Help with PCP vs Loan.. (money saving experts thread?)
Discussion
Struggling a bit here..
I understand the in's and outs of PCP and I'm really struggling to see why I should use it... yet I keep hearing it's a great product. Want to run it by you lot just to make sure I'm not missing something..
I've changed the numbers slightly, (removed some zero's as it scares the s
t out of me with all the big numbers) but here they are..
Purchase price £630
Already paid £20 cash deposit.
£610 left.
I have £360 cash.
I can borrow £250 at 4.3% over 2 years = £1.15 cost of credit
Opposed to PCP with £8 deposit (to take it to a £10 total) 7.9% over 2 years = 6.70-ish cost of credit
Monthly payments are about the same with each. I own fk all at the end of the PCP, but I tie up pretty much all my available cash with the loan option. The PCP interest is bonkers expensive.
I'm failing to see the point of the PCP really, especially as any money I hang on to will just sit in the mortgage offset, "earning" roughly 5% once tax etc is taken into account.
Total outgoing with loan/mortgage/bills/car payments/etc will be approx 45% of my monthly net earnings so I'm not overly concerned about "the boiler blowing up" etc. any "reasonable" emergency can be taken care of.
Seems there may be a tiny amount of wiggle room in buying negotiations for the car on PCP, but I've gently approached that with the dealer and I think the best we got to was about "£15" of extras, which didn't come close to the massive cost of the PCP.
So, Why take PCP?
The only other thing I can think of is that it's probably easier to get approved for credit with a secured loan on the car.
I understand the in's and outs of PCP and I'm really struggling to see why I should use it... yet I keep hearing it's a great product. Want to run it by you lot just to make sure I'm not missing something..
I've changed the numbers slightly, (removed some zero's as it scares the s
t out of me with all the big numbers) but here they are..Purchase price £630
Already paid £20 cash deposit.
£610 left.
I have £360 cash.
I can borrow £250 at 4.3% over 2 years = £1.15 cost of credit
Opposed to PCP with £8 deposit (to take it to a £10 total) 7.9% over 2 years = 6.70-ish cost of credit
Monthly payments are about the same with each. I own f
k all at the end of the PCP, but I tie up pretty much all my available cash with the loan option. The PCP interest is bonkers expensive. I'm failing to see the point of the PCP really, especially as any money I hang on to will just sit in the mortgage offset, "earning" roughly 5% once tax etc is taken into account.
Total outgoing with loan/mortgage/bills/car payments/etc will be approx 45% of my monthly net earnings so I'm not overly concerned about "the boiler blowing up" etc. any "reasonable" emergency can be taken care of.
Seems there may be a tiny amount of wiggle room in buying negotiations for the car on PCP, but I've gently approached that with the dealer and I think the best we got to was about "£15" of extras, which didn't come close to the massive cost of the PCP.
So, Why take PCP?
The only other thing I can think of is that it's probably easier to get approved for credit with a secured loan on the car.
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