PCP or loan
10-20-2006, 11:13 AM
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PCP or loan
I have exchanged a number of PMs with ex S2000 owners who are now SLK owners and have another test drive booked for tomorrow for the SLK. After days of agonising I think we have decided to have one last splurge before retirement and go for new (even after seeing the news article this morning about how it is the wrong way to do it).
This then raises the issue of how to finance it and I thought I would ask you learned lot.
PCP has advantages, lower monthly payments, no problems with selling if a change is needed after 3 years but it is a more expensive way of buying a car than getting a loan, especially if it is kept past the three year point.
What do people think?
This then raises the issue of how to finance it and I thought I would ask you learned lot.
PCP has advantages, lower monthly payments, no problems with selling if a change is needed after 3 years but it is a more expensive way of buying a car than getting a loan, especially if it is kept past the three year point.
What do people think?
10-20-2006, 11:25 AM
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My own take on this is if you have to get a loan, always try and make sure you have positive equity in the car. PCPs are useful to give you a guide value for the car after three years, use this information.
I got a tesco loan at 6.5% which was the cheapest way of doing it for me, although I could have saved a bit more by putting it on my mortgage.
I got a tesco loan at 6.5% which was the cheapest way of doing it for me, although I could have saved a bit more by putting it on my mortgage.
it can be but only if you know what you are doing.
10-21-2006, 12:22 AM
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Some reasonable loan rates out there at the moment. Northern Rock with 5.7% and no penalty for early repayment.
I'd go for the loan with the aim of paying it off early. But that's just me.
I'd go for the loan with the aim of paying it off early. But that's just me.
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10-21-2006, 02:26 AM
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I did some sums for a friend a couple of months back on PCP vs loans of 3, 4 and 5 year duration when he was looking at a new Golf GTi. (The accountancy stuff DOES come in handy occasionally! 
)
PCP IS NOT as cheap as it appears. The APR's are quite scary in comparison to what Tesco, the AA etc. will give you on a straight loan. Combine in (typically) lower monthly repayments and the amount of interest you'll be paying is a lot higher.
What they are is a good vehicle for getting people to buy brand new cars at low repayment rates because they'll never build up any/much capital in the car. They're there for the manufacturers, NOT the customer. If you can afford the extra
)PCP IS NOT as cheap as it appears. The APR's are quite scary in comparison to what Tesco, the AA etc. will give you on a straight loan. Combine in (typically) lower monthly repayments and the amount of interest you'll be paying is a lot higher.
What they are is a good vehicle for getting people to buy brand new cars at low repayment rates because they'll never build up any/much capital in the car. They're there for the manufacturers, NOT the customer. If you can afford the extra
10-21-2006, 03:16 AM
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What sort of rates were you working on ?
Dealers and the like will push you as high as they feel they can go. I know people who are paying high 9's through to 16 perct APR
Interest rates of around 6 were possible a few months ago and probably still are. Like buying the car shop around for finance too. There are loads of independant finance brokers who will be able to help.
These guys a worh a call for an indicative quote:
http://www.classicandsportsfinance.com
They are affiliated with the Porsche Club GB and give better rates/schemes to members so worth seeing if there is a MB scheme that is similar.
There are also two types of scheme that you could look at PCP or lease purchase. Essentially with PCP you can hand the car back at no cost to you or buy it for the balloon price. PCP is mileage dependant so more often than not prices quoted are for 10k per annum, this is one of the factors used to calculate the balloon and hence the monthly cost.
The alternative to PCP is lease purchase which is more akin to a traditional hire purchase agreement. The difference being the last payment is for the balloon price. So if you buy a car for
Dealers and the like will push you as high as they feel they can go. I know people who are paying high 9's through to 16 perct APR
Interest rates of around 6 were possible a few months ago and probably still are. Like buying the car shop around for finance too. There are loads of independant finance brokers who will be able to help.
These guys a worh a call for an indicative quote:
http://www.classicandsportsfinance.com
They are affiliated with the Porsche Club GB and give better rates/schemes to members so worth seeing if there is a MB scheme that is similar.
There are also two types of scheme that you could look at PCP or lease purchase. Essentially with PCP you can hand the car back at no cost to you or buy it for the balloon price. PCP is mileage dependant so more often than not prices quoted are for 10k per annum, this is one of the factors used to calculate the balloon and hence the monthly cost.
The alternative to PCP is lease purchase which is more akin to a traditional hire purchase agreement. The difference being the last payment is for the balloon price. So if you buy a car for