Is PCP still viable? Insane interest rates
Discussion
Recently went to a local Audi dealership to get PCP quotes.
The monthlies were insanely high e.g. a hum drum Q3 with 1% deposit was around £700 pcm!
The interest rate was 10.4%!
This to me makes the cost of borrowing by way of PCP disproportionately expensive. This has the effect of a monthly payment which is inconsistent with the level of car you’re getting.
I appreciate the price is still the price, but to me cash or low interest bank loan is the only way to sensibly buy a car if PCP is going to have such high interest rates.
Maybe this isn’t typical of other dealerships, but I would assume PCP is more expensive across the board.
Any thoughts?
The monthlies were insanely high e.g. a hum drum Q3 with 1% deposit was around £700 pcm!
The interest rate was 10.4%!
This to me makes the cost of borrowing by way of PCP disproportionately expensive. This has the effect of a monthly payment which is inconsistent with the level of car you’re getting.
I appreciate the price is still the price, but to me cash or low interest bank loan is the only way to sensibly buy a car if PCP is going to have such high interest rates.
Maybe this isn’t typical of other dealerships, but I would assume PCP is more expensive across the board.
Any thoughts?
AudiMan9000 said:
Recently went to a local Audi dealership to get PCP quotes.
The monthlies were insanely high e.g. a hum drum Q3 with 1% deposit was around £700 pcm!
The interest rate was 10.4%!
This to me makes the cost of borrowing by way of PCP disproportionately expensive. This has the effect of a monthly payment which is inconsistent with the level of car you’re getting.
I appreciate the price is still the price, but to me cash or low interest bank loan is the only way to sensibly buy a car if PCP is going to have such high interest rates.
Maybe this isn’t typical of other dealerships, but I would assume PCP is more expensive across the board.
Any thoughts?
Aren’t interest rates on consumer loans also high? The monthlies were insanely high e.g. a hum drum Q3 with 1% deposit was around £700 pcm!
The interest rate was 10.4%!
This to me makes the cost of borrowing by way of PCP disproportionately expensive. This has the effect of a monthly payment which is inconsistent with the level of car you’re getting.
I appreciate the price is still the price, but to me cash or low interest bank loan is the only way to sensibly buy a car if PCP is going to have such high interest rates.
Maybe this isn’t typical of other dealerships, but I would assume PCP is more expensive across the board.
Any thoughts?
People have just got used to (or never experienced anything else) very low interest rates. Before the financial crisis I doubt such rates were unusual.
AudiMan9000 said:
Recently went to a local Audi dealership to get PCP quotes.
The monthlies were insanely high e.g. a hum drum Q3 with 1% deposit was around £700 pcm!
The interest rate was 10.4%!
Is it high because of the low deposit?The monthlies were insanely high e.g. a hum drum Q3 with 1% deposit was around £700 pcm!
The interest rate was 10.4%!
I seem to recall reading VW recently dropped their rates so maybe that’ll spread to Audi.
As another poster said though - it’s up to them, they’ll adjust the deal as they need/want to. Clearly they don’t need/want to do that at the moment.
Was chatting to a Skoda dealer late last summer and there were (for the time, and bearing in mind the long leadtimes Skoda had on new) surprisingly hefty deposit contributions and low PCP rates. Dealer told me Skoda had got into a bit of a panic as PCP renewals had dropped right off. That can’t be unique - surely all VAG brands would feel that?
AudiMan9000 said:
Come to think of it, they didn’t seem interested in selling Q3s due to the shift towards EVs. There was a year waiting list for one.
Wow - we were told 9mths for a Karoq but it actually came in 4. I refused it as we’d only ‘informally’ ordered to grab the PCP contribution and hadn’t nailed down the cost to change, and they wanted a bonkers amount now.It’s the reverse, a high PCP rate is indicative of them being able to sell every car they have access to and not needing to discount.
PCP rates are starting to tumble for a lot of cars as manufacturers put extra discounts on the table but if you’re looking for something specific rather than chasing a deal then it is what it is.
Even personal loan rates for people with exemplary credit ratings are at 6% so any low PCP rate is going to be manufacturer backed.
