Reply to: PCP car finance, is optional payment included in credit amount?

[SpontaneousOrder]

So with insurance, tax and servicing on top it will cost you about £1.70 per mile and you won't even own it until you make a further payment of £15,000.

I have always paid cash for a car in the range I an afford.

Have you got a small willy?

Finance is cheaper than 25% on dividend payments.

[ASB]

Mal,

The balance you borrow is still the purchase prices less the deposit.

Interest is charged at the normal rates. Obviously a finance co could chose to apply different rates to different portions of the loan. Never seen it though.

[Scruff]

Use the built in formula in Excel and you can calculate and compare the balloon payment yourself?

[malvolio]

Not for the firsttime I am completely baffled.

it is very rare for dealers to finance anyway. They are simply introducers anyway.

whoever provides the finance pays the dealer. You pay them, you may or not make the final payment. The finance co ownsthe car until you pay it all (notwithstanding rules of 1/2 and 1/3). It is just like any other form of hp.

The way PCP works is that the dealer (or the finance company, to be precise) secure the final payment against the vehicle itself. The loan then covers the cost of the car less that final amount at commercial rates, apparently reducing the total loan amount and hence the interest paid against it. At the end of the deal they want their £!5k back, so they either keep the car, you pay it to them from your own pocket or you start again with a fresh deal and roll the balance of the final payment in to that one.

There is some interest due on the final payment money, of course, but only what it is costing the finance company to lose access to that sum for a few years as opposed to having t fund a three year loan deal from the bank for that amount, but they are making money from the deal itself which likely more than covers that fairly small amount.

But as has been said, buying the best car you can afford from your own pocket is the better idea.

[fullyautomatix]

Is this another Suity or SAS sockie ?

[ASB]

Yes you do, but not as part of the finance with the dealer...

Not for the firsttime I am completely baffled.

it is very rare for dealers to finance anyway. They are simply introducers anyway.

whoever provides the finance pays the dealer. You pay them, you may or not make the final payment. The finance co ownsthe car until you pay it all (notwithstanding rules of 1/2 and 1/3). It is just like any other form of hp.

[malvolio]

you pay interest on the 15k. Obviously.

Yes you do, but not as part of the finance with the dealer...

[fullyautomatix]

What car is it ? Used car but the costs seem to be more than a brand new Jaguar.

[ASB]

No, it's outside the loan amount. All they do is take £15k (or whatever) out of the equation so you don't pay interest on it via a loan, hence the apparent savings. Your end-of-term options are give the car back (assuming you don't owe them money for exceeding the agreed total mileage), pay them £15k and keep the car, or trade it against a new deal using the £15k less the market value of the car (which may be less than £15k of course, meaning you also owe them something.)

PCP deals work if you keep using them as per the last option and hope the dealer gets their sums right. At some point you have to stop by paying off the final payment. Or better still, don't start in the first place.

you pay interest on the 15k. Obviously.

[JRCT]

I have always paid cash for a car in the range I an afford.

Have you got a small willy?

Me too.... the first bit.

[Paddy]

As title, im looking at a used car with example details below

Deposit £5,000
Monthly fee £500+
Term 36 months

OTR price £30,000
Total amount of credit £25,000
Optional final payment £15,000

Apr 10.9%

My question is, is the optional final payment of £15,000 included in the credit amount of £25,000? So if i wanted to get a bank loan at a better apr i would just need to finance £10k over the specific term? And then i choose what to do with car at the end of the term?

So with insurance, tax and servicing on top it will cost you about £1.70 per mile and you won't even own it until you make a further payment of £15,000.

I have always paid cash for a car in the range I an afford.

Have you got a small willy?

[ASB]

Q1. Yes it is.
Q2. No. You would then be comparing apples and pears.

That 15k final payment is related to the finance deal.

[northernladuk]

As title, im looking at a used car with example details below

Deposit £5,000
Monthly fee £500+
Term 36 months

OTR price £30,000
Total amount of credit £25,000
Optional final payment £15,000

Apr 10.9%

My question is, is the optional final payment of £15,000 included in the credit amount of £25,000? So if i wanted to get a bank loan at a better apr i would just need to finance £10k over the specific term? And then i choose what to do with car at the end of the term?

Pretty crap example. They should be giving you total cost as well as those figures shouldn't they so the answer should be clear.

[Project Monkey]

Hang on a minute... you're a contractor aren't you? Why do you need to borrow £10k? If you're £10k short for a £30k car, then buy a £20k car.

[Project Monkey]

As title, im looking at a used car with example details below

Deposit £500
Monthly fee £50+
Term 36 months

OTR price £3000
Total amount of credit £2,500
Optional final payment £1,500

Apr 10.9%

My question is, is the optional final payment of £1,500 included in the credit amount of £2,500? So if i wanted to get a bank loan at a better apr i would just need to finance £1k over the specific term? And then i choose what to do with car at the end of the term?

FTFY - you were typing too many 0's