I'm Being Fleeced: PCP

[disago]

I fancy upgrading my car. I have 4 options for financing it and i think the PCP seems the best:

1. I withdraw just over 50% of my S&S ISA plus my trade in, covers the upgrade but dealer says no discount possible for cash
2. PCP @ 7.8% and they'll give around 2% deposit contribution. The monthly would reduce the amount I can pay into my ISA each month by around 33%
3. HP - not competitive, i can get a personal loan at almost 1/3 the APR
4. Personal loan @ 2.7% + trade in + 12% of my S&S ISA - assuming the 90% acceptance chance according to Mr Lewis's site is fair. There's a cap to how much i can borrow on the personal loan and still get the 2.7% rate hence the need to dip the ISA for the rest. The monthly is eating the majority of my ISA contributions over the next few years though

I feel moderately confident the return on my investments will beat the amount i'll pay in loan interest, but i'm happy to take the risk either way.

So my plan is to take the PCP for the deposit contribution then pay it off via the personal loan. I ask you PH money gurus, can i do better than this plan?

Also, 7.8% APR on the PCP seems rough, am i just not saying the right things to unlock a sensible rate? It's Porsche / VWFS. They started at over 9% this is their best rate so far. | went into this expecting 6.5% based on things i read on internets.

[Percy Cushion]

No, you're not being fleeced but, sorry OP, you cant afford the car right now. 7.8% as the best option is ridiculous. Inflation is rising and the borrowing rates are obviously following suit. Hang fire until things settle down.

If your return on investments was as good as you claim, you wouldn't need to borrow to buy a car. Sorry this isn't what you want to hear OP, may I suggest you invest first and then use your gain to buy the car (assuming no other debts)?

Edited by Percy Cushion on Wednesday 26th January 00:29

[vulture1]

2 personal loans from different banks? I had a 25k and 2 years later a 15k from a different bank running at the same time. (Before anyone has a go at me for getting debt) the 25k was for an investment that currently pays back 160% of the loan cost every month and the 15k for when my car went kaput. I had the funds in stocks but wanted to keep them so the loan at 2.29% was taken out. If I ever got in bother stocks get sold and car paid off but the other investment actually covers the car payment as well.

Ironically the car has gone up in value as well but that is pure fluke from buying last year in 2020 before the used market went up.

[interstellar]

disago said:

I fancy upgrading my car. I have 4 options for financing it and i think the PCP seems the best:

1. I withdraw just over 50% of my S&S ISA plus my trade in, covers the upgrade but dealer says no discount possible for cash
2. PCP @ 7.8% and they'll give around 2% deposit contribution. The monthly would reduce the amount I can pay into my ISA each month by around 33%
3. HP - not competitive, i can get a personal loan at almost 1/3 the APR
4. Personal loan @ 2.7% + trade in + 12% of my S&S ISA - assuming the 90% acceptance chance according to Mr Lewis's site is fair. There's a cap to how much i can borrow on the personal loan and still get the 2.7% rate hence the need to dip the ISA for the rest. The monthly is eating the majority of my ISA contributions over the next few years though

I feel moderately confident the return on my investments will beat the amount i'll pay in loan interest, but i'm happy to take the risk either way.

So my plan is to take the PCP for the deposit contribution then pay it off via the personal loan. I ask you PH money gurus, can i do better than this plan?

Also, 7.8% APR on the PCP seems rough, am i just not saying the right things to unlock a sensible rate? It's Porsche / VWFS. They started at over 9% this is their best rate so far. | went into this expecting 6.5% based on things i read on internets.

I think the way you have done it works best for you and switching to the personal loan is sensible.

Life is for living, ignore the naysayers, buy the car and enjoy it.

[Dr Jekyll]

interstellar said:

disago said:

I fancy upgrading my car. I have 4 options for financing it and i think the PCP seems the best:

1. I withdraw just over 50% of my S&S ISA plus my trade in, covers the upgrade but dealer says no discount possible for cash
2. PCP @ 7.8% and they'll give around 2% deposit contribution. The monthly would reduce the amount I can pay into my ISA each month by around 33%
3. HP - not competitive, i can get a personal loan at almost 1/3 the APR
4. Personal loan @ 2.7% + trade in + 12% of my S&S ISA - assuming the 90% acceptance chance according to Mr Lewis's site is fair. There's a cap to how much i can borrow on the personal loan and still get the 2.7% rate hence the need to dip the ISA for the rest. The monthly is eating the majority of my ISA contributions over the next few years though

I feel moderately confident the return on my investments will beat the amount i'll pay in loan interest, but i'm happy to take the risk either way.

So my plan is to take the PCP for the deposit contribution then pay it off via the personal loan. I ask you PH money gurus, can i do better than this plan?

Also, 7.8% APR on the PCP seems rough, am i just not saying the right things to unlock a sensible rate? It's Porsche / VWFS. They started at over 9% this is their best rate so far. | went into this expecting 6.5% based on things i read on internets.

I think the way you have done it works best for you and switching to the personal loan is sensible.

