I'm a company director don't you know! I could buy it outright in theory, but the problem with being a Billy big biscuits company director is that one never feels that secure, so I'd rather keep some cash in the bank in case it all goes belly up. Bank loans are cheap money..
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