Put in a higher deposit for PCP?

Put in a higher deposit for PCP?

Author
Discussion

Usy777

Original Poster:

45 posts

28 months

Monday 24th January 2022
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Looking to buy my next car (ideally a 2018ish f80 m3) on pcp and I am tempted to put in around 7 or 8k as a deposit, I can afford it but is it a reasonable amount for a deposit? The car itself is a competition pack in yes marina blue with only 13k on the clock.

I have previously had a lease car a35 amg in which I put down 4k initial rental, I didn't think much of it but I know some people may think it's a bit too much for a lease.

Anyway just want to know if anyone had any advice on if it's a good idea to pay a high amount for a deposit or deal with higher monthly payments?

Let me know your thoughts!

ncjones

256 posts

216 months

Monday 24th January 2022
quotequote all
Standard advice is to put as little as possible down as a PCP deposit.

Can depend on interest rate (of agreement vs what you could get putting the cash to different use) whether it works out cheaper overall to borrow a bit less though.

Sometimes you can get a larger discount with a slightly bigger deposit.

stevemcs

8,696 posts

94 months

Monday 24th January 2022
quotequote all
ncjones said:
Standard advice is to put as little as possible down as a PCP deposit.

Can depend on interest rate (of agreement vs what you could get putting the cash to different use) whether it works out cheaper overall to borrow a bit less though.

Sometimes you can get a larger discount with a slightly bigger deposit.
This, put the absolute minimum in.

barryrs

4,397 posts

224 months

Monday 24th January 2022
quotequote all
Unless you are intending to keep the car at the end of the term of course?

In which case the overall cost would be more important than just the deposit and monthlies.

Jasey_

4,913 posts

179 months

Monday 24th January 2022
quotequote all
Depends on your long-term plans.

If you have no intention of keeping the car past the pcp deal them smallest deposit is probably best.

The other key is the interest rate.

You pay interest on the total amount outstanding.

ncjones

256 posts

216 months

Monday 24th January 2022
quotequote all
barryrs said:
Unless you are intending to keep the car at the end of the term of course?

In which case the overall cost would be more important than just the deposit and monthlies.
The balloon payment / guaranteed future minimum value doesnt change whatever the deposit is or monthly payment are, though?

barryrs

4,397 posts

224 months

Monday 24th January 2022
quotequote all
ncjones said:
The balloon payment / guaranteed future minimum value doesnt change whatever the deposit is or monthly payment are, though?
But the interest payable will be different

quinny100

930 posts

187 months

Tuesday 25th January 2022
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If you have a decent deposit a bank loan makes more sense. Certainly up to £30k, personal loans are available up to £50k but at a higher rate.

PCP on used cars usually comes with a high interest rate.

You can sort of do your own PCP with a loan - extend the term to hit the monthly payment you need. For example if you were looking at a PCP over 3 years you might end up taking a loan over 60-65 months. At 3 years you can sell the car and settle the loan, if you decide to keep it you've already got the finance sorted. You take on the depreciation risk, but GFV's on used PCP's are very conservative.

anonymous-user

55 months

Tuesday 25th January 2022
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Honestly, unless you absolutely have to or have money to burn, at the moment I think it’s a bad idea to be getting into anything used which is expensive.

Values for everything are artificially inflated at the moment and as that works it’s way out of the market people are going to be taking a beating on depreciation.

That’s why GFVs seem conservative at the moment, the finance companies are pricing in the reduction in value as markets return to normal.