Life is for living, ignore the naysayers, buy the car and enjoy it.

Why not use your ISA savings to pay off the PCP? Otherwise you are essentially taking a personal loan to top up your ISA.

[disago]

Dr Jekyll said:

Why not use your ISA savings to pay off the PCP? Otherwise you are essentially taking a personal loan to top up your ISA.

The thing forcing my hand here is in the past month my ISA has taken a real dent. I'm just in the FTSE global all cap because i'm no markets scientist. It did the same thing about this time last year as i recall, maybe not quite as severe. I don't want to withdraw while it's down. No one knows the future but i feel fairly confident it's going to bounce back up so, if anything, i'd be keen to buy in more of that index just now while it's down.

[SunsetZed]

Can you not get a personal loan at more than 2.7% but significantly less than 7.8% to split the difference?

Also if you want to get the 2% dealer contribution you can take the PCP option and then 'change your mind' and pay it off within 14 days (in this case using the personal loan).

[kiethton]

SunsetZed said:

Can you not get a personal loan at more than 2.7% but significantly less than 7.8% to split the difference?

Also if you want to get the 2% dealer contribution you can take the PCP option and then 'change your mind' and pay it off within 14 days (in this case using the personal loan).

Exactly what we did with my Mrs' car - took the PCP @9.9% to get the discount and then repaid it with a personal loan @2.8% a few days later

[disago]

SunsetZed said:

Can you not get a personal loan at more than 2.7% but significantly less than 7.8% to split the difference?

That's along the lines of what i was hoping to get from posting this. I was hoping someone would come along and say "did you not know bank X are offerring 3% for up to 50k". I'm out of the loop on these things so all my "knowledge" comes from reading martin lewis!

[Zoon]

disago said:

SunsetZed said:

Can you not get a personal loan at more than 2.7% but significantly less than 7.8% to split the difference?

That's along the lines of what i was hoping to get from posting this. I was hoping someone would come along and say "did you not know bank X are offerring 3% for up to 50k". I'm out of the loop on these things so all my "knowledge" comes from reading martin lewis!

First Direct do £30k at 3.3%

[LeadFarmer]

Zoon said:

First Direct do £30k at 3.3%

Leaving enough left over for a nice new shiny 65" OLED TV, and some power tools

[Muzzer79]

Percy Cushion said:

No, you're not being fleeced but, sorry OP, you cant afford the car right now. 7.8% as the best option is ridiculous. Inflation is rising and the borrowing rates are obviously following suit. Hang fire until things settle down.

If your return on investments was as good as you claim, you wouldn't need to borrow to buy a car. Sorry this isn't what you want to hear OP, may I suggest you invest first and then use your gain to buy the car (assuming no other debts)?

Edited by Percy Cushion on Wednesday 26th January 00:29

When did he say that 7.8% is the best option?

He doesn't need to borrow, he is looking at the best money-management option to purchase a car which, contrary to the belief of many PHers; isn't always cash.

OP - you need to sit on the naughty step for the click-baity title. You're not being fleeced.

[disago]

Zoon said:

First Direct do £30k at 3.3%

Virtual beer to you. Application submitted. Thank you!

[CharlesElliott]

For an unsecured loan at 30K, I suspect they will be pretty tight on income and affordability criteria. Not that I know anything about your specific circumstances OP.

[interstellar]

Are you a director of a company at all? Then look at Lombard, their HP is good value even up to 50/60k its under 5%

[s111dpc]

That APR on the PCP is very high. We’ve just agreed 4.1% with Skoda which is a part of VWFS so I would try and negotiate.

[Frankstar_Rapper]

When i bought the wife's car we negotiated servicing, money off and extra years warranty if we got PCP and Alloy Insurance and volcano insurance (or what every crap they try and sell you). Used the 14 days to pay off PCP with personal loan and cancel all the insurances. The salesperson was not happy.

[95JO]

interstellar said:

Are you a director of a company at all? Then look at Lombard, their HP is good value even up to 50/60k its under 5%

Of course he is, what a stupid question. This is PH.

[Dimebars]

s111dpc said:

That APR on the PCP is very high. We’ve just agreed 4.1% with Skoda which is a part of VWFS so I would try and negotiate.

Used car dealer finance APR rates are now fixed thanks to the FCA.

New car rates will vary from model to model depending on the manufacturers campaign

[DonkeyApple]

Zoon said:

First Direct do £30k at 3.3%

Does highlight the man maths fallacy of PCP when you can borrow unsecured for more than half what the 'house' is offering as a lender of last resort. Sadly, it also tends to highlight that most punters will pay absolutely anything to get a free mudflap so long as the enormous cost is broken down to a less scary number.

It would be nice if it were the norm that consumers used their 14 day rights to leg over the car manipulators but just like pay later, zero deals and all the other consumer wheezes, it exists precisely because almost no one does. And because almost no consumer has any affordable debt capacity remaining.

It's really quite amazing when you consider a brand like Porsche that there are so many higher income earners having to borrow at junk rates to borrow a car.