PCP rates are starting to tumble for a lot of cars as manufacturers put extra discounts on the table but if you’re looking for something specific rather than chasing a deal then it is what it is.
Even personal loan rates for people with exemplary credit ratings are at 6% so any low PCP rate is going to be manufacturer backed.
There seems to be plenty of competitive rates around on new cars, even 0%. Particularly EVs.
You will find you will get a better interest rate via a finance broker.
As said above though, dealer deposit contributions on used cars will drop the effective APR though I’m not sure if that’s included in the calculations.
You will find you will get a better interest rate via a finance broker.
As said above though, dealer deposit contributions on used cars will drop the effective APR though I’m not sure if that’s included in the calculations.
Robertb said:
There seems to be plenty of competitive rates around on new cars, even 0%. Particularly EVs.
You will find you will get a better interest rate via a finance broker.
As said above though, dealer deposit contributions on used cars will drop the effective APR though I’m not sure if that’s included in the calculations.
Not sure a broker will give you a better rate than 0% You will find you will get a better interest rate via a finance broker.
As said above though, dealer deposit contributions on used cars will drop the effective APR though I’m not sure if that’s included in the calculations.
cholo said:
PCP has always been an incredibly expensive way to buy a car hasn't it? It's nothing new.
It's just a double whammy of inflation increasing RRP and interest rates pushing up monthlies?
Are you comparing with paying cash or alternative financing?It's just a double whammy of inflation increasing RRP and interest rates pushing up monthlies?
I don’t see PCP as particularly expensive. There’s good and bad deals around.
In my experience PCP is a very expensive way to never own a car. It benefits dealers and manufacturers but not car buyers.
Go second hand and use HP at the same amount and you'll own a car at the end. PCP is just a bloody scam.
If you must go new and can't afford HP, just lease a car. It's cheaper.
Go second hand and use HP at the same amount and you'll own a car at the end. PCP is just a bloody scam.
If you must go new and can't afford HP, just lease a car. It's cheaper.
Skeptisk said:
Aren’t interest rates on consumer loans also high?
People have just got used to (or never experienced anything else) very low interest rates. Before the financial crisis I doubt such rates were unusual.
They're certainly not so different from 10.4% that it's going to make borrowing virtually the whole cost of an A3 (what - £30k?) 'cheap'. That's if you can get a personal loan for that amount at all from a mainstream lender with mainstream rates - many people won't (yes, even on PH). I do like the 'manufacturers will offer support via a higher GFV' thing too - essentially that's 'the manufacturers know that the asking price is ridiculous but don't want to admit it just yet'.People have just got used to (or never experienced anything else) very low interest rates. Before the financial crisis I doubt such rates were unusual.
It may be a "humdrum" Q3, but its list price is still £35k ish.
At £700 per month, you'd have paid a total of about £25k after three years.
Even not allowing for interest as the supply shortage of cars has eased and used car prices stop being silly, it's not inconceivable the car would only be worth £10k (i.e. retail at £12-13k) when its 3 years old.
Lease price on a base model one is about £500 per month with a low annual mileage and no upfront payment so not that different.
At £700 per month, you'd have paid a total of about £25k after three years.
Even not allowing for interest as the supply shortage of cars has eased and used car prices stop being silly, it's not inconceivable the car would only be worth £10k (i.e. retail at £12-13k) when its 3 years old.
Lease price on a base model one is about £500 per month with a low annual mileage and no upfront payment so not that different.
bad company said:
cholo said:
PCP has always been an incredibly expensive way to buy a car hasn't it? It's nothing new.
It's just a double whammy of inflation increasing RRP and interest rates pushing up monthlies?
Are you comparing with paying cash or alternative financing?It's just a double whammy of inflation increasing RRP and interest rates pushing up monthlies?
I don’t see PCP as particularly expensive. There’s good and bad deals around.
Interest rates are always a lot higher than consumer loans and always a lot more expensive than leasing.
Either leasing or a personal loan make muce much sense without big incentives like a decent manufacturer contribution or a 0% deal.
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