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19 milano · 6th May 2008, 13:51

Whilst PCP's suit some people, my general advice is STAY AWAY. They often allow people to buy cars they can't afford. But that's exactly the problem, they can't afford it! This country is in massive amounts of debt because of people buying things they can't afford!

Anyway rant over and down to the facts.

2 main problems:
1. With most loans you will pay interest on any outstanding balance. On HP in month 36 you only owe 1 payment so that is all you pay interest on. Throughout a PCP the interest is calculated on your outstanding loan AND you final lump sump (often £5000 or more). For 3 years you pay interest on the lump sum even though most people have no intention of ever paying it. If you compare the overall cost to buy the same car on HP and a PCP, PCP costs more (often by thousands).
2. If you put down a decent deposit for a car, say £5000, then eventually you decide you no longer want 2 trade your car in with this company (it WILL happen!), with a PCP, you can just walk away . However if you don't pay that final lump sum (as most people don't) you walk away with nothing or maybe a few hundred pounds, but definately not you original £5000.

The moral- buy HP and buy what you can afford.

E.G. I sold an old 306 for £2000. Put this deposit down on a Civic Executive. Sold that after 3 years. As I owned it outright through HP, I kept the whole of the £8000 I made. I put this down on my current FN2 and I am still paying the same monthly payments. In 2 years I should get in excess of £11000 when I sell this car.
It took 3 years from selling a banger, to own a Type R. I couldn't have done this on a PCP. HP allows you get get a better car every 3 years without altering your monthly payments.

2 other tips are to ask your dealer to increase the amount of months you are repaying the loan over. I have a 37 month loan and this kept my payments the same (an extra month or 2 is no great hardship!). Also find a cheap bank loan (hard at the moment I know) and tell your dealer you are going to use it. They make money from finance deals, so they lowered my interest and with it my monthly payments.

Sorry for the massive post, but I hope this converts somebody!

6th May 2008, 13:51	#32 (permalink)
19 milano Valve Cap Join Date: 19th February 2008 Location: UK Posts: 29 Thanks: 0 Thanked 0 Times in 0 Posts	Whilst PCP's suit some people, my general advice is STAY AWAY. They often allow people to buy cars they can't afford. But that's exactly the problem, they can't afford it! This country is in massive amounts of debt because of people buying things they can't afford! Anyway rant over and down to the facts. 2 main problems: 1. With most loans you will pay interest on any outstanding balance. On HP in month 36 you only owe 1 payment so that is all you pay interest on. Throughout a PCP the interest is calculated on your outstanding loan AND you final lump sump (often £5000 or more). For 3 years you pay interest on the lump sum even though most people have no intention of ever paying it. If you compare the overall cost to buy the same car on HP and a PCP, PCP costs more (often by thousands). 2. If you put down a decent deposit for a car, say £5000, then eventually you decide you no longer want 2 trade your car in with this company (it WILL happen!), with a PCP, you can just walk away . However if you don't pay that final lump sum (as most people don't) you walk away with nothing or maybe a few hundred pounds, but definately not you original £5000. The moral- buy HP and buy what you can afford. E.G. I sold an old 306 for £2000. Put this deposit down on a Civic Executive. Sold that after 3 years. As I owned it outright through HP, I kept the whole of the £8000 I made. I put this down on my current FN2 and I am still paying the same monthly payments. In 2 years I should get in excess of £11000 when I sell this car. It took 3 years from selling a banger, to own a Type R. I couldn't have done this on a PCP. HP allows you get get a better car every 3 years without altering your monthly payments. 2 other tips are to ask your dealer to increase the amount of months you are repaying the loan over. I have a 37 month loan and this kept my payments the same (an extra month or 2 is no great hardship!). Also find a cheap bank loan (hard at the moment I know) and tell your dealer you are going to use it. They make money from finance deals, so they lowered my interest and with it my monthly payments. Sorry for the massive post, but I hope this converts somebody!