pcp

My daughter has been offered a good deal on pcp for her next car, i have only ever done HP or cash, has any one got any advice regarding PCP is it good or bad way of getting a car, i'm not keen on the lump sum payment at the end seems to me it may be better to take advantage of the GFV and get a new one.it also seems that less deposit may be the better way so you dont have too much cash tied up in the car, but I may be wrong about that any advice would be welcomed

Thanks BanditGT Its a new picanto she is looking at, I just wondered if it would turn into  a bit of a nightmare if there was any damage or wear they said was not fair wear and tear i don't know how picky they will be.

Personally speaking a PCP is best suited to you if you will / want to change the car every 3 years etc. It also means you can have a new car at the fraction of the price - as you only finance part of the whole cost rather than finance the full amount. This means you get to drive a car you never thought you could afford!  There is alot to be said for having a new car regularly - you have a safer car as technology etc moves on, you have reliability, you have a warranty, you have no MOT's, you have better fuel efficiency from the newly developed engines which in turn can mean cheaper road tax etc etc.

The present financial climate is making deals on new cars very attractive at the moment, especially as dealers are tripping over themselves to add extra benefits too. Dealer contribution discounts, Free servicing, extended warranties etc etc. So in some cases a new car can actually be a cheaper and better value alternative to a 6 month old or year old ex-demo.

If you plan to keep a car for the longer term, then a personal loan or other finance makes more sense as you avoid that balloon payment. But it depends on the individual and their attitudes to finance.

In my opinion on a PCP, try and keep you initial deposit low / reasonable. The more you put down as a deposit will mean the monthly repayments will be less yes - but remember after 3 years when you come to upgrade will you have saved up enough money to be able to put the same large deposit down again on the new car? You might find yourself having to pay a bit more each month for the next car as a result or compromise on the next car. Don't assume the excess value in the car at upgrade time will generate the same level of deposit again. Just something to bear in mind.

Remember that with a PCP you have the option to A) give the car back at end of term and walk away, B) pay the outstanding balloon payment and keep the car or C) sell the car privately and clear the finance. Therefore you have plenty of options. So as you say if the dealer says it has excess damage beyond wear and tear or excess mileage at the end of the term and wont play ball you can always sell the car privately, clear the finance and use any excess to start a PCP again.

To be honest though, most dealers will be only to happy to shift a new car so I don't think you will have too much trouble striking a deal at the end of the term. You get a new car, they sell another new car and they get a decent used car for their forecourt. Everyone is happy.


Edited by micman - 17 Jan 2012 at 6:51am