Buying a New Car - PCP / HP / Loan ?

[Merty]

Hi All,

Sorry if others have asked this question but I am in process of buying a car but unsure how to finance it. There are many options but i would like to know what are the experiences of other in the community.

Car I am Looking to buy is a C Class C250

Is PCP really worth it for a second hand worth £25k?

What are the advantages/disadvantages of PCP, I have seen mixed reviews...I also have noted that 70% + of the cars on road today are purchased by PCP. What are you views on this, would it be wort it to opt in to a PCP for a fixed term and hand back the car at the end of term. What are the implications, what are the dos and donts.

Or Do I take a loan or HP on a car that is worth £15K?

Any review is appreciated
Thanks

 

[JLR1969]

You can dress it up however you want but at the end of the day it's just a loan, what's important is you get the lowest price possible for the car and then get the lowest APR available.

A guaranteed value is in my opinion another marketing ploy to make you think they are doing you a favour, they are not. The GFV will more than likely be quite low and if you can be bothered you can sell it privately for more.

Most people are in essence lazy and the thought of a monthly payment that they can live with and then just hand it back and walk away is perfect.

However the interest is huge when you really look into it.

As an example a £45k car over 3 years with a £5,000 deposit doing 10,000 miles a year is £620 a month at 6% APR. £170 a month is interest.

Look on Coast2Coast spec the car you want and then go to your local dealer and try and do a deal. Even speak to the dealer who C2C refer you to and discuss finance with them.

I am buying my car and by paying cash have saved £6000 in interest charges, easy when you have the cash otherwise try the above.

 

[Palfrem]

Do a search on Pistonheads

There's lots of PCP/ Loan / Lease "advice" on there.

 

[PenelopePitstop]

PCP on used = very high APR.

It could be cheaper to lease brand new car via broker.

Check Insurance & Finance - MBClub UK - Bringing together Mercedes Enthusiasts

 

[TripleD]

Only my second post, but having purchased my last 5 cars on PCP I thought I'd share. That and I've just purchased a C250.

On a used car, PCP rates are very high, and TBH, not worth it, if the car is under £25k you can get a personal loan that works out cheaper in the long run.
PCP is great if you purchase a new or nearly new car. Nearly new or pre-reg cars can be sold at new PCP rates, but depends on mileage, if not it's typically around 8% as opposed to 11% for used.

Good points of PCP is really down to the monthly payments, and affording the car. But you have to look at how long you are wanting to keep the car for, if you want to change every 3/4 years then it could be a good option. Because of the PCP loan agreements you can find additional 'help' funding the cars from the finance company there can be extra assistance in your deposit. Sometimes its worth taking PCP, then ending the agreement early to gain this discount.

I hear a lot of car dealers explaining PCP to people, and the common mistake is believing what they say. If you put £6000 into a PCP deal, you won't see this back again at the end of the deal, it just purely helps to reduce your monthly payments.

You can Voluntary Terminate your PCP after the half way point and hand the car back, but you need to look at your levels. Normally you'll find PCP is front loaded interest, so you may find yourself in negative equity quite quickly, but then as you progress through the term you should hit a even playing field, and at this point I normally look to change.

So coming back to your £25k C250, my advice is to take a personal loan over PCP as the interest on a personal loan is low (can get 3.4%) even though you may take it over a longer term say 5 years, whereas a PCP is over 4 (or less), but with a PCP you still need to make a final balloon payment so bear that in mind.

Hopefully my rantings have helped and made sense.

 

[Deleted member 113659]

I had this deal emailed to me this morning. Thought I'd post it for you to see if leasing would suit at all.

https://www.contractcars.com/car-leasing/mercedes/c250d-lease-deals/#alternative-payment-profiles

Ant.

Sorry, I just realised that the C250 you're considering may be petrol.

 

[TheFoX]

If your purchase is under £25,000 (or whatever the current limit is), take out a personal loan, as this won't be tied to the vehicle unlike PCP or HP, where you don't own the vehicle until the last payment and 'option to purchase' is made.

Obviously, if the vehicle you are buying is over £25,000, then PCP or HP may be your only option. Do banks lend larger sums than £25,000 for personal purchases?

I prefer not to secure a loan against a car, but that is not always an option.

The last car I had on Agility was a £30,000 CLK back in 2008, on a two year lease with the option to buy at the end of the lease. The guaranteed value only benefited the dealer, as I was offered £3000 below that figure when I decided to trade it in against a newer SLK. Instead of buying the next car, I ended up returning the CLK to MB Finance rather than starting £3000 in arrears.

One thing worth checking is whether you can make additional voluntary payments to reduce the term. Some agreements are more flexible than others, while some are downright nasty.

 

[TripleD]

Do banks lend larger sums than £25,000 for personal purchases?

Yes you can get over 25k, but be aware of the interest rate that is then applied. I have heard of people extending their mortgage to cover the car costs too, it's a lower rate loan if you're able to do that.